Government announces apprenticeship reforms

The government has announced ambitious apprenticeship reforms designed to boost opportunities for young people in England.

Prime Minister Sir Keir Starmer and Education Secretary Bridget Phillipson yesterday announced that the Apprenticeship Levy will be replaced by a new growth and skills levy, which will include new foundation apprenticeships.

These new apprenticeships will give young people a route into careers in critical sectors, enabling them to earn a wage whilst developing vital skills.

The new levy will also allow funding for shorter apprenticeships, giving learners and employers greater flexibility over their training than under the existing system – where apprenticeships must run for at least 12 months.

The training eligible for funding under the new levy will develop over time, informed by Skills England’s assessment of priority skills needs.

The Department for Education will set out further details on the scope of the offer and how it will be accessed in due course.

To fund this, employers are being asked to rebalance their funding for apprenticeships, asking them to invest in younger workers. This will also involve businesses funding more of their level 7 apprenticeships – equivalent to a master’s degree and often accessed by older or already well qualified employees – outside of the levy.

The first report from Skills England, the government’s new body for the skills system, was also published yesterday. It provides an initial assessment of the nation’s working skills, as well as future skills needs and gaps which employers are struggling with across the country.

The report has found that employer investment in training has been in steady decline over the past decade, with training expenditure at its lowest level since records began in 2011, with investment per employee down by 19% in real terms. This highlights the need for government reforms to the skills and apprenticeships system.

It also shows that, across the UK, almost 1 in 10, or over 2.5 million roles are in critical demand, with more than 90% being in roles that require training or education.

The government launched Skills England in July to help identify skills needs. Skills England will play a crucial role in determining which types of training will be eligible for the expanded growth and skills levy and will set out shortly how they will work with stakeholders to inform their advice to DfE.

The need for jobs and skills varies across industries, with the health and social care sector experiencing the highest demand, followed by education, manufacturing, and science and technology.

Commenting on the speech by the Prime Minister and the announcement on apprenticeships, Stephen Phipson, CEO of Make UK, said: “This announcement demonstrates real intent from the government to fix England’s broken apprenticeship system. For too long, manufacturers have been held back from investing in critical trade and technical skills by a chronic lack of funding and industry will applaud the government’s determination to start putting this right. It is clear the Prime Minister has listened to businesses across the country and taken decisive action on apprenticeships.

“Manufacturers are clear that a successful, long-term industrial strategy depends on employers being able to invest in the skills they need to create jobs and deliver growth. This new approach to Foundation apprenticeships, focused on making high-quality training for crucial job roles available and, accessible to the businesses developing the next generation of talent, is central to making this a reality. Industry stands ready to work with government to take this positive announcement forward.”