£3,000 to hire a young person: The government’s response to youth unemployment

The government has announced a £1 billion youth employment package that includes direct cash incentives for businesses that hire young people.

If you employ staff, or have been thinking about it, the headline numbers are worth knowing. 

Almost a million young people are not in education, employment or training. Youth unemployment has hit 16.1%, its highest level in over a decade. The package is the government’s attempt to reverse that, and small businesses are central to how it is supposed to work.

The Youth Jobs Grant: £3,000 per hire 

The biggest new measure is the Youth Jobs Grant. If you hire someone aged 18 to 24 who has been on Universal Credit and looking for work for six months or more, your business will receive £3,000. 

The government expects this to support 60,000 young people over three years, and it applies to businesses of any size. 

This is separate from the existing Jobs Guarantee, which provides fully subsidised six-month placements for young people who have been out of work for 18 months. The scheme is also being expanded, from 18 to 21-year-olds to 18 to 24-year-olds, and is expected to support over 90,000 young people in total. 

The Jobs Guarantee is currently in Phase One across six areas: Birmingham and Solihull, East Midlands, Greater Manchester, Hertfordshire and Essex, Central and East Scotland, and Southwest and Southeast Wales. National rollout follows from autumn of 2026. 

Apprenticeship incentive: £2,000 for SMEs 

SMEs that take on an apprentice aged 16 to 24 will receive a £2,000 incentive payment. This builds on the existing foundation apprenticeship incentive and is part of a push to create 50,000 more apprenticeships over three years. 

The government has also scrapped the 5% co-investment for apprentices under 25 at SMEs, meaning training costs are now fully funded by the government.

If you have previously ruled out apprenticeships because of cost, the calculation has changed. 

Foundation apprenticeships are also expanding into hospitality and retail from April 2026, adding to the existing programmes in engineering, manufacturing, digital and health and social care. These are aimed at 16 to 21-year-olds and last eight months. 

New short courses and apprenticeship units 

From April 2026, the renamed Growth and Skills Levy will fund short, flexible training courses called apprenticeship units. The first seven cover areas, including AI leadership, electric vehicle charging, solar PV installation and welding. 

These are designed to let businesses upskill existing staff without committing to a full apprenticeship programme. For small firms in trades, construction or tech, this could be a practical way to access levy-funded training for the first time. 

The flip side

Some existing apprenticeship standards are being defunded, including Team Leader, Operations Manager, Chartered Manager and Coaching Professional. If you currently use any of these for staff development, check the funding rules for what is changing and when. 

Total investment 

The additional £1 billion announced takes the total investment in the Youth Guarantee and Growth and Skills Levy to £2.5 billion over the spending review period.  

The government says this will support almost one million young people and deliver up to 500,000 opportunities, broken down roughly as: 

• 295,000 training and work experience opportunities 

• 60,000 hiring incentives (the Youth Jobs Grant) 

• 90,000 Jobs Guarantee placements 

• 50,000 apprenticeships 

The Enterprise Nation view 

Polly Dhaliwal, chief operating officer of 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." 

What to do now 

• Check whether the Youth Jobs Grant applies to you: If you are hiring, or considering it, and the candidate is aged 18 to 24 and has been on Universal Credit for six months or more, you could be eligible for £3,000. Watch for the detailed guidance on GOV.UK.

• Look at apprenticeships again: Training costs for under-25s at SMEs are now fully funded, with a £2,000 incentive on top. The find employer schemes page on GOV.UK sets out what funding is available and how to access it. 

• Review the new short courses: If a full apprenticeship does not fit your business, the new apprenticeship units launching from April may offer a more flexible route to upskill staff in areas like AI, digital and engineering. 

• Check what is being defunded: If you are currently using apprenticeship standards for management or leadership training, check whether those standards will continue to be funded under the Growth and Skills Levy changes. 

The Alan Milburn investigation into youth inactivity is expected to report interim findings this spring, with further reforms likely. We will cover those as they come. 

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