In the three years since generative AI entered the public consciousness, it has moved faster than any technological shift in our history. In 2025 the skills and education sector had to grapple with how to equip people for that shift, leading to a year of profound tension.
We were caught between an economy sprinting toward an AI-driven future and a regulatory system that moves at a more measured pace.
Skills England in its AI skills for the UK workforce report characterised it as “slow curriculum responsiveness to emerging AI tools and sector-specific needs”.
The Department for Education and Skills England have now made admirable progress. By launching a dedicated level 4 AI apprenticeship standard, committing to a faster approvals process and signalling the start of shorter ‘apprenticeship units’ from next month, the government is paving the path that employers and providers have been walking for months.
The key question now is how to measure the quality and impact of these skills programmes.
Existing measures that merely tell us whether a learner passes a programme do not adequately capture the value delivered. It does not tell us whether the government’s aims on AI skills have been delivered – nor does it demonstrate to employers the return on their investment.
AI’s rapid growth means we must keep pace with best practice in measuring successful outcomes, just as we’ve broadened the scope of what an apprenticeship can be.
UK businesses couldn’t wait that long. So providers innovated within the system we had. At Multiverse we integrated AI training into relevant existing standards, like business analyst.
Broadly, it worked: we’ve equipped thousands of people with the skills to harness this powerful technology. Those skills have had real-world impact: bringing down waiting lists in hospitals; offering charity support services to more people; and enabling small businesses to innovate at a fraction of the typical cost.
But businesses didn’t yet know exactly what AI skills they required and for whom; and not all of our assumptions on what would work came right.
Measuring what matters
Apprenticeships by nature require skills to be applied on the job. It’s not easy to capture the success of that only through an assessment at the end.
That’s why we measure success in other ways too: things like costs avoided, revenue generated, issues solved for local residents, and better patient outcomes. And at a learner level, we track promotions and pay rises; nearly half of our apprentices secure a promotion.
Yet the qualification achievement rate (QAR) captures none of it. The primary measure of apprenticeship quality is still whether a learner crossed a finish line – not what they built along the way.
QAR is a lagging indicator. It measures against decisions made up to two years ago or more. In AI, two years may as well be 20.
If a learner gains the skills they need to secure a promotion and then moves into a new role before reaching an end-point assessment, the system records that as a failure of retention. But in reality it’s a triumph of social mobility and economic impact.
Better success metrics exist in other areas of education. The Higher Education Statistics Agency’s graduate outcomes survey, tracking salaries and career paths, is a great example: has your study enabled you to advance in your career and earn more?
We know training pays dividends. The Learning and Work Institute found how those who access training see a 15 per cent salary uplift across their lifetime compared to those who don’t. Why not measure the size of that prize?
The UK has the potential to lead the world in AI adoption, not least because of its world-class education systems. Our regulatory frameworks should incentivise innovation and impact.
Only then will we move from surviving the AI transition to truly leading it.
Two Northampton colleges are proposing to merge to offer local students a “wider range” of courses and strengthen their finances.
Northampton College and land-based Moulton College – which exited government intervention two years ago – are aiming to merge by January 2027, according to a joint statement today.
The colleges said merging into a single £70 million turnover group will improve local access to courses and open up progression routes that “neither organisation” could deliver alone.
They also promised to become a “more resilient organisation” that can respond to changes in policy, funding and local community needs.
Jason Lancaster, principal of Northampton College, said: “Exploring a merger gives us the opportunity to build an organisation that can meet these expectations and better serve our students and communities.”
An announcement on Moulton College’s website said governors at both colleges have now approved plans to “explore the benefits” of a merger.
It added: “A final decision will be made by the corporations of both colleges once this work is complete and all considerations have been carefully evaluated.
“There is still a long way to go but we are aiming towards January 2027 for completion.”
Public feedback is invited through an online form that allows questions or comments to be submitted.
