Apprenticeship Funding Reforms – What They Could Mean for Your Business
The Government has announced a £725 million package of reforms aimed at expanding apprenticeship and training opportunities for young people. While the headline focus is on addressing youth unemployment, there may be meaningful benefits for small and medium-sized businesses over the coming years.
Below is a summary of the key changes and how they could influence your recruitment and workforce planning.
Fully funded apprenticeships for under-25s at SMEs
One of the most significant changes is the removal of the 5% employer co-investment requirement for apprentices under the age of 25 at small and medium-sized employers. For eligible apprentices, training and assessment costs will now be fully funded by the government.
For businesses that have previously been deterred by apprenticeship costs, this change may make apprenticeships a more viable option. They can provide a cost-effective way to fill entry-level roles and develop skills within your business over the longer term.
Increased local support to find apprentices
The reform package includes a £140 million pilot scheme that will give Mayors greater responsibility for connecting young people with apprenticeship opportunities in their regions.
The effectiveness of this support will depend on local delivery, but the intention is to improve access to suitable candidates and provide additional help to employers looking to recruit apprentices.
Foundation apprenticeships and more flexible training options
Additional foundation apprenticeships are being introduced in sectors such as retail and hospitality. First launched in May 2025, these programmes are designed to bridge the gap between education and the workplace, helping young people become work-ready more quickly. They may be particularly useful where businesses currently invest significant time in early-stage training.
From April 2026, greater flexibility will be introduced through the option of shorter apprenticeship courses, allowing training to be better tailored to business needs. A new Level 4 apprenticeship in artificial intelligence is also planned, offering opportunities to build advanced skills within the workforce.
Looking ahead
While it will take time for these changes to have a full impact, businesses may wish to review whether fully funded under-25 apprenticeships could support future recruitment and skills development.
Further announcements are expected, with the Department for Work and Pensions and Skills England working alongside businesses to increase apprenticeship uptake while ensuring the system remains flexible and practical for employers.
If you would like to discuss how apprenticeships could fit into your workforce planning, please get in touch.