What changed on 1 August 2026: free apprenticeships for under 25s, and Lancashire takes control of adult skills

Two changes landed together this month. One affects what an apprentice costs you. The other affects who decides what adult training gets funded in Lancashire. Both are worth knowing about before you plan the autumn.

Apprenticeships for under 25s are now fully funded

From 1 August 2026, government funds 100 per cent of apprenticeship training costs for apprentices aged 16 to 24 at employers who do not pay the levy, and at levy payers who have exhausted their funds.

For apprentices aged 25 and over, levy payers who have exhausted their funds contribute 25 per cent, and non levy employers contribute 5 per cent.

The apprenticeships budget has also been replaced by a broader growth and skills budget, which widens what levy funds can be spent on beyond apprenticeships alone.

There is a hiring payment on top

From October 2026, employers who do not pay the levy can claim a £2,000 apprenticeship hiring payment for apprentices aged 16 to 24, for starts on or after 1 July 2026.

It is paid in two instalments, at day 90 and day 365, or at day 242 where the apprenticeship runs for less than twelve months. First payments to providers are expected in January 2027.

Read those two together and the position for a smaller employer taking on a young apprentice is as good as it has been in years: the training costs nothing, and there is £2,000 coming back.

Adult skills funding has moved to Lancashire

The adult skills fund transferred to Lancashire Combined County Authority in August 2026. The 2026 to 2027 core allocation recorded on GOV.UK is £27,282,065.

Local decision making usually means local priorities, and early indications are that the authority intends to fund activity that is actually delivered rather than planned, to ringfence a small share of provider grants for innovation, and to pay for referrals into Connect to Work and Skills Bootcamps.

For employers, the practical read is simple. Funding decisions for adult provision in Lancashire are now made closer to home, and they are more likely to follow local labour market need than a national formula.

What to do this month

If you have a young hire in mind for the autumn, the arithmetic has moved in your favour and it is worth acting while the budget position is clear. If you employ people aged 25 and over who need upskilling rather than a full apprenticeship, look at the apprenticeship units, which are shorter and sit under the same funding umbrella.

Call 01254 679998 and we will work out what applies to your organisation.

Sources

GOV.UK, apprenticeship technical funding guide from August 2026
Apprenticeship service, non levy incentive for hiring a young apprentice
GOV.UK, adult skills fund devolved grant determination letters 2026