Understanding the changes to the Apprenticeship Levy Challenges and opportunities
As the Apprenticeship Levy transitions into the Growth and Skills Levy, we can expect some changes in what types of education and training courses can be funded.
While these announcements have generated excitement among many Directors and business leaders, the process is more complex than it may initially seem. Additional skills training courses will be eligible for funding through the Levy, and further details are expected in late spring. However, the introduction of these changes will take time and require careful consideration.
Some Directors of large businesses, training organisations, and Local Authorities have already been in touch and shared concerns regarding the proposed adjustments, which are worth highlighting.
One key issue is that many Directors don’t realise the term “Apprenticeship” is legally protected, similar to the term “Degree.” For a training program to be classified as an apprenticeship, it must meet certain criteria, some of which are defined in the funding rules, while others are governed by law. Currently, an apprenticeship must last for at least a year. The Government has stated its intention to fund shorter apprenticeships and Foundation Apprenticeships under the revised Levy, but these changes will require legal adjustments. Additionally, collaboration with other government departments, such as HMRC and DWP, is essential to ensure employment arrangements (including minimum wage regulations) are appropriately addressed before the changes can take effect.
These legal and logistical challenges mean that the lead time from initial announcements to the actual rollout of the new measures will be longer than some may have anticipated. We’re likely looking at a timeline with the first flexibilities available no sooner than August 1, 2025. The specifics of the new funding rules will be outlined in the coming months, but they are not expected to be published until later in the spring.
It’s also important to note that some of the announced flexibilities may not be as generous as they first appear. For example, funding for Skills Bootcamps, which was previously provided by the Department for Education, is expected to be discontinued as a separate funding line. Instead, these programs, or similar ones, could be funded from the Growth and Skills Levy in the future. Additionally, there have been announcements that some Level 7 Apprenticeships may receive less or no funding via the Levy going forward. While reducing or removing funding for certain qualifications may seem to be driven by an affordability argument, it’s crucial to consider the broader socio-economic impacts, and not just the headlines.
Beyond the funding concerns, it’s worth considering sectors facing skill shortages or other market failures. For instance, there’s a strong case for continuing to fund Level 7 Senior Leader Apprenticeships in areas of national importance including school leadership, the NHS, social care, and Local Authorities to support the forthcoming local government reform. These sectors are experiencing crises, and funding for Senior Leader apprenticeships could play a vital role in driving the nationally needed reforms.
Another key point is that short courses eligible for funding through the Levy will likely be restricted to those qualifications appearing on approved lists. This will likely be determined by Skills England. These qualifications may be specified on a local basis, which raises questions about how this will work for national employers with needs across multiple regions.
Despite the highlighted complexities and challenges, I remain hopeful that the reforms can address some of the challenges faced by Directors and business leaders. Implementing these changes will not be straightforward. Directors will need to carefully consider how they can maximise the potential impact of these reforms within their own businesses. If any members want to discuss the forthcoming changes further, please do not hesitate to get in touch.
Dr Gareth Thomas
IoD Branch Ambassador for Skills and Education, Leicestershire and South East Midlands Branch
Managing Director, Skills and Employment Support Limited
Email: [email protected]
This is a guest article which contains the views of the author and does not necessarily represent the views of the IoD.