Its most recent accounts, for 2024-25, show it ended the year with a surplus of £300,000 from a total income of £28 million. The colleges teaches around 4,000 students and employs 400 staff.
Moulton College principal Oliver Symons, who joined in 2024, said: “This is an exciting opportunity to bring together the strengths and expertise of both colleges.
“Our goal is to offer students more choice, clearer progression routes and improved access to specialist facilities. Employers will also benefit from a single, stronger partner that is responsive to local skills needs.”
Northampton College, a general FE college, currently has about 7,000 students and 640 staff.
The college ended 2024-25 with a surplus of £3.3 million on a total income of £45 million.
Northampton College is located in the eastern suburbs of Northampton, relatively close to Moulton College, which sits on the outskirts of the town.
Officials said this latest unit has been created following a “rapid consultation” with employers and sector experts to help meet the needs of a new gigafactory under construction in Somerset for global battery business Agratas.
It was developed at pace through Skills England’s new ‘investment and infrastructure skills service’, which was set up to identify where internationally mobile investors and large infrastructure projects face skills challenges.
Industry had told officials that the existing 36-month level 3 battery manufacturing operative apprenticeship was too long and broad in scope for the imminent skills needs of the gigafactory.
A special design workshop was held in early February with the Electrification Skills Network, and representatives from the north east and west midlands battery clusters, followed up by further consultation with Agratas, wider employers and academic experts.
Skills England said this is an example of its new fast-track approach to delivering apprenticeship updates and new apprenticeship units “that are critical to the major projects in just three months”.
The units are designed to be short course alternatives to apprenticeships and are fundable through the reformed growth and skills levy.
Phil Smith, chair of Skills England, said: “This new gigafactory will create thousands of jobs and apprenticeships in the south west and beyond. I’m proud of Skills England’s work at pace with sector experts to find a skills solution that works for them.
“The new battery manufacturing apprenticeship unit will be a valuable addition to the growth and skills levy offer. By working together, we are building the jobs of the future, keeping skills training at the cutting edge.
Officials said the new battery manufacturing unit was launched today (March 23), but it is unclear when delivery can begin.
Like the other seven apprenticeship units, no funding band or typical duration has been assigned. This information is expected to be communicated to the sector from April 1.
Units will be restricted to employed learners aged 19 or older and involve 30 to 140 hours of training, delivered over one to 16 weeks. Learners will need to pass a “skills test” at the end of their course.
The other seven units are in AI leadership, electric vehicle charging point installation and maintenance, electrical fitting and assembly, mechanical fitting and assembly, permanent modular building assembly, solar PV installation, and maintenance and welding.
Initial delivery will be restricted to a “targeted group” of existing apprenticeship providers that already show “strong performance” in the occupational standards linked to the units.
Today’s announcement suggested just one provider will offer the battery manufacturing apprenticeship unit for Agratas. It said UCS College Group signed a memorandum of understanding with the employer “which will see it lead with delivery of training for the new gigafactory”.
Agratas’ new gigafactory, near Bridgwater, in Somerset, is estimated to generate over £700 million in annual economic value to the south west and 4,000 jobs once fully operational.
Employer incentives for hiring young people could be a multi-million pound waste of taxpayers’ cash, experts have warned.
Later this year, the government will roll out two financial bonuses of up to £3,000 for businesses that hire young unemployed people or apprentices.
The incentives are part of a £1 billion package over three years, which includes the ‘jobs guarantee’ subsidised work programme.
But experts said evaluations of past incentive schemes show that while there was a good case for supporting young people in the earlier stages of unemployment, the latest plans risked “deadweight” spending on grants for hires that would have happened anyway.
Work and pensions secretary Pat McFadden announced the measures last week, arguing the government needed to help NEETs who are out of work long-term avoid “lifelong scarring effects” on their health and wealth.
The number of NEET young people (not in education, employment or training) has risen to almost one million since a pre-pandemic low of about 800,000.
