Apprentices aged 25+ could cost every employer 25% from 2027. What to do now.

Reported 17 October 2026; checked 18 October against FE Week, the GOV.UK funding policy for starts from 1 August 2026 and the 2026 to 2027 funding rules. We will update this page when the government confirms or drops the plan.

On 17 October, FE Week and the Guardian both reported that ministers are drawing up plans to make every employer pay a quarter of the cost of training apprentices aged 25 and over. If it goes ahead as described, it changes who pays for every apprenticeship taken by someone aged 25 or over in England, and it lands squarely on the people most businesses are trying to retrain for AI: the ones already on the payroll.

What has been reported

FE Week, citing multiple sources, reports that the plan would let employers use growth and skills levy funds for only 75% of the eligible training and assessment cost of an apprentice aged 25 or over, with the employer paying the remaining quarter in cash. The same 75/25 split would apply to employers that do not pay the levy, who pay 5% today. Apprentices aged 16 to 24 would stay fully funded.

The Guardian, whose report FE Week and others have followed, says the change would be introduced on a phased basis from September 2027, and reports agree it has not been finalised. Nobody has yet said what "phased" means: it could be by employer size, by apprenticeship level, or a contribution that steps up over time.

The proposal sits inside the government's response to Alan Milburn's review of young people not in education, employment or training. His full report has been pushed back until after the Budget on 28 October; at DWP questions on 12 October, MPs were told it was due within weeks. The Department for Work and Pensions would not comment on what it called speculation, but confirmed that further reforms to the levy are being made to prioritise young apprentices and secure value for money.

Not everyone close to government is convinced. One source described the rationale to FE Week as "nonsensical", on the grounds that employers recruit for the jobs they need filling, not for the age of the candidate. A senior policy figure close to government told the Guardian that employers would not like it, having been told the levy was their money to spend as they chose, but argued that the current system is not working.

Who pays what now, and under the reported plan

The £18,000 figures are the funding band for the Level 4 AI and Automation Practitioner (ST1512), the apprenticeship we deliver for upskilling existing staff in AI. The rule of thumb for any standard: for every £1,000 of agreed price, a non-levy employer would pay £250 instead of £50, and a levy payer with funds would pay £250 instead of nothing. The percentage applies to the price you agree with your provider, up to the funding band; anything above the band has always been yours to pay. Today's rates are set out in full in our ST1512 funding FAQ.

Why ministers want it

The stated aim is to get more young people into apprenticeships. Youth starts have fallen by about 40% over the past decade, according to the reports, and more than half of new starts now go to people aged 25 and over. With youth NEET numbers around a million, ministers want employers' training money pointed at the young.

There is also a budget problem. FE Week notes that the levy is forecast to raise £4.5 billion in 2026-27 but the apprenticeship budget for England is £3.3 billion, and that budget has been fully spent in recent years, mainly because of growth in higher-level apprenticeships, which are taken mostly by older learners and cost more to deliver.

The direction has been consistent all year. From January, Level 7 funding stopped for new starts aged 22 and over, except those aged 22 to 24 with an education, health and care plan or care experience. In March, ministers confirmed 16 standards would be defunded, including Team Leader and Chartered Manager. In August, co-investment rose to 25% for levy payers whose funds run out, with under-25s exempted at the last minute. On 1 October the £2,000 hiring payment for young recruits went live. FE Week also understands the government is looking at defunding more standards that look like generic professional development rather than a distinct occupation. Read together, the levy is being turned from an employer training budget into a youth employment budget.

The case against, and why it matters for AI skills

The objection is simple. Employers recruit for the job in front of them, not for an age band, and the jobs AI is changing fastest are mostly held by people already in post. If the aim is a workforce that can use AI well, the people who need retraining first are the finance assistant, the HR adviser and the operations coordinator who have done the job for ten years, not only the school leaver who has not started yet.

For a small business, a rise from £900 to £4,500 to retrain one existing employee is the kind of number that ends the conversation. For a large one, a rule that every adult apprentice needs matching cash changes the levy from a fund you spend into a fund you have to top up.

The other side deserves a fair hearing. The levy was sold as an apprenticeship fund, and a growing share has paid for higher-level qualifications for people who were already well qualified, which is the use Alan Milburn keeps pointing at. Youth starts really have fallen. A 25% contribution is a blunt instrument, but it is not an irrational one, and some employers will respond exactly as intended, by looking harder at a young recruit for the next role.

What current policy says about start dates

Current policy generally applies the funding rules in force when an apprenticeship starts. The GOV.UK funding policy for starts from 1 August 2026 puts it in one line: "We fund apprenticeships using the apprenticeship funding rules in place on the date the apprenticeship started." It lists exceptions for redundancy, releasing the completion payment and moving to a new version of a standard, and the funding rules themselves say the government may change them at any time.

Recent reforms protected existing learners. August's co-investment rise applied to new starts only, and Level 7 learners who began before the January cut-off are finishing on their original funding. However, transition arrangements for the reported 2027 proposal have not been published, so nobody can yet say how it would treat an apprentice who starts before it, or one whose programme runs past September 2027.

So continue with suitable planned training, but do not accelerate starts solely on an assumed funding guarantee. An apprenticeship needs a real role, a real reason to learn, a practical period of at least eight months after prior learning is counted, and protected off-the-job time, and enrolment typically takes about four weeks. A start that makes sense on today's terms still makes sense. One that only makes sense because of a hoped-for guarantee does not.

What to do before the Budget

Sources: FE Week, Employers face paying more for training older apprentices, Billy Camden, 17 October 2026, for the reported plan, the levy and budget figures, the DWP response and the "nonsensical" quotation; the Guardian, 17 October 2026, for the phased introduction from September 2027 and the senior policy figure's comments, as reported by FE Week and by Eastern Eye, which also reports the 40% fall in youth starts and that more than half of starts now go to people aged 25 and over; FE Week, DWP questions live blog, 12 October 2026, for the Milburn report timing; Hansard, House of Lords, 17 September 2026, for the Skills Minister's words, reproduced under the Open Parliament Licence; GOV.UK, Apprenticeship funding, policy for new starts from 1 August 2026, for current rates and the start-date principle, quoted directly; Skills England, ST1512, for the £18,000 funding band. This article describes reported proposals, not confirmed policy; checked 18 October 2026. TESS Group delivers apprenticeships for employees of all ages and has a commercial interest in how they are funded.