2025’s National Apprenticeship Week, marked between 10th – 16th February, comes during a moment of structural change for the education pathway.
Background to reforms in the Apprenticeship policy space
As a policy area, apprenticeships have remained at the heart of skills reforms since the election of the Labour Government in July 2024. But a formal announcement on the full scope of change is yet to be delivered.
The Government committed to evolving the Apprenticeship Levy into a new Growth and Skills Levy back in Autumn 2024, in a move to make the funds raised by employers available for a broader range of skills needs, and to enhance flexibility in use of the levy’s resources.
This reform has been long called for by NCUB, as many businesses argue that the existing Apprenticeship Levy limits their ability to invest to meet the skills needs of their workforce, by absorbing learning and development funds and providing strict limitations around use of the levy’s resources. NCUB has welcomed the move to a refreshed approach for employer funding within skills.
Updates this week
Further information came this week in a joint letter from Skills Minister, Baroness Jacqui Smith, and the Minister for Employment, Alison McGovern MP, to the Chair of the House of Lords Industry and Regulators Committee. This was in response to a letter from the committee to the Department for Education (DfE) which raised concerning conclusions from their recent inquiry into the UK’s skills needs. The letter warned of complexity in the skills system, and called for the Department to act to ensure the UK’s apprenticeships and training programmes meet our economy’s future skills needs.
In the response, the Ministers agreed that the skills system is overly complex, and affirmed there will be forthcoming plans that increase flexibility for both employers and learners. However, the letter also confirmed that changes will “re-balance spending towards young people”, to meet ambitions within the Government’s breaking down barriers to opportunity mission.
The letter states that the DfE will be asking employers to “step forward and fund level 7 apprenticeships”, which strengthens hints that these qualifications will become ineligible for funding via the levy mechanism under coming reforms. This would require employers to find additional funding to invest in level 7 apprenticeship opportunities, if they wish to support higher learning.
The letter also announced the development of new foundation apprenticeships in targeted sectors, which will be work-based qualifications providing high-quality progression pathways for young people into further work-based training and employment.
Coming alongside the letter this week from the DfE was an announcement on the creation of shorter and more flexible apprenticeship programmes and reduced entry requirements for adult learners, intending to create 10,000 more apprentices.
Direction of travel and impacts
Expanding opportunities for adult learning through apprenticeships by removing eligibility restrictions is a positive step. NCUB has welcomed this move, recognising the critical role a robust apprenticeship system plays in equipping the workforce with future-ready skills.
However, this week’s policy developments risk exacerbating employer pressures, siloing business engagement in skills development, and constraining higher-level learning.
- Limiting resources for higher level skills
Levy contributions represent a large share of employer’s investment in skills. Disqualifying use of these funds for level 7 learning could reduce investment in, and attainment of, higher skills nationally. This is a concerning trend, as up to 90% of the workforce requires some form of up or re-skilling, and because it’s higher skills which catalyse productivity and deliver the strong economic performance which growth depends on.
Our employers face significant headwinds, evidenced in the wholescale drop in investment in skills over the last 15 years, and the decline of private investment in R&D, which remains below pre-pandemic levels. Increasing training costs by making higher-level learning an additional employer expense will limit access to essential skills and contradict national ambitions for economic growth. To enhance productivity and stimulate growth, businesses need greater access to higher-level skills, alongside fewer barriers to engagement in skills development at all levels.
- Siloing employer engagement in skills
Creating the capacity to host additional apprentices and introducing a foundation route will only succeed if employers can provide more entry-level learning opportunities. However, this resource is finite, and doing so comes at a cost to other education pathways and collaborative activities.
Directing increasing proportions of employer’s resources towards this pathway may limit their ability to invest in alternative skills development pathways across HE and FE, to contribute to curriculum development, and to equip their existing workforce with the evolving skills and knowledge that is essential for success in a fast changing world.
This was a key challenge outlined in NCUB’s Collaboration for Future Skills report, which looks at how we can remove the barriers to collaboration and shift the focus away from specialised programme (such as Apprenticeships), to expand the benefits of employer engagement in education across a broader range of education’s offering.
Employers need support to be able to invest in skills for the future at all levels. With additional pressures from T Levels, placements, and curriculum co-development, an over-reliance on the apprenticeship model risks diverting attention from broader skills challenges.
- Creating a model to unlock wholistic employer investment in skills
Targeting levy funds toward young people raises a pressing question: Which mechanisms will be developed to deliver upskilling at the scale needed to meet future workforce demands and drive productivity?
NCUB’s latest data indicates that while businesses have increased investment in apprenticeships through the levy, their investment in university CE/CPD has declined. A re-balancing is needed.
We continue to call for a well-rounded skills strategy, which doesn’t just support entry-level roles, but also ensures businesses can access the high-level skills critical for long-term innovation and economic performance.
NCUB members will soon be able to download and access NCUB’s full member briefing on trends around employer investment in skills, where we outline the different forms of investment, and make the case for wider support to unlock opportunties.
Reforms to the levy were a key theme discussed in a roundtable hosted this week by the DfE and Combined Authority Cambridge and Peterborough. Attending the session, NCUB discussed policy solutions to increase employer engagement and investment in skills. We continue to argue that reducing funds available to develop higher skills – at a time when top talent is needed to deliver on our national productivity and growth ambitions – limits employers’ ability to up and re-skill their staff in the rapidly evolving world we live in, and access the full capability and potential of their workforce.
NCUB members can soon access a full briefing on Apprenticeship trends, reforms and practical solutions to the challenges facing the sector.
Beyond Apprenticeships, the letter this week from Minister Smith also outlined further details on the scope of Skills England, which is still formally developing within the Department, currently in ‘shadow form’. She re-affirmed that the Government will develop a Post-16 Education and Skills Strategy, which will set out the Government’s long-term vision for the skills system – including HE provision, adult and lifelong learning. These are development that NCUB will watch with interest, and continue to provide updates on.
Please reach out to the team if you have insights to share on these reforms: policy@ncub.co.uk.
Policy Lead - Impact
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