Government announces fully funded apprenticeships for under 25s

Government Announces Fully Funded Apprenticeships for 16–24 Year Olds: A Major Opportunity for the RACHP Sector

The Government has announced a significant change to apprenticeship funding that will make it easier and more affordable for employers to invest in the next generation of talent.

From 1 August 2026, employers recruiting eligible apprentices aged 16 to 24 will receive 100% government funding for apprenticeship training and assessment costs, even after their Apprenticeship Levy funds have been exhausted. This represents one of the most significant changes to apprenticeship funding in recent years and provides a valuable opportunity for employers across the Refrigeration, Air Conditioning and Heat Pump (RACHP) sector.

What Has Changed?

Previously, once an employer's levy funds had been exhausted, they were required to contribute towards the cost of apprenticeship training through a co-investment model.

From 1 August 2026, employers recruiting eligible apprentices aged 16–24 will no longer have to make this contribution.

This means:

• 100% of apprenticeship training and assessment costs will be funded by Government for eligible apprentices aged 16–24.
• The change applies to new apprenticeship starts from 1 August 2026.
• It covers apprenticeships, Foundation Apprenticeships and Apprenticeship Units within the wider Growth and Skills offer.
• Employers recruiting apprentices aged 25 and over will continue to contribute 25% of training and assessment costs once levy funds have been exhausted.

For example, a Level 2 apprenticeship with a £3,500 funding band would previously have required an employer contribution of £875 once levy funding had been used. From August, that employer contribution falls to £0 for eligible apprentices under the age of  

Why This Matters for the RACHP Sector

The RACHP industry continues to face significant workforce challenges, with employers consistently identifying skills shortages, an ageing workforce and increasing demand for qualified engineers as major barriers to growth.

At the same time, the transition to low-carbon heating, refrigeration and cooling technologies is creating demand for new technical skills across the sector.

Reducing the cost of employing young apprentices removes one of the barriers that many businesses—particularly SMEs—have faced when investing in future talent.

For employers, this means:

• Lower recruitment and training costs.
• Greater confidence to recruit additional apprentices.
• Improved succession planning.
• An opportunity to develop skilled engineers who understand their business from the outset.
• Increased support for building long-term workforce resilience.

For many businesses, this could be the ideal time to review workforce plans and consider expanding apprenticeship recruitment over the next 12 months.

Additional Support for Young People

Alongside the funding changes, Government has announced plans to introduce a targeted bursary for eligible young people whose household finances could otherwise prevent them from starting an apprenticeship.

Further details on eligibility and how the bursary will operate will be released later this year.

This additional support aims to ensure talented young people from all backgrounds have the opportunity to enter skilled careers without financial barriers.

Further Employer Incentives

Employers recruiting apprentices under the age of 25 may also benefit from additional financial support, including:

• Up to £6,000 in available hiring incentives and grants (where eligible).
• No employer National Insurance contributions for apprentices under 25.
• Fully funded apprenticeship training and assessment for eligible new starters aged 16–24.

Together, these measures significantly reduce the cost of recruiting and developing new talent.

What This Means for IOR Members

For members of the Institute of Refrigeration, these changes present a real opportunity to strengthen the industry's future workforce.

The RACHP sector has repeatedly highlighted the need to attract more young people into technical careers, improve diversity across the profession and create clearer progression pathways into employment. Removing training costs for younger apprentices is a positive step towards achieving these ambitions.

Through the IOR Industry Skills Alliance, employers, training providers, awarding organisations and industry partners are already working collaboratively to improve skills, simplify career pathways and increase employer engagement.

This latest funding announcement complements that work and provides another practical reason for businesses to invest in apprenticeships.

If the sector is to meet future demand, embrace new technologies and support the UK's net zero ambitions, attracting and developing the next generation of engineers must remain a collective priority.

Now is an excellent time for employers to review their workforce strategy, engage with apprenticeship providers and consider how apprenticeships can support future business growth while taking advantage of the enhanced government funding available from August 2026.

https://www.gov.uk/government/news/government-invests-in-young-people-with-more-opportunities-close-to-home