The UK government has announced a £1 billion employment drive intended to create 200,000 jobs and apprenticeships for young people.

Backed by major and small businesses, the scheme aims to reverse the rising number of young people not in education, employment or training, which increased by 37 per cent between 2021 and 2024.

Ministers describe the package as the biggest transformation of apprenticeships in a decade, with a particular focus on sectors such as hospitality and retail.

Under the new “New Deal” for young people, a Youth Jobs Grant will give businesses £3,000 for every young person they hire aged 18–24 who has been on Universal Credit and looking for work for six months. The government expects this to support 60,000 young people over three years.

The existing Jobs Guarantee will also be expanded from the 18–21 age group to 18–24, creating more than 35,000 extra subsidised roles and taking the total number of jobs backed through the scheme to more than 90,000 over the next three years.

In addition, small and medium sized employers will receive a £2,000 apprenticeship incentive for each new employee they take on aged 16–24. As part of wider reforms to the Growth and Skills Levy, the government has set a target of creating 50,000 more apprenticeships, with new foundation apprenticeships in hospitality and retail due to launch from April 2026.

“These measures will give life‑changing opportunities to young people and significantly reverse the increase we inherited in those not in education, employment or training,” said work and pensions secretary Pat McFadden. “We are focusing funding where it’s needed most and giving employers the flexibility and support they’ve asked for. These reforms will give young people a vital first step on the career ladder and help business leaders recruit the talent that will grow their companies.”

Last week, the British Retail Consortium (BRC) warned that opportunities for young people in retail could decrease if planned reforms aimed at strengthening worker security come into force.

The organisation said the Employment Rights Act, which received Royal Assent last December, risks reducing the availability of flexible, entry‑level roles that have traditionally been an important route into work for young people.

Helen Dickinson, chief executive of the BRC, welcomed the government’s new youth employment package and said retail apprenticeships could be a “game changer” if they are designed with retailers.

“Government risks undermining its own ambition to tackle youth unemployment through other policies,” she said. “The Employment Rights Act must work with not against opportunities for young people.

“Without a joined‑up approach, well‑intentioned initiatives will lose their impact.”

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