The government has announced a £725 million overhaul of the apprenticeship system, setting out plans to create 50,000 new placements over the next three years in an effort to address rising youth unemployment and strengthen the UK’s long-term economic prospects.
The reforms include a £140 million mayoral pilot programme giving regional leaders new powers to connect young people — particularly those not in education, employment or training (NEET) — with apprenticeship opportunities at local employers. Ministers say the changes will open thousands of new routes into skilled work across the country, with a sharper focus on aligning training with local labour market demand.
A central pillar of the reforms is a commitment to cover the full cost of apprenticeships for eligible under-25s at small and medium-sized businesses — a move aimed at removing the financial barriers that have discouraged thousands of SMEs from hiring apprentices.
The government will also launch new foundation apprenticeships in industries such as hospitality and retail, intended to help young people enter the workforce more quickly. Expansion plans for growth sectors — including digital, engineering, health and advanced manufacturing — are expected to create clearer pathways into roles experiencing chronic skills shortages.
Sheila Flavell CBE, COO of FDM Group, called the investment a “crucial step” in preparing young people for a job market undergoing rapid transformation.
“As AI adoption accelerates across every sector, the demand for digital and technical skills is rising sharply,” she said. “Our research shows that more than half of organisations now expect AI capabilities in all early-career roles, yet only 6% feel their teams are equipped with these skills.”
Flavell said embedding practical AI and digital literacy into early-career training was essential to ensuring the UK workforce remained competitive.
Sachin Agrawal, Managing Director for Zoho UK, said the reforms were a “significant step towards modernising the UK’s skills infrastructure,” particularly in regions historically underserved by training and investment.
“By building a more evenly distributed skills base, the UK can attract greater investment from the tech industry into hiring and upskilling local talent,” he said. “Flexible short courses, foundation apprenticeships and new pathways in AI and digital engineering mark an important shift toward modular, competency-based training.”
From April 2026, the reforms will introduce a suite of short, flexible training courses in critical skills areas as well as a new Level 4 apprenticeship in artificial intelligence, designed to meet employer demand for future-focused capabilities.
The package represents the most significant restructuring of the apprenticeship system in a decade and is aimed at reversing a sharp decline in participation — apprenticeship starts among young people have fallen by almost 40% since 2015/16.
Ministers say the new measures will simplify pathways, expand access and ensure training reflects the needs of modern industries and regional economies.