New incentives
From June, a ‘youth jobs grant’ of £3,000 will be available to employers who hire anyone aged 18 to 24 who has been on universal credit for six months. Around 60,000 people are forecast to be taken on over three years.
Then in October, the government will also pay an ‘apprenticeship incentive’ of £2,000 to small and medium-sized businesses that hire 16 to 24-year-old apprentices.
A £2,000 employer incentive is also available for every young foundation apprentice start, although figures covering August to October last year reveal there were only 36 starts.
Each new grant can be “stacked”, so an SME hiring a foundation apprentice aged 18 to 24 who has been unemployed at least six months could claim grants totalling £7,000, officials have confirmed.
The incentives come alongside a youth guarantee jobs programme for people in receipt of universal credit for 18 months or more, currently launching in six UK regions and due to expand nationally in October.
McFadden has widened the scheme’s scope from 18 to 21-year-olds up to 24-year-olds, more than doubling the eligible group from 30,000 to 72,000.
Deadweight risk
Business groups welcomed the new incentives, but experts warned the policies were likely to benefit only a “small percentage” of the almost one million NEETs.
Xiaowei Xu, senior research economist at the Institute for Fiscal Studies, said there was a “good case” for supporting young people before their skills and confidence were “eroded” by long spells out of work.
And she explained wage subsidies should boost long-term youth employment levels by encouraging hires that would not have otherwise taken place – a concept economists call “additionality”.
But offering £3,000 to all employers without checking for additionality could result in “substantial dead weight” spending, Xu warned.
And while a £3,000 grant would reduce the cost of hiring a young person by between 27 and 35 per cent over six months, the benefit of the grant to employers would be “negligible” when spread over the long term, she added.
Xu said it “remains to be seen” how much the government policies would increase long-term employment as they will only benefit a “small share” of the nearly one million NEET young people.
The IfS estimated the 60,000 job grants apply to 420,000 NEET young people, including 100,000 looking for work on universal credit for six to 18 months, and 320,000 on the benefit regime for six months or more for health reasons.
An old tool
Cash incentives for businesses that hire young people and apprentices are an established government policy for boosting uptake.
The government already offers long-running incentives for hiring younger apprentices, including £1,000 for a 16 to 18-year-old’s employment-related costs, and relief on employer national insurance contributions for under-25s that is expected to cost the Treasury £570 million this financial year.
From 2012 to 2014, the government offered a ‘youth contract’ wage incentive of £2,275 for employers hiring 18 to 24-year-olds on the government’s ‘work programme’.
Between 2012 and 2017, the government also offered a £1,500 ‘Apprenticeship Grant for Employers’ to businesses that were new to apprenticeships, had fewer than 50 employees, and recruited an apprentice aged 16 to 24.
Evaluations of both programmes estimated that deadweight accounted for about 22 per cent of apprenticeship grants and 76 per cent of youth contract grants.
However, both studies suggested the schemes were successful at encouraging recruitment of young people and that benefits “substantially surpass the costs”.
Stephen Evans, CEO of the Learning and Work Institute, told FE Week that conclusions about whether incentives were successful were “mixed at best”.
And he said the government risked getting “quite a high level” of deadweight if it was not careful about who it targeted with incentive payments.
An ‘apprenticeship incentive payments’ scheme that ran between 2020 and 2021 paid grants of up £3,000 to 162,000 employers.
Only 20 per cent of employers responding to a DfE survey said this caused them to recruit more.
An independent review of spending during the pandemic later found about £4.7 million was lost to fraud and error through such apprentice and trainee hiring incentives.
The Department for Work and Pensions’ director of work-based skills Kate Ridley-Pepper told FE Week the new apprenticeship incentives would be paid to training providers then forwarded to employers in an attempt to avoid fraud.
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Training providers have warned the apprenticeship units funding model is “not a winning formula” and could choke off delivery before it begins.
