From 1 August 2023, traineeships will instead be integrated into 16-19 study programmes for young people, and the non-devolved adult education budget for adults.
Minister for skills, apprenticeships and higher education Robert Halfon told the House of Commons integrating the traineeship programme will make the employment landscape easier to navigate for both young people and employers.
He said: "It will also enable employers, training providers and local authorities to tailor their programmes, as they will have greater flexibilities to design a traineeship around the learner or business need as we will be removing the national framework which sets strict requirements on providers, in how they must deliver a traineeship."
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Figures published by the government in November 2022 showed there were 15,500 traineeship starts recorded in 2021/21, just 36% of the 43,000 target and down from 17,400 the year prior.
The treasury invested £126 million in traineeships in 2021/22 and £111 million the year before.
Agata Nowakowska, AVP EMEA at Skillsoft, said removing government funding for traineeships would have long term implications for the UK's skills crisis.
Speaking to HR magazine, she said: "A lack of government funding for traineeships means young people will have a reduced chance of choosing a vocational route into learning new skills and starting their careers. This will severely impact the skills shortage in this country over the long term.
"More employees should look beyond degree requirements when hiring, considering “STAR” employees - workers who are Skilled Through Alternate Routes. With demand for digital-native talent at a premium, and the very nature of job roles evolving fast, traineeships can help bridge the gap - both for the skills needed within the organisation today, and looking ahead to the future.
"Mutually beneficial to prospective employees and employers alike, employees can perfect their core craft and branch out to learn new skills - building a solid foundation for growth."
Traineeships were introduced for people aged up to and including 24 in 2013/14 and were designed as a way to create the skills needed to successfully step into employment.
Young people will still be able to make use of programmes such as apprenticeships, T-levels, bootcamps and sector-based work academies.
Halfon added: "The traineeship programme has been running for nearly 10 years and the number of starts has remained relatively low. It is right, therefore, that we focus our offer on our mainstream provision.
"This change will make it easier for young people and employers to navigate our skills offer and will enable providers to better tailor their programmes to deliver the key skills needed to drive growth in local communities."
