Parents on benefits will be paid up to £4,500 a year to encourage their children into apprenticeships, the government has announced, in a bid to reverse the “perverse effects” of a welfare system that currently penalises families when a young person starts work.
The bursary is designed to replace Universal Credit payments that households lose when a child takes up an apprenticeship. Currently, families can see their benefits cut by anywhere from £17 to £330 a week, creating a financial disincentive that critics say is fuelling a rise in young people not in education, employment or training (Neet).
“Parents on benefits get up to £4,500 bursary to replace lost Universal Credit if child starts apprenticeship.”
Official figures show more than a million people aged 16 to 24 are currently Neet, a trend the government is desperate to reverse. A recent report by former Health Secretary Alan Milburn warned that one in six young people could be Neet within five years without urgent action.
The problem was laid bare in a Social Security Advisory Committee report, which highlighted how single parents with a disabled child could lose up to £340 per week in benefits if their child started an apprenticeship – more than the expected apprenticeship salary of £258 per week. Because apprenticeships are classed as paid employment, benefit payments are slashed, trapping families in a system that actively discourages work.
The new bursary, expected to benefit a few thousand households, will be funded from a £30m pot drawn from the growth and skills levy – a tax on employers with annual wage bills over £3m. It is part of a wider package that includes full funding for apprenticeship training for under-25s and additional support for employers.
Work and Pensions Secretary Pat McFadden said: “By providing bursaries to those who need them most and fully funding apprenticeship training, we are making sure cost is not the reason someone misses out.”
Prime Minister Andy Burnham, who has staked his reputation on tackling the Neet crisis, acknowledged the challenge ahead. “The trend is rising at the moment, so the first thing I’ve got to do is to stop that rise,” he said.
The Conservatives welcomed Burnham’s support for apprenticeships but attacked the funding. Shadow Work and Pensions Secretary Helen Whately said the plan was “uncosted” and accused the prime minister of raiding existing budgets. “It is spending money already committed elsewhere. So, either it is another unfunded announcement, or Andy Burnham is not being straight with us about his plans,” she said.
The bursary aims to remove a barrier that has long distorted choices, but with the number of Neet young people already above a million and rising, the question is whether a few thousand payments can halt a growing crisis.