How could the benefits system help more young people do an apprenticeship?

In the UK, there is a significant discrepancy in current policies around Child Benefit and Universal Credit (UC) and how young people’s education and work choices impact their household income. Families can face financial disadvantages if a young person over 16 chooses an apprenticeship over full-time education, as eligibility for Child Benefit and the child element of UC is lost.

This blog, by our Director of Impact and Evidence, Chris Goulden, explores how the loss of this support affects families, using insights from the Minimum Income Standard (MIS) research and considers potential policy changes to provide better outcomes for households with young apprentices. It also questions whether there is a clear and co-ordinated policy intent behind current benefit design for such families. This is at a time when the provision of apprenticeships for under 25s has collapsed, and when we know that doing an apprenticeship is a valuable route to good work for many young people.

The policy challenge 

For those who claim them, Child Benefit and the child element of UC can provide a stable and much-needed contribution to household incomes. However, these benefits cease if a young person aged over 16 in the family starts an apprenticeship because they are considered to be an independent worker and their own ‘benefit unit’. In contrast, families with a youngster in full-time education at the same age retain these benefits, even if that young person is working part-time. With the UC child element contributing around £62 per week and Child Benefit providing an additional £15.90, households without this support experience significant income loss. 

This discrepancy may create the perception of a financial disincentive for families who are considering apprenticeships, especially when these are typically low paid compared to part-time work for students. In 2023, an apprentice aged 18 earned an average hourly wage of £6.50, versus £9.25 for their peers in part-time jobs. Given the substantial role Child Benefit and UC play for low-income households, these differences in support allocation can, at best, seem to pose a significant financial barrier to young people contemplating vocational training routes. 

The impact on family income 

The loss of Child Benefit and UC for young apprentices can dramatically reduce household income. Case studies reveal that even when both parents work full-time at the National Living Wage, a family with a young apprentice often cannot meet the income needed for a minimum socially acceptable standard of living, as defined by MIS. For example, a two-parent working household with two children, one of whom is an apprentice, sees its income fall to 63% of MIS compared to the same household with a child in full-time education and working part-time, who reach 90% of MIS1. A lone parent household with a young apprentice in similar circumstances is left covering only 47% of MIS. 

This shortfall suggests that the current policy approach not only reduces the financial stability of such households but may also indirectly influence their educational choices. Consequently, some families may discourage apprenticeships, given the financial challenges that appear to accompany them. 

Are contributions from apprentices to family budgets a solution? 

However, it is likely that young apprentices living at home would contribute to household costs. Other research using MIS suggests a contribution of 25% of weekly food costs and 15% of household bills as a reasonable benchmark. This sort of boost to household incomes would reduce the shortfall for a couple with both parents working full-time to 88% of MIS. This would be a similar level to the family with a Sixth Form student in part-time work. In a lone parent household, if the apprentice contributed their full income (albeit an unlikely scenario) to help cover family costs, the household would be just shy of the MIS level. 

This highlights a key question: should apprentices be expected to contribute to household costs to offset the loss of benefits, or is a broader policy solution needed? Requiring contributions from young apprentices could place undue financial strain on them, limiting their disposable income to cover essential personal expenses like travel, equipment, and other apprenticeship-related costs. 

While the young apprentice is technically eligible for UC in their own right, even at the low levels of apprenticeship pay they would be highly unlikely to be deemed to have an income low enough to successfully claim. Treating the young person as part of the family UC benefit unit would also make things worse, as their income would then reduce levels of eligibility for UC overall. It would be useful if DWP, DfE and HMRC agreed and communicated a common and coherent view of how and why the benefits system is designed to support wider policy objectives on apprenticeships, and not inadvertently hinder them, or be seen to hinder them. 

Clearer outcomes for families with young apprentices 

Reforming apprenticeship-related policies and providing more clarity about the overall incentivisation of apprenticeships could help to solve some of these dilemmas. Potential solutions include: 

1. Retaining Child Benefit: Allowing families with young apprentices to retain Child Benefit would rebalance some of the financial inequity and risk associated with choosing an apprenticeship. However, because an apprentice is regarded as a worker, not a child, wider benefit rules may need to be bent if not changed completely. This could have other adverse and unintended consequences.
2. Increased apprentice pay: Minimum pay rates for apprenticeships are rising rapidly, increasing by nearly 20% in April 2025. This will help to address the imbalance, enable young people to contribute more to family costs and reduce the need for welfare support, making apprenticeships a more financially viable pathway for young people and their families. Minimum pay should be kept under review but pushed up as quickly as possible, while balancing against the number of opportunities available overall.
3. De-risk the choice to do an apprenticeship: Be clear about the impact of doing an apprenticeship on household incomes and benefits, so that families can make an informed choice about whether to encourage their children to explore it as an option.

A balanced approach combining elements of all three would help to provide clarity on the respective expectations of employers, families, apprentices and government in increasing the enrolment of young people into apprenticeships. 

A way forward 

The challenges faced by families with apprentices, or potential apprentices, highlight the importance of policy taking an equitable approach to diverse educational and career pathways for young people. Apprenticeships are essential for skill development, workforce diversity and (as our Youth Employment Toolkit shows) for reducing levels of unemployment and inactivity, but without adequate support, many families may feel forced to prioritise immediate financial needs over long-term career goals for their children. It may not be very clear what impact doing an apprenticeship would have on a family’s precarious finances, and under circumstances of stress and uncertainty, it may often not seem to be worth the gamble. 

We hope that publication of this research is an opportunity to revisit and recalibrate how the benefits system can better support families with apprentices, ensuring that a minimum level of income adequacy is maintained regardless of the type of educational or vocational path a young person pursues. 

To read the full report, click here.