The government claims that the UK’s economic future relies on leading cutting-edge innovation in AI, a sector prioritised for growth in its Industrial Strategy, which featured prominently in today’s Budget. Today’s changes also included an announcement that more small businesses can invest for ‘free’ in future talent.
Is it really free?
The intention is for more businesses to encourage young people into work without the burden of part-funding the apprenticeship. The Chancellor stated that this is a change to fully fund SME apprenticeships for eligible people under 25, with £725 million earmarked, although details on how this will work are unclear. It also remains to be seen whether this will kick in immediately, from the new financial year in April 2026 or at some later date. Either way, this appears to be a something of a change in direction from recent apprenticeship changes, which axed some apprenticeship funding and take effect from January 2026.
How is it expected to work?
Since the apprenticeship levy was introduced in 2017, only large employers with a payroll in excess of £3 million pay into the levy at a rate of 0.5% of salary costs. SMEs make a co-investment payment, currently of 5%. The 5% was scrapped in 2024 for apprentices up to 22 years old. This relief is now extended to those aged 22 to 24.
Other apprenticeship changes
The government hope to “simplify the apprenticeship system and make it more efficient” by making various other changes, including:
- Introducing short courses from April 2026, and
- Changing the expiry window to 12 months
Other changes impacting young people
- The “Youth Guarantee” – the government will guarantee a 6-month paid work placement for every eligible 18–21-year-old who has been on Universal Credit and looking for work for 18 months. £820 million has been set aside for this.
Changes to national living wage and national minimum wage from 1 April 2026
- National Living Wage – an increase from £12.21 to £12.71 an hour.
- National Minimum Wage: workers aged 18 to 20– an increase from £10.00 to £10.85 an hour.
National Minimum Wage: 16 and 17-year-olds (and apprentices) – an increase from £7.55 to £8 an hour.
Keep up to date with the official Apprenticeships website for further information.