Andy Burnham has unveiled plans to offer businesses £2,000 lump sum payments from October 2026 as part of efforts to reduce the number of young people claiming Department for Work and Pensions (DWP) benefits. The new Labour government aims to strengthen the connection between education and employment, with a bursary drive that includes cash incentives for parents whose children take up apprenticeships.
Tackling the Rising Benefits Bill
The Milburn Review recently warned that over a million young people are at risk of spending their lives on benefits, prompting urgent action. From October, smaller firms hiring apprentices under 25 will receive a £2,000 hiring bonus. This initiative is designed to encourage businesses to invest in young talent and reduce long-term welfare dependency.
A government press release stated: "This builds on wider investment already helping colleges grow where demand is highest – we are investing £9 billion into 16 to 19 education in 26-27, enabling providers to grow high-quality pathways for thousands more learners."
Additional Funding for Education and Training
Beyond the hiring bonus, the government is committing a further £287 million to create over 22,000 additional places across colleges and post-16 providers. Covering 87 projects across England, this includes expanding construction courses in fields like bricklaying, plumbing, and decorating. The aim is to equip young people with skills needed for in-demand careers.
Philip Hoare, Group Chief Executive of Balfour Beatty, welcomed the announcement: "Apprenticeships change lives. They open doors to skilled careers, help employers build the workforce they need and play a vital role in supporting long-term economic growth. We're incredibly supportive of the Government's commitment to removing barriers that prevent young people from accessing these opportunities and increasing support for employers investing in the next generation."
Impact of the Milburn Review
The Milburn Review highlighted the stark difference in outcomes based on how long young people remain not in education, employment, or training (NEET). Of those NEET for less than a year, 65% return to participation the following year; for those NEET for more than a year, only 25% do. This underscores the urgency of early intervention.
Support for Apprenticeship Bursaries
Simon Ashworth, Deputy CEO and Director of Policy at the Association of Education and Learning Providers, praised the new bursary of up to £4,500 a year: "It is a welcome step that removes a significant financial barrier preventing some young people from both taking up and completing apprenticeship. By tackling the household benefit trap, more young people will be able to choose an apprenticeship based on their ambitions rather than their family's finances. If we are serious about reducing the number of young people who are not in education, employment or training, we have to make it easier for employers to recruit them. Fully funding apprenticeship training for eligible under-25s is a major step towards that goal and should encourage many more businesses to invest in the next generation of young talent."
These measures form part of broader Universal Credit reforms aimed at making work pay and reducing the benefits bill. The government hopes that by incentivising apprenticeships and investing in education, it can create a skilled workforce and lower long-term welfare costs.
