The government has announced a new scheme providing businesses with a £3,000 grant for every young person they hire aged 18-24 who has been on universal credit (UC) and looking for work for six months.
With apprenticeship starts amongst young people down 40% in the last decade and almost one million young people not earning or learning, ministers hope it will help to tackle the UK’s youth employment problem.
An “apprenticeship incentive” of £2,000 will also be given for each new employee aged 16-24 taken on by a small or medium sized business.
In addition, the jobs guarantee scheme, which provides six months of paid work for young people on UC and looking for work for 18 months or more, will be expanded from 18-21-year-olds to 18-24-year olds.
The government says that over the next three years, the £3,000 grant will support 60,000 young people and the jobs guarantee change will create more than 35,000 extra jobs, increasing the total supported through the scheme to around 90,000.
Today is the latest in a series of announcements on youth unemployment and apprenticeships.
The government has previously announced new short training courses in AI, engineering and digital skills.
In the November 2025 Budget, chancellor Rachel Reeves said that the 5% levy that SMEs currently need to pay for apprenticeships will be removed which means training costs for all eligible under 25 apprentices will be fully funded.
Work and pensions secretary Pat McFadden said:
“These measures will give life-changing opportunities to young people and significantly reverse the increase we inherited in those not in education, employment or training.
“We are focusing funding where it’s needed most and giving employers the flexibility and support they’ve asked for.
These reforms will give young people a vital first step on the career ladder and help business leaders recruit the talent that will grow their companies.”
Reaction to the new youth unemployment announcements
Tina McKenzie, policy chair, Federation of Small Businesses, said:
“This is a game-changer to tackle youth unemployment and inactivity, which FSB has campaigned about as levels remain stubbornly high after the pandemic. Creating good opportunities for young people is absolutely crucial – for individuals themselves, for small businesses and for local economies and people. The new incentives announced today are a clear and decisive step forward – helping small firms to hire those on universal credit and to create apprenticeships.
“It’s the right choice to prioritise public funding to back small employers in particular to provide apprenticeships for young people. The UK can’t afford a lost generation amid rising employment costs, therefore we’re pleased the government has listened carefully on this and stepped up with this pro-jobs, pro-opportunities package.”
John Foster, chief policy and campaigns director, Confederation of British Industry, said:
“There is a strong moral and economic imperative for business and government to work together to tackle the rising number of people not in employment, education or training. Financial incentives to create extra opportunities for young people are a welcome step in supporting employers as they navigate the ongoing cost pressures shaping recruitment decisions.”
Polly Dhaliwal, chief operating officer, Enterprise Nation, said:
“Small businesses are where most young people get their first real experience of work, and our community of more than 170,000 small businesses wants to hire young talent but needs the risk taken out of it. That’s exactly what these measures do.
“The £3,000 youth jobs grant and the £2,000 apprenticeship incentive for smaller employers are practical, meaningful support that will make a real difference to whether a small business takes a chance on a young person. Enterprise Nation will be working to make sure every eligible small business knows what’s available and how to access it.”
Kate Shoesmith, director of policy, British Chambers of Commerce, said:
“The firms we represent are passionate about giving young people opportunities, building their talent pipeline, and futureproofing their workforce.
“With labour costs the most pressing concern for businesses right now, we’ve consistently called for better pathways to support employers to do the right thing. That’s why we welcome a number of these new measures, particularly extra funding support. They are a positive step forward in answering business concerns and enabling employers to transform the lives of more young people.”
Laura-Jane Rawlings, CEO, Youth Employment UK, said:
“Employer incentives and job creation are critical if we are serious about helping more young people move into good work, and it is encouraging to see government backing measures that support businesses to open up opportunities for the next generation.
“It is also positive to see a renewed focus on apprenticeships for young people. A strong skills system must work for employers while ensuring that young people — particularly those facing the greatest barriers — can see clear pathways into training, apprenticeships and sustainable employment.”