Last week the Chancellor of the Exchequer, Rt Hon John Healey MP, delivered his first Budget and the first fiscal event under Andy Burnham as Prime Minister. Healey acknowledged the difficult economic and fiscal backdrop created by the ongoing conflict in the Middle East, and stressed the Budget was built on fiscal discipline. He promised “breathing space for today” on the cost of living and the cost of doing business, alongside “fresh hope for the future”.
Healey set out a series of measures on skills and youth employment, ahead of Alan Milburn’s final report for the Young People and Work Review and the conclusion of Sir Stephen Timms’ review of Personal Independence Payments, which are both due in November.
Key announcements included the £100 million over two years to expand local apprenticeship services as well as new place-based investment. These build on the Youth Employment and Skills Package announced in the Spring, including the Jobs Guarantee.
Our research with employers shows that employers want to recruit young people, but opportunity creation is uneven, with training costs, wider financial pressures and limited staff time to supervise and support young recruits among their biggest barriers.
These measures are a real opportunity to improve access to employment and skills but their success will also depend on whether employers are able to create the opportunities that young people move into.
Direct routes into work for young people
The government has said it will not write off the nearly one million young people who are not in education, employment or training (NEET).
As part of this, the Chancellor confirmed the Jobs Guarantee for eligible 18 to 24-year-olds on Universal Credit, alongside the Youth Employment and Skills Package which includes the £3,000 Youth Jobs Grant for businesses hiring eligible young unemployed people. A Young Entrepreneurs Allowance will also be piloted in England to support living costs during the first year of setting up a business, in recognition that access to financial support can be a barrier for young founders.
Apprenticeships and employer demand
Healey also announced £100 million to expand Mayoral Apprenticeship Brokerage Pilots from seven to 14 areas which will allow all current mayors to offer tailored support to young people and employers, particularly small and medium-sized businesses.
The Budget also included changes requiring at least 3% of the workforce on large government construction and infrastructure projects to be apprentices, building on the £2,000 apprenticeship hiring payment for non-levy paying employers.
Place-based skills
Healey announced a number of region-specific announcements, many of them tied to defence skills and several in the devolved nations.
In England, Team Plymouth will receive £3 million to help young people who are NEET into the local defence industry, and £28 million is proposed to expand the Leeds College of Building, subject to business cases. In Scotland, £20 million of co-funding with the Scottish Government will support two Defence Technical Excellence Colleges, in the east and west of the country, creating careers for school leavers in the defence sector. In Wales, a £5 million bridging payment will help a Defence Technical Excellence College prepare to take its first students, and in Northern Ireland almost £7 million has been announced for defence-related skills, alongside work on a region-wide defence skills and apprenticeship programme.
The Plymouth announcement is a useful example of linking support for young people directly to local skills shortages, and it will be worth watching what it delivers. Place-based approaches of this kind work best where employers help to shape them from the outset.
Upskilling and access to talent
The Chancellor also confirmed changes to Skilled Worker visas from 2027, including lower occupation-specific salary thresholds and a curtailment period of up to six months for the highest skilled workers. Employers will want to understand how these changes sit alongside efforts to build the domestic skills pipeline for young people.
The Union Learning Fund will also be re-established in England, with £15 million a year from 2027-28 to support learning and training among people already in work.
Looking ahead
In his speech, the Chancellor confirmed that Alan Milburn’s final Young People and Work Review and the conclusion of the Timms Review of Personal Independence Payment are due next month. The government will set out its response before the end of the year, followed by a White Paper in early 2027 and legislation later that year.
For these announcements to be as impactful as possible, employers need to have the conditions that allow them to create opportunities for young people. Our research with the Learning and Work Institute, From Appetite to Opportunity, found that employer appetite for hiring young people is strong, with almost a quarter of employers expecting to increase their recruitment of young people over the next year. Incentives are a welcome step, but different employers need different forms of support, and local apprenticeship services will be most effective where they are designed with employers in mind.
As reforms develop, we would also welcome continued recognition of the role training plays in supporting people aged over 25, including those changing careers, returning to work or already in post, and to keeping training affordable and accessible for the employers who provide it.
At this pivotal moment for the sector, with the forthcoming Milburn and Timms reviews, and subsequent Government response, we are keen to see employer demand sit alongside preparing young people for work as a priority. These measures can deliver meaningful, accessible routes into employment by creating the conditions for employers of every size to invest, grow and support young people.
You can read the official Budget document here.