The Department for Education’s apprenticeships budget has risen to more than £3 billion for the first time.
New Treasury documents for 2025-26, known as ‘main supply estimates’, show that ministers have increased England’s apprenticeship budget for this year by 13 per cent, from £2.73 billion to £3.075 billion.
The Department for Education confirmed the £345 million boost to FE Week.
The increase is the largest in cash terms since the apprenticeship levy’s introduction in 2017, and comes as the sector awaits reforms such as the axing of level 7 apprenticeships and pivoting to the ‘growth and skills levy’.
It also suggests a cut to the Treasury’s top slice of the apprenticeship levy – the amount the government keeps after collecting the funds paid by employers and dishing out spending for apprenticeships to the DfE and devolved nations – which hit more than £800 million in 2024-25.
The Office for Budgetary Responsibility (OBR) has estimated that total apprenticeship levy paid by businesses in 2025-26 will be £4.2 billion, which leaves a top slice of around £600 million once the DfE’s new budget is released and devolved nations are paid their share.
Simon Ashworth, deputy chief executive of the Association of Employment and Learning Providers (AELP), said: “On the face of it, this is very welcome news against the backdrop of an extremely tight fiscal environment.
“A 13 per cent increase doesn’t just reflect the anticipated growth in levy take by the OBR, but a substantial release of the amount the Treasury has been retaining as a top slice.
“AELP have long called for the gap between what’s raised by the apprenticeship levy and the amount spent on the programme budget to be minimised so this is definitely a step in the right direction.”
However, he added that the DfE’s budget increase “does call into question why the government need to proceed with slashing and burning level 7 apprenticeships if there’s more money coming in the budget”.
Waiting for level 7 crunch
The sector is waiting on a final decision on the axing of level 7 apprenticeships, which accounted for about 9.2 per cent, or £240 million, of 2023-24’s £2.7 billion budget.
A letter from education secretary Bridget Phillipson, seen by FE Week this month, revealed a “concession” is on the cards that would allow young people aged 16 to 21 to continue to access all master’s level apprenticeships following pressure from other cabinet ministers.
But it referred to other “challenging steps needed” ahead of reforming the apprenticeship levy into the growth and skills levy that could include other types of work-based training.
Gradual increases
England’s apprenticeship budget has increased steadily from £2 billion in its first year, 2017-18.
However, during the same period the amount raised through the levy grew from £2.271 billion to £4.1 billion in 2024-25.
The Treasury’s budget documents were published yesterday as part of the government’s annual cycle of seeking Parliament’s formal approval of its spending plans through a vote, usually in July each year.
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