Government Announces £1bn Plan To Tackle Youth Unemployment

A major youth employment drive backed by £1 billion will help create 200,000 jobs for young people, alongside the biggest transformation of apprenticeships in a decade.

It comes as apprenticeships starts amongst young people are down 40 percent in the last decade and almost one million young people are not earning or learning – a rise of 248,000 between 2021-2024.

Announced in a speech by Work and Pensions Secretary Pat McFadden at Waltham Forest College, a “New Deal” for young people includes: A new Youth Jobs Grant, through which businesses will receive £3,000 for every young person they hire aged 18-24 who has been on UC and looking for work for six months.

This is expected to support 60,000 young people over three years. Expansion of the Jobs Guarantee to a wider age range, from 18-21 to 18-24, to create more than 35,000 extra subsidised jobs. This brings the total to be supported through the scheme to over 90,000 in the next three years. An Apprenticeship Incentive of £2,000 for each new employee aged 16-24 taken on by an SME.

As part of wider reforms, this will drive progress to our target of creating 50,000 more apprenticeships. Further reforms to the Growth and Skills Levy to prioritise young apprentices, secure value for money and give school and college leavers more opportunities than ever to build careers in cutting edge industries.

It is the latest step in the Government’s commitment to ensuring every young person aged 16-24 has the opportunity to earn or learn. These changes are backed by an additional £1bn, taking the total investment into the Youth Guarantee and the additional investment in the Growth and Skills Levy to £2.5 billion over the next three years. This will support almost one million young people and help deliver up to 500,000 opportunities to earn and learn.

Prime Minister Sir Keir Starmer said: Backing young people is one of the most important investments we can make in this country’s future.

“We are determined to tackle the rise in youth unemployment by expanding practical routes into work, boosting apprenticeships, and giving employers the clarity they need.

“These reforms underpin our ambition to create an economy that works for everyone, closing the skills gap and supporting more young people into meaningful employment.”

Foundation apprenticeships, supported with an incentive for employers, will also expand into hospitality and retail from April 2026, building on foundation apprenticeships launched in engineering, manufacturing and digital. These entry-level opportunities will support young people aged 16 to 21 as they take the first step on the career ladder and move from education into lasting employment.

The reforms are backed by Michelin Star celebrity chef Tom Kerridge, who has provided dozens of apprenticeships at his pubs.

Alongside this, the Growth and Skills Levy will be changed to reprioritise investment where it is needed most, to ensure that young people can access the jobs essential to our economy’s growth as well as ensure apprenticeships remain fit for purpose and prioritise value for money.

This means apprenticeship standards that do not meet the country’s skills priorities or take resources away from opportunities for young people and could be better delivered through on the job training will be defunded.

Michelin Star chef Tom Kerridge said: “I welcome this announcement which will provide amazing opportunities to young people looking to get into this industry and others, to learn a trade and earn along the way.

“I’ve trained apprentices in my restaurants, and I know what a great start it gives them in their careers, and these incentives will give our industry a great boost. I’m pleased Pat McFadden has made this a priority.”

Kate Nicholls, Chair of UKHospitality, said: “Hospitality is the sector best placed to help people back into work, and these are important measures that remove barriers for businesses employing more people.

“The Government’s £3,000 Youth Jobs Grant is modelled on proposals UKHospitality submitted and I’m pleased that this has been taken forward. Acting as the equivalent to an employer NICs holiday for businesses employing young people, the grant helps to address a major cost challenge for hospitality businesses.

“Including hospitality in foundation apprenticeships delivers on another of UKHospitality’s key asks and means there are now several supported pathways into work where employers are financially supported to reduce their costs.

“With employment costs rapidly increasing, engaging with the Government to introduce these incentives has been one of our priorities and can support businesses to help reduce the cost of employment.

“With some management apprenticeships streamlined, it’s positive that our calls to retain sector-specific standards across catering and hospitality have been acted upon and those apprenticeships saved.

“These announcements show the benefit of working closely with business groups to design measures and policies that are practical, cost-saving and work for businesses. It’s crucial this approach continues and that the Government ensures that people of all ages have routes to learn and develop skills in hospitality.”