Draft funding rules for the new short courses set to be paid for through the reformed growth and skills levy from next month show funding will be heavily end-loaded and paid on two milestones to providers.
The first 30 per cent of the funding band will be paid once the learner has completed 30 per cent of the planned delivery hours. The second milestone payment will come once the learner has completed all hours and passed their skills test.
It means a provider that delivers 90 per cent of planned hours when a learner drops out risks receiving just 30 per cent of the funding.
On top of this, the Department for Work and Pensions said it would keep the “affordability” of apprenticeship units “under review” and could withdraw a unit with just four weeks’ notice.
Providers fear the model leaves them exposed and could dampen their appetite for involvement.
Simon Ashworth, deputy CEO and director of policy of the Association of Employment and Learning Providers, said: “As it stands, the methodology places significantly more risk on providers, with funding heavily end-loaded so providers absorb the upfront costs of delivery. This will create real cashflow pressures.”
He added that despite skills minister Jacqui Smith telling FE Week there was no cap on the amount of levy funding employers could spend on new apprenticeship units, the “reference in the small print to DWP being able to withdraw funding with just four weeks’ notice effectively acts as a backstop”.
“Taken together, this is not a winning formula,” he warned.
High risk, low reward
The government confirmed this week that from next month, apprenticeship units would be available for delivery in seven areas: AI leadership, electric vehicle charging point installation and maintenance, electrical fitting and assembly, mechanical fitting and assembly, permanent modular building assembly, solar PV installation, and maintenance and welding.
The content for apprenticeship units comes from the knowledge and skills from existing apprenticeship occupational standards “needed to address specific critical skills gaps”.
Units will be restricted to employed learners aged 19 or older and involve 30 to 140 hours of training, delivered over one to 16 weeks. Learners will need to pass a “skills test” at the end of their course, delivered by their training provider and validated by their employer, with independent assessment being an option.
Initial delivery will be restricted to a “targeted group” of existing apprenticeship providers that already show “strong performance” in the occupational standards linked to the units.
Funding bands and delivery hours for individual units are still being tested with “critical stakeholders”, but should be confirmed from April 1.
Robert Halfon, former skills minister and now executive director of external affairs at manufacturing giant Make UK, welcomed the “strong focus on critical engineering and manufacturing skills” such as welding, fitting and assembly in the newly announced apprenticeship units.
However, he added that the approach to funding their delivery “must be sustainable for training providers, otherwise employers will find themselves once again unable to access training they want to invest in”.
“Too often, the problem that employers encounter with the skills system is a lack of local provider capacity to deliver the training they need,” Halfon told FE Week.
“A funding model that makes it too risky for providers to deliver apprenticeship units only deepens this problem if it means there is little appetite to offer the courses. Providers need to be backed with the right funding from this new flexibility in the growth and skills levy to ensure that they can offer the right training in the right places.”
Ashworth warned that without a meaningful level of funding to incentivise delivery, it is “hard to see strong take-up”.
“It is now for government to demonstrate whether these new products have real substance or risk being superficial,” he added.
A DWP spokesperson said: “These apprenticeship units will offer employers more flexibility to upskill their staff while addressing the nation’s skills shortage.
“As part of their introduction, consultations will be held with employers and providers.”
In Greater Manchester, a quiet revolution has been taking place in Further Education to address these challenges. It hasn’t come from new qualifications, or from policy announcements, but from a bold, new, practical idea, that innovation can be taught, learned and embedded through people.
The Innovation Literacy Launchpad drew on evidence from the GM Further Education Innovation Programme (GMFEIP), funded by Innovate UK, which demonstrated how FE-led approaches can widen participation, build capability and support diffusion in innovation.
The Innovation Literacy Launchpad was developed in response to a well-evidenced gap between technical skills and the real-world capabilities needed for innovation, the programme has, in just a short pilot phase, demonstrated something powerful, that when apprentices are given the tools, confidence and space to think differently, they don’t just learn, they transform how work gets done.
