Public funding for level 7 apprenticeships will be removed for people aged 22 and older from January 2026, the government has confirmed.
From the new year, employers will only be able to use the apprenticeship levy to fund the master’s level courses for existing apprentices and new starters up to age 22, as first reported by FE Week earlier this month.
Level 7 apprentices who are care leavers or have an education, health and care plan (EHCP) can be funded up to age 25.
The Department for Education (DfE) said today the reforms “rebalance” the apprenticeship budget “towards training at lower levels, where it can have the greatest impact”.
It comes as part of a bundle of skills announcements, including 45,000 “domestic” training places funded through the immigration skills charge, a boost to the apprenticeship budget and £132 million for skills bootcamps in “priority sectors”.
Appointments to the board of Skills England are also expected today.
Education secretary Bridget Phillipson said: “A skilled workforce is the key to steering the economy forward, and today we’re backing the next generation by giving young people more opportunities to learn a trade, earn a wage and achieve and thrive.”
The controversial cut to level 7 apprenticeships has been trailed for months, with prime minister Keir Starmer first announcing plans for the restrictions last September alongside shortened apprenticeships and new foundation-level programmes.
FE Week first revealed that young people up to age 21 would be exempt from the level 7 funding axe earlier this month. A leaked letter from Phillipson to Cabinet Office minister Pat McFadden revealed the age cap was introduced as a concession to win the support of her ministerial colleagues.
Level 7s unviable from January
FE Week analysis for the most recent full academic year, 2023-24, shows that out of 23,860 level 7 starts, 468, or 2 per cent, were for under-19s, while 7,995, or 34 per cent, were aged 19 to 24. The government only publishes data on apprenticeship starts in three age groups: under-19s, 19 to 24-year-olds, and 25-plus.
It means very few level 7 apprenticeships will remain viable from January, with only the solicitor and accountancy and tax professional standards clocking up sizable volumes of starts for under 25s.
The senior leader level 7 apprenticeship, which the Chartered Management Institute claims is largely taken by professionals in the NHS, education and civil service, has less than 1 per cent of starts for those aged under 25.
Other popular level 7 apprenticeships likely to become unviable to due to the age limit include senior people professional, digital and technology solutions specialist, chartered town planner, artificial intelligence (AI) and architects.
Employers wishing to continue with level 7 apprenticeships will need to pay for them themselves.
Just under £240 million was spent on level 7 apprenticeships in 2023-24, but DfE have not confirmed how much would be saved by removing levy eligibility now the age cap is in place.
‘Record-breaking’ apprenticeship budget
DfE has also confirmed a “record-breaking” apprenticeship budget for 2025-26.
Treasury documents published earlier this month already confirmed the 13 per cent budget boost, from £2.73 billion in 2024-25 to £3.075 billion in 2025-26, as reported by FE Week at the time.
DfE said today the extra funding, the largest cash increase in the apprenticeship budget since the levy was introduced in 2017, “will open up opportunities for young people to succeed in careers the country vitally needs to prosper”.
Latest forecasts by the Office for Budget Responsibility (OBR) show £4.2 billion is expected in apprenticeship levy payments by employers in 2025-26, another record figure.
Accounting for DfE’s £3 billion apprenticeship budget and allocations to devolved nations, this will leave around £600 million retained by the Treasury in 2025-26, down from £800 million in 2024-25.
Part of DfE’s pivot towards young people is the new foundation apprenticeships, designed for 16- to 21-year-olds, or up to age 24 for apprentices who were in care, in prison or with an education, health and care plan (EHCP).
The first seven approved foundation apprenticeship courses were announced last week; three in construction, two in digital, one in health and social care and one in engineering and manufacturing.
Starts are expected from this August, once the government has changed the law to reduce the legal minimum duration of apprenticeships from 12 to eight months.
Maximum funding on offer to deliver the training ranges from £3,000 for health and social care, which one provider chief branded “laughable”, to £4,500 for engineering.
Employers who take on, retain, and progress a foundation apprentice will receive incentive payments worth up to £2,000.
The DfE said today that an extra 30,000 apprenticeship starts will be created during this parliament.
Boost for ‘priority’ bootcamps and construction
DfE has also earmarked £132 million for skills bootcamps “across a range of priority sectors” for 40,000 learners in 2025-26. This is alongside £100 million already announced to extend the courses in the construction sector.
The government had previously told training providers that the programmes in sectors other than construction would no longer be funded.
Providers in non-devolved areas will have access to 13 new level 2 construction courses through the Free Courses for Jobs (FCFJ) scheme, while mayors will share £14 million for in academic year 2025-26 for up to 5,000 new construction training places.
A £600 million construction sector training deal was announced back in March which included funding for ten technical excellence colleges that will specialise in construction training.
Immigration Skills Charge
A tax hike on employers hiring immigrant workers will fund up to 45,000 training places “to upskill the domestic workforce and reduce reliance on migration in priority sectors,” the DfE has claimed.
The immigration skills charge (ISC) will rise by 32 per cent as part of the government’s recent crackdown on immigration.
This is the first time the government has given any indication, albeit vague, that revenue generated by the ISC actually funds any training.
A previous FE Week investigation found the charge had raised nearly £1.5 billion since it was introduced in 2017, but neither the Treasury, DfE, nor the Home Office would say how the money contributed to skills budgets, sparking criticisms over transparency.
Interesting point made by one of our members: – “There is also a technical issue that the current funding system is set up to categorise learners by ages 16-18, 19-24 and 25+. To cope with a 16-21 band will require significant system change in a short period of time.”