How the new hospitality apprenticeship scheme will work

The hospitality industry has been shouting for support as recruitment becomes increasingly difficult, but the government’s decision to extend its apprenticeship scheme could bring 50,000 young people into the workforce.

The expansion of the scheme will see the removal of the 5% levy on apprentices for under-25s and is also promising new apprenticeships in AI, hospitality, and engineering.

How will the scheme work?

The £725m package of reforms to the apprenticeship system was announced in last month’s Autumn Budget. It is directly aimed at people under 25-years old, says the Government in the press release announcing the changes.

The focus is on matching skills training with the jobs that are available locally to those taking part, it adds. Key to this is a £140m pilot programme to support local mayors being able to connect young people – “especially those not in education, employment or training (NEET)” – with apprenticeship opportunities at local employers.

There is also news for SMEs with the plan to cover the full cost of apprenticeships for eligible young people. This sees the removal of the 5% co-investment rate for SME’s, which was a barrier for some businesses.

The Government did offer SMEs some relief to rising staffing costs when it fully funded 20,000 new apprenticeships in April last year, but businesses have continued to suffer after the NICs hikes and changes to the minimum salary requirements for migrant workers.

This latest shakeup, though, is as much about retraining as getting people into the workforce. It includes access to short courses in “cutting-edge areas including AI (as a Level 4 apprenticeship), engineering and digital skills,” adds the Government, so employers can “upskill” their workforce on the job. These will roll out from April next year, and will help apprentices maintain their skillsets in a rapidly changing work environment.

For hospitality and retail businesses, it is hoped that there will be “new waves of foundation apprenticeships”. This is in addition to the Sector-based Work Academy Programme (SWAP), which was launched in May by the Department for Work and Pensions (DWP) and the sector’s leading trade body UKHospitality.

This aimed to deliver 100,000 work placements (up from its previous target of 80,000) to those receiving unemployment benefits, so they could gain skills to work in the industry.

Why is it being introduced?

In the simplest terms, this is about addressing unemployment among people under 25. BBC News reported last month that almost one million young people are not in work or education.

It shared figures from the Office for National Statistics that between July and September, there were 946,000 NEETs, down from 948,000 in the three months before. This equates to one in eight young people; and has been consistently above 900,000 since early 2024.

The reforms are hoped will “simplify and modernise the apprenticeship system,” says the Government, but also include more access to learning so businesses can see the impact in their workforce.

In an interview with BBC Radio 4’s Today programme, Skills Minister Baroness Jacqui Smith added: “The real priority for us with apprenticeships is to put right what we’ve seen over the last 10 years, which is a reduction of 40% in young people starting apprenticeships.”

However, some have criticised the reforms as not going far enough; and the decision to remove funding for level seven apprenticeships for people over the age of 22 has come under particular scrutiny.

The news has generally been received positively. Kate Nicholls, Chair of UKHospitality, said: “The addition of hospitality to the sectors that can access foundation apprenticeships will provide more routes into work for young people and I look forward to continuing to work with the Government on its skills policy.”

How can businesses get involved?

The reforms will take place over the next three years. The details for those businesses wanting to get involved haven’t been released as yet.

There are seven foundation apprenticeship schemes already in place though, which were launched in the autumn. These are in construction, digital, engineering and manufacturing, and health and social care. The new schemes will be in hospitality and retail, but details haven’t been unveiled as yet.

In the meantime, businesses in those areas could take stock of staffing to consider whether an apprentice would work. It could also be the time to look at any skills gaps and look at the short courses that the Government is rolling out to see if there is a potential match up there.

While apprentices can’t fill all levels of roles, the focus that the Government has on these schemes is worth taking advantage of as recruitment continues to be difficult; and as businesses juggle staying afloat with employee needs.