£4,500 benefits top-up for families to encourage teens into apprenticeships

Some families on benefits will receive up to £4,500 a year in a bid to encourage children to take up apprenticeships. Currently, parents can lose a portion of their child benefit when their 16- or 17-year-old leaves full-time education, under a counter-intuitive incentive that stops teenagers entering work. As part of a drive to encourage more youngsters into jobs, ministers will press ahead with plans to offer grants to families to stop them discouraging their teenage children from becoming apprentices. This cash will offset the loss of benefits they would have previously experienced. The scheme was first mooted by Work and Pensions Secretary Pat McFadden, who has remained in the role under Andy Burnham’s Government. The i Paper revealed on Monday that plans for a “targeted” approach to persuading apprenticeship take-up is to go ahead. It has since been confirmed that families on universal credit will receive a bursary worth up to £4,500 a year when a young person in their household takes up an apprenticeship, rather than lose some of the benefits they receive for that child. The bursary will be funded through the £1bn additional investment in the Growth and Skills Levy announced in May. It sits alongside a package of incentives to get employers to hire young people, including fully funded apprenticeship training for all eligible under-25s from 1 August, relief on employer national insurance contributions, and up to £8,000 in financial support for businesses that take on young apprentices. Announcing the policy in a joint statement with the Department for Education on Tuesday, McFadden said: “Every young person deserves the chance to build a future they can be proud of, and our welfare system should be a springboard to opportunity, not a barrier to it.” He added that the new bursary would make sure that “cost is not the reason someone misses out” on employment, and called the changes a “serious investment in the next generation and in the future of our economy”. The measures form part of a wider drive to deliver 50,000 new youth apprenticeships by the end of this Parliament. McFadden has previously said the benefits rules disincentivise a “small number” of families. There is no public record of how many exactly are affected. Families who claim universal credit can lose between £17 and £339 a week in child benefit if a 16- or 17-year-old in the household becomes an apprentice instead of remaining in full-time education, a report by the Social Security Advisory Committee previously found. Welfare reform a key test of Burnham’s premiership It comes as Burnham faces one of his first major challenges as Prime Minister, as he seeks to set the tone for his Government on a totemic issue with voters: the benefits bill. After Labour’s failed attempt to slash welfare spending last year, Burnham’s political enemies view his approach to reform as a measure of his political authority. Meanwhile, Britain’s international investors view it as a key test of his fiscal credibility. The Prime Minister is keen to show he is not baulking at tricky issues, saying: “We’ve got to get really serious as a country at getting the welfare bill down.” Burnham arrives in No 10 as the rate of joblessness among 16- to 24-year-olds is the highest in more than a decade, with one million young people left out of work and education. The welfare bill is set to exceed £330bn this year, about £50bn more than before the Covid pandemic. An attempt to slash £5bn last year ended with Sir Keir Starmer’s authority in tatters. There are already signs Burnham will not face the same level of rebellion. Keeping McFadden in place as Work and Pensions Secretary last week as Burnham announced the new Cabinet is a recognition of the success he has already achieved in convincing Labour MPs that welfare changes are not being made from the wrong end of the telescope. One of the major criticisms of Starmer and his chancellor, Rachel Reeves, was that they came up with a plan to save money and retrofitted welfare changes into it. Offering benefits top-ups to families with children going into apprenticeships aligns with Burnham’s plan to do things differently. He has spoken at length about giving young people the support they need to find jobs. Nevertheless, central to his reform is that certain benefits, including mental health support, will become “conditional” on people taking work opportunities rather than staying at home. The cost of personal independence payments (PIP) to young people has risen sharply in recent years, alongside a surge in claims linked to mental health and neurodevelopmental conditions, such as anxiety, depression, ADHD and autism. PIP is available regardless of whether someone is working or studying. Some youngsters can receive significantly more through sickness benefits than they would earn from a part-time minimum wage job. Helen Whately, the shadow Work and Pensions Secretary, said the “incentives are topsy-turvy” and were pushing young people towards a lifetime on welfare. The concern is not limited to the opposition. While some Labour MPs have also come around to changing welfare payments, some maintain reservations. Labour MP: We have got to fix welfare “If I had my way, I’d remove PIP for young people with mild anxiety,” a Labour MP told The i Paper. “I say to parents: why are your kids on full PIP? Not only is it important for them to get off it, but it’s an important symbol to the electorate.” The MP said the 2025 rebellion by Labour MPs over welfare reforms had lodged in the minds of voters. “Last year’s attempt to change welfare was a strategic error. Because it went badly, people noticed it. If we had never tried to touch it, people might not have noticed, but since they did, we now have got to fix it,” the MP said. Burnham believes a push for further education is essential to bringing down the number of young Neets (not in education, employment or training), which has passed a million for the first time despite 84 per cent of them saying they want to work. In an interview with the BBC on Monday, he said he might “increase the conditions required to receive benefits”. However, he said: “It’s about changing the nature of the support and making some of the support conditional upon people taking opportunities that are presented in front of them.” But he stopped short of criticising claimants. “I wouldn’t necessarily go straight to blaming those people,” he said. “There are people in the benefits system, young people in their twenties, who have been, I would say, quite seriously let down because the support wasn’t there for them when it should have been there.” Accelerating incentives for businesses to employ young people Incentives to encourage businesses to invest in youth apprenticeships were already being rolled out under the previous chancellor, but ministers are also looking into whether those can be accelerated. Youth unemployment tsar Alan Milburn is set to propose overhauling the system to get young people into work and drive down the benefits bill in a report to be published this autumn. Separately, Sir Stephen Timms, the disability minister also retained in post by Burnham, will deliver a report on rationalising PIP payments around the same time. One of Burnham’s first announcements was a cap on bus fares, seen as the carrot approach to helping people search for jobs. How far his MPs will let him use the stick alongside the carrot is an open question.