Growth and Skills Levy - Understanding the changes shaping England’s skills system

Skills England: Driving a more coherent, responsive skills system

Established in June 2025, Skills England is responsible for leading the national skills strategy under the mission: “better skills for better jobs”. 

Its purpose is to build a more coordinated system that aligns training with labour‑market needs across England. To achieve this, it focuses on three national priorities:  

• Developing an authoritative picture of the skills the country will need over the next decade  

• Ensuring the training system is flexible and responsive to employer demand at national, regional, and local levels  

• Strengthening alignment between national and regional skills planning through Local Skills Improvement Plans (LSIPs)  

Skills England’s approach is rooted in collaboration, bringing together employers, providers, local leaders, trade unions, and central government to plan for long‑term workforce needs. 

The Growth and Skills Levy: A more flexible funding system

Introduced in April 2025, the Growth and Skills Levy replaces the Apprenticeship Levy and gives employers far greater flexibility in how they meet skills needs. It is designed to help people gain relevant, high‑quality skills at work and to support innovation and productivity across the economy. 

What has changed 

The Levy introduces a more flexible, responsive training system. Under the new approach: 

• More types of training can be funded, enabling employers to respond quickly to skills needs, especially in fast‑moving sectors where shorter, more responsive training options are essential 

• Employers can use up to 50% of their levy funds for non‑apprenticeship training, including short courses, modular learning, and Skills Bootcamps, providing greater flexibility in how they invest in training and skills development 

• At least 50% of levy spend must continue to support full apprenticeships, ensuring they remain a core, long‑term route for structured skills training 

Why these changes matter 

The reforms directly address long‑standing issues such as: 

• Levy funds going unspent 

• Limited flexibility in how employers could invest in skills training  

• Difficulty accessing shorter, targeted training to meet immediate skill shortages 

By widening the scope of eligible training, the Levy enables employers to get the right skills in place more quickly and efficiently. 

Aligning with national priorities 

The government will work with Skills England to ensure the training available through the Growth and Skills Levy aligns with employer demand and the UK’s wider national priorities. This partnership will help build the capabilities most needed across the economy. 

Changes already in place / announced

Several reforms have already been implemented as part of the transition to the new levy:  

• Shorter apprenticeship durations  

The minimum duration has reduced from 12 months to eight months, supporting faster skills development and workplace impact 

• New foundation apprenticeships (Level 2)  

Introduced in priority sectors and designed for people aged under 22, to strengthen entry‑level routes and support young people into paid employment.  

• Faster approval process 
  New accelerated approach to reduce approval times go from 18 months to three months 

• Removal of mandatory maths and English for adult apprentices  

Learners aged 19 and over no longer need to achieve Level 2 maths and English to complete an apprenticeship.  

• Simplification of End-Point Assessment (EPA)  

More flexible assessment design, including greater scope for remote assessment and streamlined processes.  

• Funding eligibility changes for Level 7 apprenticeships  

From 1 January 2026, funding for Level 7 apprenticeships became limited to learners aged 16–21 or aged up to 25 with an Education Health and Care Plan (EHCP) or care‑leaver status. 

New Apprenticeship Units (from April 2026) 

Apprenticeship units represent one of the most significant proposed changes to the system so far. They are designed to make training more flexible, more targeted, and easier for employers and learners to access. 

What they are 

• Short, formally recognised (accredited) training modules that come directly from existing apprenticeship standards 

• Made up of specific Knowledge, Skills and Behaviours (KSBs), that are defined within an existing full apprenticeship standard  

How they work 

• Delivered as short training units, expected to typically last from between 1 week to 3 months 

• Designed to be taken independently of a full apprenticeship programme while still following the same approved standards  

How they are funded 

• Funded through the Growth and Skills Levy, allowing employers to use their levy contributions for modular training as well as full apprenticeships 

• Employers will be able to use up to 50% of levy funds on these shorter units, helping them address immediate or emerging skills gaps 

Who can deliver them 

• Training providers that are registered on the official government Apprenticeship Provider and Assessment Register (APAR)  

Priority areas for the first units 

The first units will focus on areas where skills shortages are most acute:  

• Digital 

• Advanced AI (Artificial Intelligence) 

• Engineering 

Full apprenticeships will continue to play a central role, providing the structured, comprehensive development needed to build long‑term workforce capability. 

Further changes expected in 2026 

From 1 August 2026, additional reforms are planned to take effect:  

• Levy funds will expire after 12 months instead of 24, requiring more proactive workforce and training planning  

• SMEs will receive full government funding for apprentices under 25, removing the usual 5% co‑investment cost  

• Co-investment rates for levy-paying employers will change when they have exhausted their levy funds: 

• Government contribution will reduce from 95% to 75%  

• Employer contribution will increase from 5% to 25%  

These adjustments aim to encourage more timely use of funds, increase access for young people, and continue to prioritise high‑quality apprenticeships. 

What this means for employers 

The reforms collectively create: 

• Faster, targeted training options through modular units and shorter apprenticeships 

• Greater flexibility to respond to skills priorities, particularly in fast‑moving sectors 

• More opportunities to build early‑career talent, supported by new Level 2 pathways 

• Reduced co-investment demands for SMEs, improving access to apprenticeships for young people 

• More efficient use of levy funds, reducing the risk of unspent contributions 

Overall, employers will have a broader and more adaptable toolkit for developing their workforce. 

What this means for learners 

For learners, the evolving system is designed to offer: 

• Clearer entry routes into work, especially through foundation apprenticeships 

• More targeted upskilling aligned with real job roles in priority areas 

• Training linked to progression pathways, shaped by employer and regional needs 

• More flexible ways to gain skills, including shorter units and modular learning 

This aims to create a more accessible, job‑focused skills landscape with pathways that suit learners at different stages. 

How we can support your organisation  

If your business is considering traditional apprenticeships or exploring the new apprenticeship units to upskill your teams, bring in fresh talent, or make the most of available funding to address your skills gaps, our team of expert advisors is here to support you every step of the way. 

How our advisors can help 

• Identify the right training pathways to match your skills needs needs 

• Maximise your funding opportunities, ensuring your organisation makes the most effective use of the Growth and Skills Levy 

• Create a tailored skills development plan that aligns your business goals with the latest training and funding reforms.