A Practical Response to a System Wide Challenge
Across the UK, organisations like Innovate UK and global bodies such as the World Economic Forum have consistently highlighted the same issue. While industries invest heavily in technical training, the skills that truly drive innovation such as creative thinking, problem-solving, collaboration and experimentation remain largely underdeveloped.
This gap is particularly visible in workplaces where processes go unquestioned, ideas remain unspoken and employees lack the confidence to challenge the way things have always been done.
The Innovation Literacy Programme was designed to tackle this head-on. Rather than treating innovation as abstract or reserved for specialists, it reframes it as something practical that everyone can do, every day. Delivered over eight immersive sessions, the programme takes apprentices on a journey from identifying problems to generating ideas, testing solutions and communicating change.
A Bold Pilot with National Reach
Between October 2025 and March 2026, the Innovation Literacy Launchpad pilot shared this innovate course with 13 colleges across England, Wales and Scotland. In that time, 30 staff were trained as facilitators through a “Train the Trainer” model, enabling them to deliver the programme directly to apprentices in their own setting, with 290 forecast for delivery in the upcoming months.
Facilitator satisfaction reached a Net Promoter Score (NPS) of +64, an exceptional level of endorsement, while through GMFEIP, over 300 apprentices completed the course and reported a positive experience with an NPS average of +25. But beyond the numbers lies something more meaningful, a shift in mindset and behaviour.
Trainers described learners arriving hesitant, unsure, even disengaged, “rabbit in headlights” and leaving as confident contributors, presenting ideas, challenging assumptions and actively seeking improvements in their workplaces. One apprentice summed it up simply: “Now, if I see something that doesn’t make sense, I ask why… and if nobody knows, I get rid of it.”
The shift from passive participation to active problem-solving is at the heart of the programme’s impact.
Apprentices as Agents of Change
A recurring theme throughout the pilot has been the idea of apprentices as “Trojan horses for innovation.” In organisations that may lack formal innovation capacity, apprentices are uniquely positioned as learners and employees, empowered to bring fresh perspectives into established environments.
During the Launchpad, apprentices reported increased confidence in speaking up, greater willingness to share ideas and a more constructive approach to teamwork and problem solving.
Apprentices began identifying inefficiencies, questioning processes and proposing improvements, often for the first time in their real world setting. The programme’s strength lies in its direct connection to real work contexts, where apprentices apply what they learn immediately, bridging the gap between education and impact.
The Power of Pedagogy
What sets the Innovation Literacy Launchpad apart is not just what it teaches, but how it teaches it.
This is not a traditional classroom based course. It is built around facilitation, discussion, reflection and hands-on activity. Apprentices are not passive recipients of knowledge, they are active learners engaging with innovation, which is critical for embedding in the workplace.
Where facilitators fully embraced the approach, sessions were more engaging, participation was higher and outcomes were stronger. Trainers themselves described returning from training “buzzing with enthusiasm,” with that energy spreading across their teams and colleges.
One senior leader captured the emotional impact, “I honestly had a tear in my eye at the end of the session. The excitement of the trainers to go ahead and deliver it is just palpable.”
The sense of possibility, confidence and shared purpose is difficult to quantify, but central to the programme’s success.
Scaling What Works
The pilot has shown that innovation capability can be developed effectively across Further Education institutions and that across the sector there is strong demand nationally. The Train the Trainer model offered a scalable route, enabling colleges to build internal capacity and extend reach.
A recent evaluation report noted that maintaining the integrity of the programme as it scales requires ongoing support, coaching, observation, feedback and communities of practice. During the pilot, a central team played a key role in quality assurance, working alongside facilitators to embed the intended approach which has been deemed essential for future success of the programme.
The evidence is clear that when delivered well, the programme works across a range of sectors, levels and learner groups, from Level 2 to Level 6, and across a wide range of disciplines.
