Small business owners have backed a new youth employment drive that includes a Youth Jobs Grant providing businesses with £3,000 for every young person they hire.
The government is preparing to introduce a package of measures, backed by £1 billion, to help create 200,000 jobs for young people, alongside the biggest transformation of apprenticeships in a decade.
The move has been welcomed by organisations representing small business owners including Small Business Britain, Family Business UK and the Federation of Small Businesses (FSB) which described it as a “game-changer”.
The new Youth Jobs Grant will give businesses £3,000 for every young person they hire aged from 18 to 24 who has been on Universal Credit and looking for work for six months. This is expected to support 60,000 young people over three years.
The Department for Work and Pensions (DWP) also announced expansion of the Jobs Guarantee scheme to a wider age range, extending it from 18 to 21 years to 18 to 24.
This is intended to create more than 35,000 extra subsidised jobs, bringing the total to be supported through the scheme to over 90,000 in the next three years.
It is introducing an Apprenticeship Incentive of £2,000 for each new employee aged 16 to 24 taken on by a small or medium-sized business. As part of wider reforms, this will drive progress to the Government’s target of creating 50,000 more apprenticeships.
DWP has also announced further reforms to the Growth and Skills Levy to prioritise young apprentices, providing them with access to bite-sized training courses.
Tina McKenzie, policy chair at the FSB, 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.”
Michelle Ovens, CEO and founder of Small Business Britain, welcomed the announcement, adding: “Small businesses have long valued the energy, creativity and talent that young people bring and provide a crucial training ground to nurture the UK’s next generation.
“We need to give the nation’s 5.6 million small businesses as much support to grow as possible. Doing so will not only empower firms at the heart of their local communities but enable them to provide vital skills training and meaningful work for young people entering today’s workforce.”
Neil Davy, CEO of Family Business UK, commented: “A shortage of skilled workers is a key barrier to growth for more than a quarter of family businesses. A third also believe that more flexible training options are needed to help build a future-ready workforce.
“Family firms have often struggled to utilise funding through the previous Apprenticeship Levy, and this change is one we have been calling for. It is essential the apprenticeship system remains flexible enough for family businesses to support the next generation of the workforce – including those who may become future leaders in that business.”
The Government is set to announce further details on accessing the schemes later in 2026.
