This year, the Government’s Apprenticeships Levy is set to become the Growth and Skills Levy in a move designed to make training and development more accessible for business.
But what does this mean for your business, and the funding you can access to upskill your staff? Our guide aims to help.
What happens at the moment?
The Apprenticeship Levy was launched in 2017. It was a fund to pay for apprenticeship training that was built up through contributions made by employers with an annual wage bill of more than £3million. Every year, the Government required them to pay HMRC 0.5% of their payroll over the £3 million threshold
Employers of companies large and small could then access those funds by setting up and Apprenticeship Service account. Large companies could draw down 100% of the money to fund apprenticeships, while smaller companies that did not contribute to the levy got 95%, and had to pay the remaining 5% themselves.
What were some of the criticisms of the current system?
Businesses that could not use the funds within 24 months saw the cash go to the Treasury, while some SMEs felt there was too much red tape involved and time committed to apprenticeship training programmes.
Large companies in some sectors said that degree apprenticeships were unsuitable for their needs, while social mobility researchers said that young school leavers were not benefiting from the programme, with one in six apprenticeship courses being done by university graduates.
What’s changing in 2025?
In the Autumn Statement, Prime Minister Keir Starmer and Education Secretary Bridget Phillipson announced the Government would create a Growth and Skills Levy, replacing the Apprenticeships Levy.
Instead of only funding degree apprenticeships, companies can use the money to pay for a wider range of training, including short courses, online masterclasses and other upskilling programmes such as skills bootcamps.
Funding will be targeted towards training that supports closing regional skills gaps and employers are also being asked to rebalance their funding for apprenticeships, with the Government asking them to invest in younger workers rather than spending Levy training funds on more experienced senior staff.
As a result, some Level 7 apprenticeships (equivalent to a Master’s degree) will be removed from those eligible for funding through the levy. Skills England, the body responsible for deciding which training is funded through the Growth and Skilly Levy, is yet to announce whether the Senior Leader Apprenticeship will continue after the autumn, with business organisations lobbying for it to remain.
In November, Skills England launched an informal consultation with employers in priority sectors such as health and social care, construction and manufacturing to determine which types of training would be most useful.
How can you prepare your business?
Do a skills audit. If you have not got an up-to-date picture of your company’s skills gaps, then do a skills audit as soon as possible. Identify the key areas where training can have the most impact. Involve your staff and ask them how they would like to learn – some may relish the academic challenge of a degree while others would prefer shorter, more focused courses.
Your local business organisations, such as Chambers of Commerce, networking groups or membership organisations will likely be running consultations and explainer sessions either in person or online as more details emerge of how the new Growth and Skills Levy will work. Look out for events or online webinars and take part – it’s your chance to have your say and find out how other firms are approaching it.
Work out a budget. The message from the Government is clear; it expects employers to pay more towards more big-ticket training aimed at senior staff. If this is in your talent development plan, then you will need to allocate funds towards this.
Make the most of Level 7 levy programmes while they are still available. ÃÛÌÒÖ±²¥ offers a couple of Level 7 programmes including Senior Leaders Apprenticeship and Artificial Intelligence Specialist Apprenticeships. These programmes are suitable for professionals who are already established in their field but would like to increase strategi thinking and critical analysis. Delivered through a series of face-to-face and online seminars, real-world projects, interactive class room activities and simulations, our apprenticeships provide the perfect blend of work-based learning.
Contact learning providers and speak to their development teams. They are here to help employers find answers to training needs
The Growth and Skills Levy marks an important evolution in workforce development opportunities for businesses. With enhanced flexibility, longer timelines, and simplified processes, this initiative empowers organisations to prioritise building skilled, adaptable teams.
Whether you're a small business focused on upskilling your staff or a larger organisation looking to future-proof your workforce, contact us to learn more about how apprenticeships can help you.
Posted on Thursday 30 January 2025