Parents on Benefits to Get Up to £4,500 for Child's Apprenticeship

Families who lose benefit payments when a child starts an apprenticeship will be offered a bursary worth up to £4,500 under government plans to encourage more young people into work, the BBC reported.

The payment is designed to replace Universal Credit lost when a young person takes up an apprenticeship. It is expected to reach an estimated few thousand households, which currently stand to lose between £17 and £330 a week in that situation.

How it will be funded

The bursary will be paid from a £30m pot financed through the growth and skills levy, a tax on employers with annual wage bills above £3m.

The Conservatives welcomed support for apprenticeships but criticised the funding mechanism.

The problem it is meant to solve

The measure follows a Social Security Advisory Committee report warning of the "perverse effects" the benefits system has on young people's employment choices.

Because apprenticeships are classed as paid employment, benefit payments to a household are reduced when a young person starts one. The committee found that single parents with a disabled child could lose up to £340 a week — more than the expected apprenticeship salary of £258 a week.

In other words, a family could be materially worse off for a young person taking up training. The committee said this was undermining efforts to reduce the number of young people not in education, employment or training, known as Neet.

The scale of the Neet problem

Official figures show more than a million people aged 16 to 24 are currently Neet. In a recent report, former health secretary Alan Milburn warned that one in six young people could fall into that category within five years without urgent action.

Against that backdrop, the bursary is narrow in scope. It addresses one specific disincentive for a few thousand households rather than the wider question of why so many young people are out of work and training — though for the families caught by the current rules, it removes a direct financial penalty for taking up an apprenticeship.

Reporting basis: BBC Business.