Healey’s apprenticeship brokerage misses 28m people

Half of England’s population will be excluded from a £240 million mayoral brokerage programme to boost apprenticeship recruitment, prompting warnings of a “two-tier skills system”.

Chancellor John Healey told Labour’s conference this week that all 14 mayoral strategic authorities (MSAs) in England would get funding from spring for “local apprenticeship services”.

The brokerage services aim to connect young people with apprenticeships and boost employer take-up, with a particular focus on small and medium-sized enterprises.

But the decision to restrict funding to areas with mayoral devolution deals means around 28.5 million people will live outside areas eligible for the programme.

Local leaders, MPs and skills experts have warned the approach risks creating a postcode lottery for apprenticeship support.

FE leaders have also questioned the government’s unprecedented decision to use apprenticeship levy funding to pay for the brokerage services, with tens of millions of pounds spent on strategic authority “delivery” rather than training or assessment.

Association of Employment and Learning Providers CEO Ben Rowland said: “This money should not come from the levy, all of which should be dedicated to its original purpose: supporting the delivery of apprenticeships.

“We are also concerned that learners, employers and providers in non-devolved areas are, in effect, second-class citizens, leading to a two-tier skills system.”

MPs to lobby for non-mayoral areas

Several Labour MPs representing areas without mayors were understood to be frustrated by Healey’s announcement.

One, who asked not to be named, told FE Week: “My colleagues and I will be seeking urgent clarity on this and will continue to lobby for non-mayoral areas to benefit from these critical initiatives.

“I would encourage others to do the same, so that no area is left behind.”

A County Councils Network spokesperson said its 39 members’ areas were home to 12 million jobs and 48 per cent of the country’s businesses, but 30 do not have a directly elected mayor and 22 do not have a devolution deal.

“This means large swathes of England currently do not have access to powers such as the local apprenticeships programme announced this week,” they said.

“To avoid a country of urban ‘haves’ and county ‘have nots’, we are calling on the government to complete the devolution map, and ensure every area has access to a devolution agreement by the end of 2028, where there is local consent.”

‘Skills shortages do not stop at mayoral boundaries’

The exclusion has particularly frustrated leaders in areas that have already established local apprenticeship “hubs” to provide brokerage support.

The Solent Growth Partnership, which covers Portsmouth, Southampton and the Isle of Wight, launched an apprenticeship hub in 2019, offering support and training for employers and training providers alongside a levy transfer service.

A spokesperson said: “It is particularly frustrating that many of the approaches being tested through the new pilot closely mirror models that hubs such as Solent have already developed, refined and delivered successfully over a number of years.

“While we understand the government’s desire to work through existing mayoral combined authorities, this approach risks creating a postcode lottery for employers.

“Skills shortages, recruitment challenges and the need for apprenticeship brokerage do not stop at mayoral boundaries.”

The election of a mayor for the new Hampshire and the Solent Combined County Authority has been delayed by a year to 2028.

FE Week reported earlier this year that local authorities and training provider networks outside devolved areas had established brokerage-style apprenticeship hubs, some of which are now threatened by the loss of regional development funding.

In May, training provider networks wrote to work and pensions secretary Pat McFadden warning that the end of the UK Shared Prosperity Fund (UKSPF) in March threatened their work.

The government replaced UKSPF this April with the £225 million Local Growth Fund, which is worth 75 per cent less than its predecessor and will only go to 11 mayoral strategic authorities in the North and Midlands.

Edge Foundation CEO Alice Barnard said it was “vital” that government support for apprenticeship brokerage services extends to non-strategic authority areas “where hubs face an increasingly uncertain future owing to their reliance on various short-term funding streams, not least the recently expired UKSPF”.

Apprenticeship money diverted to ‘solve the wrong problem’

Last year’s autumn budget allocated £140 million from the apprenticeship budget to fund the brokerage pilots in up to eight mayoral areas between late 2026 to March 2029.

Up to £60 million of this was earmarked to fund “MSA delivery” while £80 million would fund associated training and assessment.

Healey’s announcement this week added an “extra” £100 million to the programme and extended the funding to six more mayoral areas.

It is not yet known whether the additional cash will also be taken from the Department for Work and Pensions’ annual apprenticeship budget, or how it will be split between MSA delivery and training costs.

The Treasury would only say that the brokerage expansion would be “fully funded” by savings identified by the DWP, with further details expected in the budget on October 28.

Ben Pike, an adviser and board member at multiple training providers, criticised the use of apprenticeship levy funding for brokerage programmes.

“I believe it is diverting huge amounts of money to solve the wrong problem,” he said.

“Incentives for employers are really positive and will drive work opportunities, but spending millions on a matching service isn’t going to change the volume of available roles which is our core challenge.”

The government is already facing pressure on the £3.3 billion annual apprenticeship budget, which overspent for the first time in 2024-25.

Ministers are redirecting funding towards young people, including by removing funding for level 7 apprenticeships for over-22s and defunding a range of management apprenticeships.

Pike said: “We are cutting investment in higher-level skills, which we know has a high return on investment, to fund this [brokerage] exercise which is concerning for our economy longer term.”

DWP accounts this year revealed forecasts that show apprenticeship spending is expected to reduce from 2027-28.

Seven mayoral areas will begin piloting the new brokerage services from “early 2027”, months behind the original schedule, with the remaining seven due to follow in spring.

The first seven are London, Greater Manchester, Liverpool City Region, South Yorkshire, Tees Valley, West Midlands and West of England.

The other seven areas to receive funding are the North East, West Yorkshire, Cambridge and Peterborough, East Midlands, Greater Lincolnshire, Hull and East Yorkshire, and York and North Yorkshire.

Although details of the services remain limited, a successful bid by South Yorkshire Combined Authority included a “targeted employer brokerage” service focused on SMEs, “personalised support” for young people and a “talent pool” to redirect applicants who narrowly miss out on apprenticeships towards alternative opportunities.

The government has trialled multi-million-pound SME apprenticeship brokerage pilots in the past but struggled to make them work.

Healey said local leaders “know their areas best” and were better placed to match young people with small employers to create apprenticeships for their communities.