Skills England and the Future of Apprenticeship Funding: What Businesses Need to Know

In the ever-evolving landscape of education and training, the introduction of Skills England and significant changes to the UK Apprenticeship Levy have become pivotal topics. At Solveway Apprenticeships, where we work closely with apprentices across accountancy, data, and IT, understanding how these developments will impact businesses and learners is crucial. With the recent governmental shifts, there's a new approach designed to address the growing skills gap and provide learners from all backgrounds with more opportunities to succeed.

A New Body for a New Era: Skills England

The UK government has introduced Skills England, a new professional body that places partnerships with employers at its core. This body is dedicated to offering more opportunities to learners from all walks of life while delivering critical skills for businesses of every size and across all sectors. Initially set up in shadow form within the Department for Education, Skills England is already undertaking its essential role of identifying skills gaps and collaborating with key organisations to develop solutions. Over the coming months, Skills England will expand its operations, adding new functions as it builds its staffing and deepens its relationships with employers.

The creation of Skills England signifies a commitment to addressing both local and national skills needs, ensuring that the future workforce is equipped with the knowledge and capabilities required to thrive in an increasingly complex job market. With its ambitious goals and collaborative focus, Skills England will be a vital force in shaping the future of skills training and apprenticeships in the UK.

A New Government, A New Direction

In July 2024, the Labour government came into power with bold promises to tackle the UK's skills shortage head-on. With around 6.5 million people in the workforce expected to be "significantly underskilled" by 2030, and nearly a third of employees aged 50 or over, the need for a modernised approach to skills development has never been more urgent.

Labour's answer to this challenge is a broadening of the existing Apprenticeship Levy into a more comprehensive "Growth and Skills Levy," a move that signals greater flexibility in how businesses can invest in upskilling their workforce. This change is part of a wider strategy led by Skills England, aimed at filling critical skills gaps and ensuring that training aligns with the needs of both learners and employers.

Why Change the Apprenticeship Levy?

Introduced in 2017 by the Conservative government, the Apprenticeship Levy was designed to increase investment in apprenticeship training. However, while it provided valuable resources for many businesses, it faced criticism from various quarters. Employers found the levy overly restrictive, limiting how they could spend the funds, and there was widespread frustration over unspent levy contributions, which reached close to £4 billion by 2023.

In response, the Labour government has reimagined this funding model. The new Growth and Skills Levy will offer businesses greater flexibility by allowing them to use 50% of their levy contributions for other forms of training beyond apprenticeships. This could include continuous professional development (CPD) or other skills-based training that is not traditionally covered by apprenticeship schemes.

What Do These Changes Mean for Businesses?

For employers, these changes could provide much-needed flexibility in how they develop their workforce. While apprenticeships will remain a key component of the new system, the ability to allocate half of the levy to other training options opens up a range of possibilities.

At Solveway, we recognise that many employers in industries like IT and data analytics require highly specialised skills that may not always fit into the traditional apprenticeship framework. The Growth and Skills Levy will allow businesses to better tailor their investment in skills to their immediate needs, whether that’s through formal apprenticeships or alternative training routes.

However, with this flexibility comes the need for businesses to make informed decisions about their training investments. As Skills England begins to establish its guidelines, there will likely be a learning curve as employers adapt to this new system. Clear advice and support from training providers like Solveway will be essential to ensure businesses get the most out of their levy contributions.

Will Apprenticeships Still Be a Priority?

One potential concern is that the broader use of levy funds could result in a reduction in apprenticeship opportunities. Apprenticeships are a proven way to develop practical, job-ready skills in a structured environment, and for many industries, they remain the most effective way to bridge the skills gap.

At Solveway, we believe that apprenticeships will continue to play a vital role, particularly in sectors like IT, data, and accountancy where hands-on experience is invaluable. While some businesses may choose to allocate funds to other forms of training, the structured nature and long-term benefits of apprenticeships make them a cornerstone of workforce development.

The Path Ahead

The introduction of Skills England and the transformation of the Apprenticeship Levy into the Growth and Skills Levy are undoubtedly significant changes. As these policies take shape, businesses must stay informed and proactive in adapting their training strategies.

For companies already engaged with Solveway, this is an exciting time to reconsider how best to leverage their levy contributions. Whether it's continuing to support apprentices in accountancy, data, and IT, or exploring new training pathways, the key is to stay agile and open to the opportunities this new system offers.

In conclusion, while the changes may seem complex, they are driven by a clear vision to close the UK’s skills gap and better prepare the workforce for the challenges of the future. With the right guidance and approach, businesses can make the most of the evolving landscape and ensure their teams are equipped with the skills they need to thrive.

‍