Should parents on benefits get £4,500 if their child starts an apprenticeship?

Some parents on benefits could receive up to £4,500 a year if their child takes up an apprenticeship, the government has announced.

The bursary will end a quirk in the system that sees these families lose more money through benefits than the child earns in apprenticeship wages.

Because apprenticeships count as paid employment, households currently lose between £17 and £330 a week in benefit payments when a young person starts one – with single parents of disabled children potentially losing up to £340 a week, more than the average apprenticeship salary of £258.

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A Social Security Advisory Committee report published earlier this year described the resulting “perverse effects” on young people’s choices, warning that benefit rules treat full-time study and apprenticeships as two very different things.

The consequences can be serious for families, said Ben Rowland, chief executive of the Association of Learning Providers.

“Sometimes providers had put in huge effort to get a young person an apprenticeship, and then at the last minute they’d say, ‘I can’t do it because I’ve spoken to my parents, and we’re suddenly going to lose a whole ton of money,'” he told Big Issue.

“When you suddenly say, ‘You’re going to lose a whole load of benefit income,’ which feels certain, and compare that with the uncertain income from an apprenticeship, lots of families understandably say no.”

The bursaries will be funded through a £30m pot drawn from the growth and skills levy – a tax on employers with annual wage bills over £3m. They are expected to reach a few thousand households.

Stephen Evans, chief executive of the Learning and Work Institute welcomed the move as “very sensible”. But he urged the government to keep things simple.

“There’s definitely an issue here. There are some households that will be worse off financially if the young person takes an apprenticeship, so it’s sensible to introduce this sort of bursary to make sure no household is worse off,” he told Big Issue.

“Make it simple to claim, because we know that if things are very complicated, people tend to give up or avoid it. And make sure it’s well targeted, because the benefit system is quite complicated and the risk is you set up a rule that misses somebody.”

More than a million 16 to 24-year-olds – one in eight – are currently not in education, employment or training, a number that has risen by 37% since 2021.

The bursary will only impact a few thousand – but it’s still worth doing, experts said. “I think this could make a fairly big difference to a fairly small number of people, and that’s still worth doing,” said Evans.

Rowland agreed: “It’s not a big number, but these are probably some of the families who need the most support. Getting their teenager into an apprenticeship can change their whole attitude and outlook on life because they’ve got someone in productive work.”

But the number of apprenticeships available still depends on employers being willing and able to hire – and many businesses say rising costs and economic uncertainty makes that difficult. As a result, demand from would-be apprentices often outstrips the number of places on offer.

“What they’ve done on the supply side is necessary, but not sufficient,” said Rowland. “For anything like this to work well, you need employers to want to create apprenticeships too.”

The government has also announced a £2,000 incentive for small and medium-sized employers taking on new apprentices under 25, alongside £725m for apprenticeships as part of a wider £1.5bn employment and skills package.

But while overall apprenticeship starts have begun to recover from pandemic lows, they remain below their pre-Covid peak, and starts among under-19s have continued to fall.

For Evans, that is the real test of whether the bursary succeeds.

“You can’t take up an apprenticeship that doesn’t exist,” he said. “We need to go much further and faster on increasing youth apprenticeships.”

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