Higher Training Costs for Older Workers Threaten Youth Jobs Plan 2026

Higher training costs for older workers could undermine the government's plan to tackle the youth jobs crisis, according to Britain's largest employers. Ministers are reportedly planning to increase the cost of training workers over 25 by 25% in England to incentivize firms to train young people instead.

The proposal, drawn up before Wednesday's budget, is expected to form part of the government's response to Alan Milburn's review into youth unemployment. With 1 million 16- to 24-year-olds not in education, employment or training (Neet), the government is under pressure to act. However, business leaders warn that making older workers more expensive to train will simply shift opportunities rather than create new ones.

Why the Government Wants to Raise Training Costs for Older Workers

The government's goal is clear: encourage employers to invest in young people and reduce the number of Neet young adults. By making it more expensive to train older workers, ministers hope firms will redirect training budgets toward younger staff. The plan is part of a broader effort to address the youth jobs crisis, which has been exacerbated by the pandemic and economic uncertainty.

Chancellor John Healey is expected to announce measures to bolster opportunities for young people in the upcoming budget. The proposal to raise training costs for older workers is seen as a way to rebalance the system, which critics argue has favored older workers at the expense of the young.

Employers Push Back: 'It Will Just Shift Opportunities'

Business leaders have urged the government to reconsider the plan. Robert Halfon, former Conservative skills minister and now executive director of policy at Make UK, said: "It will just mean opportunities are shifted around instead of creating new ones." He added that while getting young people into employment is a moral and economic imperative, making it more expensive to train older workers isn't the answer.

Halfon called on Healey to "break the cycle" of short-term thinking and instead focus on creating genuine opportunities for all workers. Employers argue that older workers are a vital part of the workforce, and penalizing their training could lead to skills shortages and reduced productivity.

The Impact on Older Workers and the Economy

Older workers already face significant barriers to employment, including age discrimination and job anxiety. Raising training costs could further marginalize them, making it harder for them to stay in work or re-enter the workforce after redundancy. This comes at a time when many older workers are struggling to find work due to age discrimination in hiring.

Moreover, the economy benefits from a diverse workforce that includes experienced older workers. Training older workers can lead to higher retention rates and valuable knowledge transfer to younger colleagues. Penalizing their training could have unintended consequences for businesses and the wider economy. The background to this story is set out in Plan to Make Firms Pay More to Train Older Workers Than Youth. A related thread runs through Youth Unemployment Crisis: Young People Struggle for Jobs in. Earlier coverage in Pre-Apprenticeship Scheme to Close Youth Unemployment Gap shows how the argument developed.

What's Next for Apprenticeship Funding?

The government's response to the Milburn review is expected to include a range of measures to tackle youth unemployment. The proposal to raise training costs for older workers is just one piece of the puzzle. Other initiatives, such as AI bootcamps and career-focused education, are also being considered to help young people gain the skills they need. A closer look at the same subject appears in Labour's Apprenticeship Scheme Falls Short with Only 160 Starts. Anyone following the wider picture can start with Youth Unemployment Crisis: Too Few Jobs in Too Many Places. The same theme surfaces in UK Youth Unemployment Falls Below 1 Million: A Turning Point, which takes a different angle.

As the budget approaches, all eyes are on Chancellor Healey to see how he will balance the need to support young people with the concerns of employers. The decision will have far-reaching implications for the workforce and the economy. Context on how this played out before sits in Over-50s Unemployment Crisis Demands Jobs for Older Workers. A companion piece, UK AI Bootcamps Tackle Youth Unemployment Crisis, approaches the same subject from another angle.

Key Takeaways

• Government plans to increase training costs for workers over 25 by 25% to encourage hiring young people.
• Employers warn the move will shift opportunities rather than create new ones.
• Older workers already face barriers like age discrimination and job anxiety.
• Training older workers can benefit businesses through retention and knowledge transfer.
• The budget will reveal how the government balances youth employment with employer concerns.

Comparison of Training Costs and Outcomes

FAQ

The debate over training costs for older workers is part of a larger conversation about how to support both young and older workers in a changing economy. As the government finalizes its plans, it must consider the unintended consequences of pitting generations against each other. For a deeper look at the challenges facing older workers, see our analysis of the over-50s unemployment crisis and the urgent need for jobs for older workers. Employers and policymakers alike must find a balanced approach that creates opportunities for all.

Meanwhile, the government's plan to make firms pay more to train older workers than youth has sparked significant backlash. Business leaders argue that such a move could backfire, leading to skills shortages and reduced competitiveness. The job anxiety soaring for older workers is a hidden crisis that cannot be ignored. As the budget approaches, the government must weigh the potential benefits against the risks.

Investing in young people is crucial, but it should not come at the expense of older workers. The UK AI bootcamps tackling youth unemployment crisis show promise, but they must be part of a comprehensive strategy. Older workers struggling to find work due to age discrimination need support, not penalties. The apprenticeship experience shared by UK employers highlights the value of training at all ages. By learning from these insights, the government can craft policies that truly break the cycle of unemployment and underemployment.