Apprenticeship reforms: What universities and businesses need to know

Apprenticeship programmes are an important mechanism for universities and businesses to collaborate to deliver higher skills. Universities and businesses must be able to shape the Government’s apprenticeship reforms, including the new Growth and Skills Levy and future funding for Level 7 apprenticeships.

In September, the Prime Minister announced a series of reforms to apprenticeships in England, including the new Growth and Skills Levy. These reforms are intended to improve access to apprenticeships for young people (as part of Labour’s new Youth Guarantee). Apprenticeships are also expected to drive local growth by enabling employers to access the skills they need locally.

Universities are a major provider of apprenticeships, providing one in ten apprenticeships in England in 2022/23, with some universities providing thousands of apprenticeships each year. Higher education is also essential to delivering wider skills and training for businesses, and will play a key role in delivering the training that will underpin the Lifelong Learning Entitlement. Businesses are the critical stakeholder informing provision, as they will spend much of the money generated by the Levy – and will hope it delivers the flexibility they’ve been calling for to investment in their future workforce needs.

Shaping the Growth and Skills Levy

Key policy debates about the Levy include around governance, funding allocations and eligible provision.

The Autumn Budget emphasised that Skills England will decide what provision is eligible for future Levy funding “in partnership with employers, providers and learners”. NCUB has advocated for the body to create structures that enable evidence-based collaboration between universities and businesses. While Skills England has invited stakeholders to provide evidence to support initial decision-making by the end of 2024, long-term engagement mechanisms remain unclear. It is likely this will include collaboration with regional organisations and industry groups, building on existing structures for engagement.

Significant debate has focused on how funds raised by the Levy could be prioritised and ringfenced to achieve different outcomes. Labour previously proposed allowing up to 50% of Levy funds to be spent on non-apprenticeship training but has been more ambiguous since coming into Government. As the Government’s apprenticeship budget has returned very small underspends since 2021/22, NCUB has called on the Government to reserve a portion of Levy funding for apprenticeships, whilst providing new flexibilities businesses need. One way to provide further funding for apprenticeships and other training could be to allocate more of the funds raised by the Levy for this purpose. Analysis by the Learning and Work Institute finds that the Government is likely to raise £846 million more from the Levy than is allocated to the apprenticeship budget in 2024/25.

Will level 7 apprenticeships be eligible for Growth and Skills Levy funding?

Degree apprenticeships in England have seen consistent growth since the introduction of the Apprenticeship Levy, with 46,790 starts in 2022/23 compared to 10,870 in 2017/18. This includes level 7 apprenticeships (equivalent to a masters degree) which are addressing critical skills needs in growth sectors (like digital technologies and green industries) and public services. However, the Government is reviewing the eligibility of level 7 apprenticeships for Levy funding, citing concerns that funding could be better used to improve access to apprenticeships for young people.

The Skills Minister, Jacqui Smith, has warned stakeholders there is limited flexibility for including level 7 apprenticeships within eligible provision under the new Levy. Therefore, it’s vital that the Government engages universities and businesses to understand the importance of level 7 apprenticeships in meeting national and regional higher skills needs (including those needed to deliver the Industrial Strategy, or the NHS Long Term Workforce Plan). This will help to identify where flexibility is needed for continued funding for level 7 apprenticeships.

What’s next?

Government timelines for implementing these reforms remain unclear, although the Skills Minister has indicated that a post-16 education strategy will be published “after Christmas”. This is likely to provide more detail on the implementation of apprenticeship reforms.

NCUB is actively engaging members and partners to assess the implications of these changes. If you’re likely to be affected, we would welcome a conversation to hear your perspective.