London, November 27, 2025
The UK government has announced major policy changes in the 2025 Budget that will fully fund apprenticeship training for under-25s in small and medium enterprises (SMEs) and introduce a £820 million youth guarantee for 18 to 21-year-olds to support education, training, and paid work placements. These measures aim to improve access to employment and reduce youth unemployment nationwide.
Full Funding for Apprenticeships in SMEs
The government will eliminate co-investment payments for apprentices aged 22 to 24 employed by SMEs, building on prior support that exempted those under 22. This policy change means that SMEs will no longer be required to contribute a 10% top-up toward apprenticeship training costs for young workers under 25. The government will fully cover these expenses, reducing financial barriers for both employers and apprentices.
Youth Guarantee Scheme
A new “youth guarantee” initiative has been allocated £820 million over three years targeting 18 to 21-year-olds. Under this scheme, all eligible young people will secure a guaranteed placement in college, an apprenticeship, or receive personalized job support. For those unemployed after 18 months, the guarantee provides a six-month paid work placement aimed at facilitating sustainable employment and mitigating long-term joblessness.
Additional Apprenticeship Funding
The Budget also commits an extra £725 million nationwide to expand apprenticeship opportunities for the under-25 demographic. This funding is expected to increase training capacity, with a focus on sectors experiencing significant skills shortages, thereby addressing systemic workforce needs.
Impact on Young People and Businesses
These reforms will enhance access to apprenticeships and training by removing cost obstacles for SMEs and providing structured employment pathways for young people. The youth guarantee strengthens safety nets by offering tailored support and work experience for those struggling to find jobs. Collectively, these policies are designed to facilitate smoother transitions from education to employment for young citizens.
Context and Implementation Timeline
The changes form part of a broader government strategy to reduce youth unemployment and address skill deficits in the labor market. The measures are scheduled for implementation beginning with the 2026 financial year, although certain components may be introduced earlier.
As these reforms take effect, they represent a significant shift in government support for young workers, promising to make apprenticeships and work-based training more accessible while reinforcing targeted assistance for youth facing employment challenges.