Are We Preparing Young People for the Economy They’re Entering?

Imagine your child gets an apprenticeship, starts earning and takes their first proper step into work, only for your household to end up financially worse off.

I had no idea this was happening, but some parents lose Child Benefit and parts of Universal Credit when their child starts an apprenticeship. Depending on their circumstances, the family can lose between £17 and more than £330 a week, sometimes more than the apprentice earns.

The government now plans to offer some families up to £4,500 a year to close part of that gap.

At the same time, schools could be asked to tailor lessons for over-14s around local jobs, while Microsoft and Meta continue spending extraordinary amounts on AI.

So the big question this week is whether we are preparing young people for the economy they are entering, particularly when that economy is changing so quickly.

Let’s get into it.

The government will use £30m from the Growth and Skills Levy to offer some families on benefits up to £4,500 a year when their child starts an apprenticeship.

Under the current system, a family may continue receiving support while a young person remains in full-time education. But if that same young person starts a paid apprenticeship, they are treated differently and the household can lose Child Benefit and parts of Universal Credit.

Parents have such a huge influence over what happens after school. If choosing an apprenticeship leaves the entire household struggling to pay its bills, that is obviously going to affect the decision. It will also play on the young person’s mind because they know their choice could make life harder for everyone at home.

We constantly hear that work should pay, but the system should not make a family poorer because a teenager has started working and training.

The £4,500 payment will only support a few thousand households, so it is not a complete solution. But if it removes a financial barrier and helps more young people enter employment, education or training, I think it is a sensible step.

This matters because just over one million people aged 16 to 24 are currently not in education, employment or training. That is 13.5% of the age group.

If the government wants more young people to take apprenticeships, it needs to make sure their families are not financially punished for supporting them.

Andy Burnham also wants schools to make education for over-14s more responsive to their local job market.

Schools, colleges, mayors and employers would work together to offer more technical training connected to industries in their area. The idea is based partly on the Greater Manchester Baccalaureate and could begin nationally from September 2028.

My school was very focused on university being the “successful” route. Apprenticeships and technical qualifications weren’t presented with the same status, despite everything they can provide without creating student debt.

I think connecting schools with employers could give young people a much clearer idea of the opportunities open to them. The danger is limiting their ambitions to whatever jobs happen to exist nearby.

If I had a 14-year-old now, personally I would want them to understand AI and what quantum computing could mean for the future. I would want them to learn languages, understand finance and have the tools to look after their mental health.

Those skills are not tied to one local employer. They help young people understand the world and adapt as it changes.

The goal should be to give teenagers more routes and more information, rather than deciding too early what kind of career someone from their postcode should have.

From 2028, English mayors will receive a share of the income tax generated in their areas, rather than relying as heavily on grants handed down by central government.

Anyone else a touch concerned alot of his policies are English focused…

Anyway, they will also be given greater control over housing, transport, planning and skills, with more detail expected in a government white paper and the Budget. Mayors could eventually borrow against some of this future income to fund larger local projects.

I can see the logic. Someone making decisions in Manchester, Birmingham or Liverpool should have a better understanding of what that area needs than someone sitting in Whitehall.

It could also make the proposed changes to education more effective. If mayors have greater control over both skills policy and the money used to fund it, they may be able to connect schools, colleges and employers more effectively.

However, the obvious risk is that wealthier areas generate more income tax than poorer ones. The final system will need some way of preventing already successful regions from pulling even further ahead.

Devolution sounds quite technical, but the basic idea is simple: more of the money raised in an area would be controlled by the people running that area.

Whether that improves people’s lives will depend on how much money mayors actually receive, and how accountable they are for spending it.

Google, Amazon, Microsoft and Meta have now invested more than $1.1tn in AI infrastructure since 2023, and they are expected to spend roughly another $725bn to $745bn this year on data centres, advanced chips and the enormous amount of power needed to run them. Estimates vary slightly as companies update their spending plans, but the direction is very clear: the sums are getting bigger.

Microsoft reported quarterly revenue of $90bn, while its cloud revenue rose by 27%. Its capital spending increased by 70% to $41bn, largely to meet demand for cloud computing and AI.

The positive results helped restore confidence in AI investments after a painful sell-off. South Korea’s Kospi index rebounded by more than 16%, with Samsung Electronics and SK Hynix among the biggest risers. But the index was still recovering from enormous losses earlier in the week, showing just how quickly sentiment can change when investors have priced in near-perfect growth.

Meta now expects to invest between $130bn and $145bn this year. Its spending continues to rise, but its profits have fallen sharply.

I think there is currently a problem with the amount Big Tech is spending on AI. The technology will undoubtedly be important, but these companies are committing hundreds of billions partly because none of them can risk being left behind.

The question is no longer whether AI will produce revenue. Microsoft is already showing that it can. The question is whether it will produce enough profit to justify the extraordinary amount being spent across the industry.

The Bank of England held its base rate at 3.75% today, with six members voting to keep rates unchanged and three voting for an increase.

The US Federal Reserve also kept its rate between 3.5% and 3.75% for a fifth consecutive meeting. Three American policymakers wanted rates to rise.

Both central banks are worried that inflation could increase again, particularly if conflict in the Middle East keeps oil and energy prices high.

For borrowers, this means there is still no immediate relief. Mortgage rates, loans and credit cards are unlikely to become dramatically cheaper while central banks remain concerned about another rise in inflation.

Last week’s lower UK inflation figure was welcome, but one positive month is not enough to convince the Bank of England that the problem has disappeared.

Alphabet-owned Waymo has told Uber that it plans to offer robotaxi journeys through its own app in Austin and Atlanta from January 2028. Customers in those cities currently book Waymo vehicles through Uber.

Uber says the independent service will operate alongside their existing arrangement, so the partnership has not formally ended. However, Uber shares still fell around 4% because investors are worried Waymo may eventually stop needing it.

If Waymo owns the vehicles, the self-driving technology and the customer relationship, it has less reason to share booking revenue with another platform.

Don’t know about you but I would be very nervous about getting into a completely driverless taxi. I understand why companies are investing in them, but trusting software with a journey through a busy city still feels like quite a leap.

👜 LVMH’s fashion and leather goods division returned to growth for the first time in two years, with sales rising 1% to €8.9bn. Louis Vuitton and Dior performed particularly well in the US and Japan. It is an improvement, but one quarter of 1% growth does not mean the luxury slowdown is over.

⚖️ Johnson & Johnson has proposed paying $5.5bn to settle around 76,000 claims alleging that its talc products caused ovarian cancer. The company continues to deny that its products were unsafe and says it wants to end years of litigation.

🏦 Standard Chartered reported record first-half profits of $4.8bn and announced a further $1bn share buyback. The bank is also planning to cut around 7,800 roles by 2030 as it expands its use of AI. Record profits and thousands of job cuts can apparently exist in the same announcement.

🚗 BMW plans to cut around 8,000 jobs globally by the end of 2027. The carmaker is under pressure from weaker demand in China, US tariffs and growing competition in the electric vehicle market.

The apprenticeship story is the one that stayed with me this week.

We tell young people to work hard, gain experience and choose the route that suits them. But when starting an apprenticeship can leave their household poorer, the financial incentives are working against the message.

The £4,500 payment is a sensible start, but schools and families also need better information about the options available beyond university.

The bigger challenge is making sure young people learn skills that will remain useful as AI changes the workplace. That means technical skills, but it also means financial education, languages, adaptability and understanding how to protect their mental health.

We cannot predict exactly which jobs will exist in twenty years. We can at least give young people more than one route to reach them.

Have a wonderful weekend.

Abi x

p.s. sneak peek at Sundays YouTube title