Apprenticeships and the Growth & Skills offer – do the proposals go far enough, quickly enough?

The government’s Post-16 Education and Skills White Paper sets out the direction for apprenticeships and employer-informed training. At its centre is the transformation of the Apprenticeship Levy into the Growth and Skills Levy (or a Growth and Skills “Offer” in the interim), a flagship reform intended to boost flexibility and align training with industrial priorities.

There are some encouraging signs, but this takes place against the backdrop of uncertainty following the transfer of apprenticeship responsibilities from the Department for Education to the Department for Work and Pensions – as well an Autumn Budget where public finances look decidedly shaky. The question is not just what’s changing, it’s whether the changes go far enough to meet the scale, speed and complexity of skills demand across the economy.

1. What’s Changing?

The Growth and Skills Levy has been designed to unlock unused training potential by allowing employers to fund a wider range of activity beyond full apprenticeships. Key proposals include:

Converting the Apprenticeship Levy into a more flexible fund for short, modular training (initially “apprenticeship units”) from 2026;

Creating up to 30,000 Foundation Apprenticeships for young and early-career learners, with employers receiving up to £3,000 per apprentice;

Aligning apprenticeships with new V Levels at Level 3 and expanded technical routes at Levels 4–5;

Encouraging employer co-investment and partnership through Skills England and local sector bodies.

Together, these proposals aim to make skills policy more responsive to labour-market change. But significant questions remain about pace, practicality and impact.

2. The Scale of the Levy Underspend

Since the Apprenticeship Levy was introduced in 2017, large employers have paid in over £18 billion, yet billions remain unused or have expired.

More than £3.3 billion of levy funds have been returned to the Treasury since 2019 under the “use it or lose it” rule.

In 2024-25, the Department for Education recorded a small overspend on its apprenticeships budget, after increasing the overall budget to £2,729 million. The budget for this financial year now stands at £3,075m, with pressures on that total continuing to grow. Several estimates suggest that each year the treasury top slices approximately £800 million from levy receipts, releasing this would provide a significant top up for providers and employers to deliver much needed skills and qualifications

Public-sector employers alone have allowed over £300 million in unspent levy funds to lapse.

Around 48% of levy-paying businesses report returning unspent funds each year.

These figures expose a structural inefficiency in the system. Employers are willing to invest but often find the levy too rigid, too slow, or too complex to use. In addition, not all levy receipts are finding their way into the system, if the full value of levy contributions were available this could mobilise employers and providers alike whilst allowing the DWP to provide free support and guidance for SMEs.

3. Will the Growth and Skills Levy Fix It?

The reforms go some way to addressing employer frustration. Allowing funds to be spent on short, job-specific courses recognises the reality of how modern industries train.

The new approach could help SMEs access funding via transfers from larger employers, and it opens the door to training that supports automation, AI adoption, green technologies and digital transformation, areas where skills needs to evolve faster than traditional qualifications can adapt.

However, several gaps remain:

The timeline (full rollout not until 2026) risks more overspend.

The share of levy funds that can be used for short courses is still to be defined.

There is no clear mechanism to prioritise urgent sector shortages (for example, in renewables, logistics, or advanced manufacturing).

SMEs may still find the administrative process too burdensome without local support.

Will these short courses be approved for delivery quickly enough to keep up with the speed of industrial change?

As released at AELP’s autumn conference providers will need to be approved and on APAR to be able to deliver these short qualifications

Are some of these qualifications already funded through ASF or other means? And will they carry their own professional recognition/certification? An example often used is the Heat Pump installer which qualifies an individual to install Air Source heat pumps.

Without faster and clearer implementation, millions of levy income could continue to sit idle creating a missed opportunity when employers across the economy are crying out for skilled labour. Employer investment in development and training is far below that of the 2010s, however, with more employers now paying into the levy releasing the full value of levy receipts could power both apprenticeship, levy funded short courses and potentially ASF/LLE funded ineligible courses.

4. Skills England – Can It Keep Up With Industry?

The White Paper gives Skills England the pivotal role of coordinating workforce intelligence, funding priorities and training delivery across government and industry. In theory, it will act as the national “skills system integrator” spotting shortages early and ensuring the right training is available quickly.

But there’s a tension between that ambition and the machinery of government.

Skills needs change in weeks and months, not years. The growth of green energy, AI, data science, and logistics technologies requires near-real-time responsiveness.

Skills England is still in its infancy, building its evidence base and establishing governance structures. It may take several cycles before it can generate sectoral insights robust enough to direct funding confidently.

Short courses can only be responsive if approval systems are agile. If each new module needs months of validation, initial employer enthusiasm will disappear quickly.

The promise of “modular flexibility” will only succeed if Skills England can streamline course approval, accreditation and funding decisions, and give providers the authority to act quickly where demand is clear.

Without that agility, there’s a risk that Skills England becomes another coordinating body that reacts to skills gaps after they’ve already widened.

5. Do the Reforms Go Far Enough?

The direction of travel is right, but the pace and depth of reform may fall short of what’s needed to unlock the system’s full potential.

Positives:

Acknowledging levy rigidity and introducing modular options;

Commitment to aligning skills with industrial strategy;

Strengthened collaboration between employers, providers and local authorities.

Limitations:

The reforms are evolutionary, not revolutionary, still using existing frameworks and timelines.

They don’t yet ensure rapid training availability in response to real-time industrial shifts.

The redistribution of unused levy funds to regions or SMEs remains undefined.

The structural imbalance persists, big firms dominate access, while smaller ones face barriers.

The defunding of low volume and low-quality apprenticeships has not yet been defined

Is the defunding of level 7 apprenticeships dependent upon age a cliff edge moment for other higher-level training? E.g., degree apprenticeships?

With billions unspent and youth unemployment stubbornly high, modest reforms may not be enough to build a skills system that genuinely drives growth and inclusion.

6. A Call to Action: Turning Policy Into Practice

For employers, training providers and local partnerships, the task now is to shape and accelerate implementation:

Engage with Skills England early to influence the first wave of modular training priorities.

Co-design short courses that could slot into the new levy model and be rolled out quickly when funding opens.

Use current apprenticeship and transfer routes to minimise further underspend before 2026.

Collaborate across sectors and regions to push for faster approval and funding cycles for high-demand skills areas.

The Growth and Skills Levy could be a genuine turning point but only if it leads to a system capable of responding to labour-market change in real time. Otherwise, it risks becoming another slow-moving policy framework chasing a fast-moving economy.

The Association of Employment and Learning Providers (AELP) is a national membership body, proudly representing organisations operating in the skills sector. AELP members deliver a range of training and vocational learning – including the majority of apprenticeships as well as Skills Bootcamps, 16-19 Study Programme, Adult Education Budget and more.

For further information or interviews please contact Matt Strong, Communications Manager, AELP, on 07920 161685 or [email protected]