The UK Government has announced a £1 billion Youth Guarantee to help more young people into education, employment, or training. This follows growing concern in the industry about the sharp decline in apprenticeship starts—particularly among small and medium-sized businesses (SMEs).
For the hair and beauty industry, this is a critical intervention. Once one of the UK’s top ten most popular apprenticeship routes, the sector has seen a significant decline over that last decade. And across the wider economy, apprenticeship starts amongst young people are down 40%, according to the Department for Education.
Why Do Apprenticeships Matter?
The hair and beauty sector historically utilised the apprenticeship system as an entry into creative careers in hairdressing, makeup artistry, beauty therapy and holistic wellbeing.
As part of this, the industry has also historically provided opportunities to train and develop careers in some of the most deprived areas of the UK. According to the British Beauty Council’s Value of Beauty 2024 report, 45% of jobs within the beauty industry are in areas with the highest levels of deprivation.
The industry also helps young people develop meaningful and rewarding careers, with almost half of the workforce under the age of 35. It is essential for businesses to continue to be able to offer these opportunities, and more.
The British Beauty Council has been engaging with government and colleges, regarding this significant decrease in apprenticeships across the industry since 2020, to find workable solutions.
The Business Challenges
The cumulative impact of increased business costs over recent years has meant that growing the workforce and investing in apprenticeships has been increasingly difficult to near impossible.
The reduction in apprenticeship starts is largely due to the fact that the industry is made up of 78% micro businesses (those employing less than 5 people) and 95% small businesses (employing less than 10), with 25% more SMEs in the beauty industry than in 2015. This means businesses with small margins and less access to finance are often taking on greater personal risk, and are less able to absorb tax and spend cost increases. This has resulted in a drop in employment, fewer apprentices and increased redundancies across the wider industry.
The Youth Guarantee: How this works for hair and beauty SME’s
The Department for Work & Pensions is rolling out the Youth Guarantee program to address some of the challenges that have occurred with rising business costs and drop in employment.
With full details and further information still being rolled out, here’s what we know applies to the industry at present:
- Apprenticeships and Incentives
A £2,000 incentive will be given to SME employers who take on new apprentices aged 16–24. The policy will take effect for those starting apprenticeships from 1 October 2026, as long as they have joined their employer within the past 3 months (from July 2026). This will be paid in two equal installments at day 90 and day 365 (or day 242 if apprenticeship under 12 months).
New entry-level ‘Foundation Level 2 Apprenticeships’ are also being launched with a £2,000 incentive for businesses across the hospitality and retail sectors from April 2026, aimed at helping young people gain basic workplace skills. This is expected to apply to beauty retail with employers paid in three equal installments; at day 90, day 242 (8 months) and when an apprentice progresses onto their next apprenticeship.
In addition, employers are fully exempt from National Insurance Contributions for all apprentices under 25.
- The £3,000 Youth Jobs Grant
This is a one-time hiring incentive for businesses that recruit young people at risk of long-term unemployment launching in June. £3,000 payment will be paid to employers who take on young people aged 18–24 who have been on Universal Credit and seeking work for at least 6 months. It is expected that the grant will be paid in two installments of equal amounts at month 1 and month 3.
- The Jobs Guarantee
The Jobs Guarantee will offer a fully subsidised 6-month job placement (usually 25 hours per week at the relevant National Minimum Wage) for young people aged 18–24 who have been on Universal Credit and looking for work for 18 months.
Phase one is due to be rolled out in spring across six pilot areas: Birmingham & Solihull, East Midlands, Greater Manchester, Hertfordshire & Essex, Central & East Scotland, and Southwest & Southeast Wales. A national rollout is then expected to follow around October 2026.
- Growth and Skills Levy Reforms
The Growth and Skills Levy is a UK Government training fund designed to upskill the national workforce by requiring large employers with an annual pay bill over £3 million to contribute 0.5% of their payroll into a digital account. This money acts as a “use-it-or-lose-it” voucher system that businesses can spend on both long-term apprenticeships and—newly for 2026—shorter, modular “skills units” in areas such as digital and AI. This has been developed with input from the Council and other business organisations to ensure the levy offered greater flexibility and increased access to funding by non-levy paying SMEs.
While only large firms pay into the pot, small businesses will also benefit with access to these new skills units and there’s also the opportunity to apply for surplus funding through the Business Growth hub or Apprenticeship Service (details below).
Together these measures are aimed to redress the industry’s apprenticeship decline.
Find Out More:
While the full details are yet to be published, businesses can take the following steps to prepare:
- The government has directed businesses to www.business.gov.uk/recruit (or the standard GOV.UK “Hire an Apprentice” page) for upcoming registration details.
- Find your local Business Growth Hub who will have specific advisors to help you navigate the Growth and Skills Levy changes.
- Ensure your business is registered on the Apprenticeship Service portal, as this is where incentive claims and levy funds are managed.