Beyond Apprenticeships
While the pilot focused on apprentices, the potential reach of the Innovation Literacy Launchpad extends far beyond. Colleges and stakeholders have already expressed interest in applying the model to T Levels, Higher Education, staff development and direct employer engagement.
There is also growing appetite for commercial delivery, reflecting the programme’s relevance to workforce development more broadly. At its core, the Launchpad offers a solution to something that many organisations are searching for, a practical, proven way to build innovation capability from the ground up.
Further Education a Catalyst for Change
Perhaps the most significant legacy of the programme is what it reveals about the role of Further Education. Too often the sector is positioned as a provider of technical skills alone, but FE has the potential to be a driver of innovation within local and national economies.
The Launchpad demonstrates this potential in action, by equipping learners with the mindset and skills to innovate and by embedding those capabilities within workplaces, the FE sector becomes a catalyst for change.
As one university leader involved in the programme noted, the approach “demystifies innovation and makes it accessible.” It shows that innovation is not about costly expertise or high tech solutions, it is about people doing things better, every day.
Looking Forward
While the Innovation Literacy Launchpad is still in its early stages, its impact is already clear. The programme has engaged colleges, energised staff, empowered learners and begun to shift how innovation is understood and practiced within Further Education.
Looking ahead to further scale the programme, it will require investment, coordination and a commitment to maintain quality. It will also require a stronger long-term evidence base, tracking how learning translates into workplace impact over time.
In a system searching for ways to boost productivity, close skills gaps and drive inclusive growth, the Launchpad offers a model that is both practical and transformative.
The idea is simple, to teach people how to think differently and make small changes everyday.
To learn more about the Innovation Literacy Programme or to download the evaluation summary, visit https://innovationliteracy.co.uk/
Ministers have been accused of hypocrisy after government departments rushed to enrol civil servants onto level 7 apprenticeships just before public funding was switched off.
Analysis by FE Week shows dozens of level 7 apprenticeship contracts were secured for close to 200 civil servants in the months before January’s funding deadline for learners aged 22 and over. Most were for the controversial senior leader standard.
The cuts were introduced to ease pressure on England’s strained apprenticeships budget and to redirect funding towards younger learners. But the data reveals that departments across government – including those responsible for the policy – made significant use of the subsidy.
The Department for Work and Pensions, which oversees apprenticeships policy, enrolled around 20 staff onto the level 7 senior leadership apprenticeship in November.
And in an apparent case of departmental confusion, it awarded a five-year £2.1 million contract for level 3 team leader and level 5 operations manager apprenticeships – two of 16 standards earmarked for defunding this week – with teaching starting in December. Internal decisions to scale back management apprenticeships were being signalled at the time.
The DWP declined to explain the rationale for the contract awards, or provide the ages of the level 7 apprentices it enrolled shortly before funding was withdrawn.
A government spokesperson said: “Level 7 standards were available to all employers until the point they were defunded for learners aged 22 and over. Government departments are subject to the same rules.”
Sector leaders questioned the “contradictory” move from the government as it proved ministers and officials deemed the defunded apprenticeships as valuable and appropriate.
Rush hour
The rush to secure level 7 apprenticeships followed the Department for Education’s announcement in May that public funding would be withdrawn for learners aged 22 and over from January.
Starts on level 7 apprenticeships spiked nationally last year as employers raced to beat the deadline. It heaped further pressure on England’s apprenticeship budget. Maximum funding available for the two most popular level 7 standards, senior leader and accountancy professional, was £14,000 and £21,000, respectively.
To avoid another cost spike, officials have capped starts for providers offering the 16 standards earmarked for defunding this week.
FE Week analysis indicates at least nine government departments were part of the level 7 spike. Between the initial announcement and the funding cut-off, around two-thirds of level 7 contracts were commissioned in the final quarter of 2025.
The most significant late activity came from the Department for Environment, Food and Rural Affairs, which secured nearly two-thirds of its 16 contracts – covering at least 87 learners – during the last quarter of 2025.
