The government has announced a £725m reform of the apprenticeship system and outlined plans to create 50,000 new jobs over the next three years to tackle rising youth unemployment and strengthen the UK’s long-term economic prospects.
The reforms include a £140m mayoral pilot scheme that will give regional leaders new powers to connect young people – particularly those not in education, employment or training (NEET) – with training opportunities with local employers. Ministers say the changes will open up thousands of new routes into skilled work across the country, with a greater focus on tailoring training to local labor market demand.
A key pillar of the reforms is a commitment to cover the full cost of training eligible under-25s in small and medium-sized businesses – a move aimed at removing the financial barriers that have prevented thousands of SMEs from taking on trainees.
The government will also introduce new basic training courses in sectors such as hospitality and retail to help young people enter the world of work more quickly. Expansion plans for growth sectors – including digital, technology, healthcare and advanced manufacturing – are expected to create clearer pathways for jobs affected by chronic skills shortages.
Sheila Flavell CBE, COO of FDM Group, described the investment as a “critical step” in preparing young people for a rapidly changing job market.
“As AI adoption increases across all sectors, demand for digital and technical skills is surging,” she said. “Our research shows that more than half of companies now expect AI skills in all roles early in their careers, yet only 6% believe their teams have these skills.”
Flavell said embedding practical AI and digital skills into vocational training is crucial to ensuring the UK workforce remains competitive.
Sachin Agrawal, managing director of Zoho UK, said the reforms were a “significant step towards modernizing the UK’s skills infrastructure”, particularly in regions that have historically been underserved in training and investment.
“By building a more evenly distributed skills base, the UK can attract greater investment from the technology industry in hiring and upskilling local talent,” he said. “Flexible short courses, basic training and new approaches to AI and digital engineering mark an important shift towards modular, competency-based training.”
From April 2026, the reforms will introduce a range of short, flexible training courses in critical skills areas, as well as new Level 4 training in artificial intelligence, designed to meet employers’ demand for future-focused skills.
The package represents the most significant shake-up of the apprenticeship system in a decade and aims to reverse a sharp decline in participation – young people starting apprenticeships have fallen by almost 40% since 2015/16.
Ministers say the new measures will simplify pathways, expand access and ensure training meets the needs of modern industries and regional economies.
