Families on Universal Credit will be able to get a grant of up to £4,500 a year when a young person in the family starts an apprenticeship, the Department for Work and Pensions and the Department for Education have announced.
The payment is designed to replace lost earnings when a 16- to 18-year-old leaves full-time education for paid training. The government has said it is targeting what it calls “a small number of Global Credit households in the current apprenticeship waiver”, and it is expected to reach a few thousand households.
The bursary will be paid from a pot of £30m funded by the growth and skills tax, which applies to employers with annual payroll debts of more than £3m. The government said bursaries and free training for under-25s are being funded by £1bn of extra investment in the levy announced in May. The final scholarship amount will be confirmed later, it added.
It follows a Social Security Advisory Committee report, published on 23 April, which found the benefits system was producing what it called “perverse effects” on post-16 choices. The committee said the loss of benefits when a child starts an apprenticeship ranges from around £17 to more than £330 a week, depending on home circumstances.
The committee found that a single parent with a disabled child could lose benefits of up to £340 a week, compared to an expected apprenticeship wage of £258 a week. Because apprenticeships are considered paid work, parents can lose Child Benefit and Universal Credit features, while parents of young people in education continue to receive support.
Dr Stephen Brien, chairman of the Social Security Advisory Committee, said: “The social security system is neutral in the decisions young people make when they turn 16. As it stands, it can penalize families when young people go into apprenticeships, even though this is an option the government actively encourages.”
Work and Pensions Secretary Pat McFadden said: “By providing bursaries to those most in need and fully funding apprenticeships, we are confident that cost is not a reason to miss out.”
For recruiters, the scholarship remains close to the steps with strong dates. From 1 August the government will fully fund apprenticeship training for all eligible under-25s, extending a promise first made in December’s £725m apprenticeship reform package. From October 2026, small firms will receive a £2,000 recruitment bonus for taking on an apprentice under the age of 25. The Government has said that SMEs employing young students can access up to £8,000 in support, and that National Insurance contributions apply to students under the age of 25.
The government said these measures should bring in 50,000 new students by the end of this Parliament. It is also investing a further £287m to create more than 22,000 extra places across 87 colleges and post-16 projects in England.
Official figures show that more than a million 16 to 24-year-olds in England are not in education, employment or training, almost one in eight. Alan Milburn’s review of youth unemployment warned that one in six could become Neet within five years without action.
Prime Minister Andy Burnham has said he is “on a mission” to reduce Neet numbers. “The trend is increasing right now, so the first thing I have to do is stop that increase,” he said.
Helen Whately, shadow pensions secretary, said: “I’m glad Burnham agrees: apprenticeships are a good thing, and we need more.” He said the program had “no payback” and was “a waste of money that has already been made elsewhere. So, either it’s another unfunded announcement, or Andy Burnham is not being direct with us about his plans.”
Simon Ashworth, deputy chief executive of the Association of Education and Learning Providers, said: “By facing the challenge of home benefits, more young people will be able to choose an apprenticeship based on their own interests rather than their family’s finances.”