The Department for Education had consistently commissioned level 7 apprenticeships since 2021. Last year, it issued eight procurement notices spanning areas such as AI, systems thinking and senior leadership, with five programmes launching in the final two months before the funding deadline.
Meanwhile, the Department for Work and Pensions, which assumed responsibility for apprenticeships in September, enrolled around 20 employees onto the level 7 senior leadership standard in November.
Caught in a contradiction trap
Apprenticeship leaders said this behaviour from government departments was “entirely predictable”.
“Whenever a funding cliff edge is introduced, you’re likely to see both public and private-sector employers act in a fairly rational way to secure access to that type of provision through government funding,” said Mandy Crawford-Lee, chief executive of University Vocational Awards Council.
“I’m a bit cross if I’m honest. This is just a stupid policy and history will not be kind.”
Ben Rowland, CEO of the Association of Employment and Learning Providers, said the defunding policy was being driven by artificial financial pressure, not a lack of demand or value.
“Employers, including Whitehall itself, are clearly signalling that these apprenticeships deliver real impact,” he said.
“This leaves the system caught in its own contradictions, with government restricting funding while continuing to rely on these programmes for its own workforce.”
Crawford-Lee added: “If they are deemed valuable enough for central government to utilise, there is a legitimate question now to be asked why they should no longer attract public investment more broadly.”
The Chartered Management Institute has found nearly half (49 per cent) of management apprentices work in the public sector, including health, defence and education.
Petra Wilton, policy director at the CMI, told FE Week that the large take-up of management and leadership level 7 standards by public sector employers gave civil servants a career path into professional management.
She added: “The loss of levy funding for these courses will have an impact on not only the quality of leadership in our public services, but ultimately on the services they provide to taxpayers.”
England’s apprenticeship budget will grow to £3.3 billion in 2026-27, FE Week has learned.
The figure represents a 5.8 per cent rise on the current £3.118 billion allocation, a sum already boosted mid-year by £43 million to meet higher-than-expected demand.
The latest settlement adds a further £180 million, but comes amid ongoing financial strain and controversial funding reforms.
It follows the first-ever overspend of the apprenticeship budget in 2024-25, which forced the government to inject £345 million and pushed total spending beyond £3 billion in 2025-26.
Despite the uplift, ministers are under pressure to rein in costs. Apprenticeship starts have remained largely flat over the past four years, while spending has surged due to the growth of higher-level apprenticeships – predominantly taken by older learners – which are more expensive to deliver.
Meanwhile, participation among young people has fallen sharply. Starts for under-25s dropped by 40 per cent over the past decade, while almost one million young people are now not in education, employment or training – an increase of 248,000 between 2021 and 2024.
In response, ministers are attempting to redirect funding towards younger learners while implementing savings measures.
Popular management apprenticeships are among 16 standards that will be defunded later this year, with caps introduced to prevent a repeat of the recruitment surge seen before level 7 funding was withdrawn for over-21s in January.
It is estimated the move, announced on Monday, could save up to £300 million annually, while savings from level 7 apprenticeships should reach around £200 million.
The changes form part of a wider reform of the apprenticeship levy into a broader “growth and skills levy”. This will expand the scope of funded provision, including the rollout of short courses – dubbed “apprenticeship units” – and new foundation apprenticeships in sectors such as hospitality and retail from April.
New incentives of £2,000 for small and medium-sized businesses hiring 16 to 24-year-old apprentices will also come into force from October, which can be stacked on top of existing incentives of £2,000 for hiring a foundation apprentice.
Treasury top-slice continues
While the apprenticeship budget is increasing, the issue of a Treasury top-slice persists.
Employer levy contributions are forecast to generate £4.5 billion in 2026-27. Of this, around £500 million will be allocated to the devolved nations. Combined with the £3.3 billion apprenticeship budget, this leaves an estimated £700 million not returned to the system.
