Apprenticeship Reforms - What it means for your business

The government has introduced significant changes to the apprenticeship system in England, offering exciting new opportunities for business owners. These reforms focus on increasing young people's access to apprenticeships, including the introduction of a new "Growth and Skills Levy," which will replace the existing Apprenticeship Levy.

We have summarised below what this could mean for your business.

The new Growth and Skills Levy

The new Growth and Skills Levy is designed to provide businesses with more flexibility in how they approach apprenticeship training. Currently, apprenticeships must last a minimum of 12 months, which doesn't always align with the operational needs of every company.

With the new reforms, businesses can access funding for shorter apprenticeships. This flexibility allows you to offer training programmes that not only fit your business needs but also match the pace at which your employees learn. In practice, this means you could onboard new staff more quickly while still equipping them with valuable skills tailored to their roles.

Foundation Apprenticeships

Another key component of the reforms is the introduction of Foundation Apprenticeships. These new apprenticeships are aimed at helping young people break into essential industries while earning a wage and gaining practical skills.

The goal of these is to help encourage businesses to invest in younger talent. Young workers often bring enthusiasm, a fresh perspective, and a willingness to learn. With government support backing their training, this can become a valuable opportunity for businesses seeking new talent while reducing some of the training costs.

How will this affect your current apprenticeship plans?

As part of the reforms, businesses will need to reallocate some of their apprenticeship funding towards younger workers. This includes a shift in how employers fund higher-level apprenticeships (such as level 7, equivalent to a master’s degree), where businesses will need to cover more of the costs outside of the levy.  These high-level apprenticeships are typically accessed by older or already well-qualified employees.

If your business relies on high-level apprenticeships, now is the time to assess your budget and start planning for this change. Adjusting your financial planning early will help you manage these costs more effectively and ensure that you continue to benefit from highly qualified employees.

What Skills England’s reports means for you?

Skills England recently published its first report (published 24 September 2024), which paints a picture of the UK's current skills landscape. Worryingly, it highlights a 19% drop in employer investment in training per employee since 2011. Furthermore, 1 in 10 jobs are now classified as "critical demand," with the vast majority requiring specialised training or education.

For businesses, this report is a timely reminder of the growing skills gap across industries. The new Apprenticeship Reforms offer a prime opportunity to invest in your workforce, helping you to stay ahead in a competitive market. By acting now, your business could be well-positioned to attract and retain skilled workers, securing a stronger future.

Key takeaways for your business

• The Growth and Skills Levy should give you more flexibility, enabling you to tailor apprenticeships to your business needs, including shorter training programmes.
• Foundation Apprenticeships provide an opportunity to access a new pipeline of young talent, equipped with the skills necessary for your sector.
• Businesses will need to shoulder more of the cost of high-level apprenticeships (level 7), so now is the time to review and plan for these changes.
• The Skills England report underscores the importance of investing in training to address widening skills gaps. By embracing these reforms, you can position your business for long-term success.

Further announcements are expected from the Department for Education on the specific details of how the new system will work.  

For more details, check out the official announcement from the government here.