As we heard in the Prime Minister’s party conference speech, increasing the esteem of technical careers is deeply personal to him, particularly given his father’s story. The same goes for me.
In a previous job working as a lecturer in FE, I saw first-hand how access to high quality technical education can transform lives and open doors. Even today it’s an issue that’s literally close to home, with my wife about to begin her a career in midwifery but helped on the way to university by our local FE college.
That path: to a secure, well-paid job, in your own community, is one that many more young people want to tread. Yet tragically, many in communities such as mine in Bishop Auckland have previously felt that the only way they can get on is by moving out: first to university then to work in London or another big city.
High-quality technical education and apprenticeships, available nearby and supported by local businesses, are the key to breaking this cycle. By ensuring young people can train, qualify and thrive in the places they grew up, we strengthen our local economies and allow talent to stay rooted in communities right across the country.
That is why T Levels matter. Designed with employers and combining classroom study with real-world industry placements., they give young people the skills, knowledge, and hands-on experience needed for apprenticeships, further study or skilled jobs. Introduced in 2020, there are now 21 T Level courses being delivered by hundreds of providers.
Across the North East, T Levels are already powering the industries of the future. At Tyne Coast College, students on the building services engineering for construction T Level are gaining the skills needed to help meet the Government’s target of 1.5 million new homes, with the greatest uplift required in the North.
At Gateshead College, the Engineering, Manufacturing, Processing and Control T Level is preparing students to lead the region’s clean energy revolution, while at NCG Newcastle, the digital support services T Level is providing the expertise to help modernise and scale-up our nation’s defences.
I recently met with T Level students at Bishop Auckland College, whose passion and determination were truly inspiring. Their stories show what can be achieved when we give young people the chance to combine learning with hands-on industry experience. These are the future nurses, engineers, digital technicians, and educators who will power our economy and deliver excellent public services for decades to come.
I’m delighted that other Parliamentary colleagues are taking the opportunity to visit T Level providers in their see for themselves just how transformative these qualifications are.
It’s why I strongly welcomed the Prime Minister’s recent announcement setting out the clear ambition that two-thirds of young people will gain high-level qualifications by the age of 25, whether through university, FE or a gold standard apprenticeship. Backed by £800 million in additional funding for 16–19 education and a plan to establish new technical excellence colleges, this sends a clear signal that we are serious about backing the skills vital to our future prosperity.
T Levels are a success and I look forward with optimism to how they can continue to help deliver the skills revolution our country needs.
In the months ahead, my colleagues and I on the APPG will continue working closely with government, industry, and education providers to champion these qualifications, listen to the experiences of students and employers and help improve access.
We’re also keen to hear from parliamentary colleagues across party divides about how T Levels are being delivered in their areas, including any barriers and challenges which government still needs to address.
In a time where there’s so much talk of political division, let’s come together behind a shared commitment to ensuring all our young people can gain vital skills, and embark on well-paid and rewarding careers, wherever they come from. This is vital not only to young people’s individual futures, but to our collective future, because the truth is – and I here it every time I meet with business and industry leaders – Britain is being held back by a lack of skilled workforce. T Levels and work placements and are important part of the answer.
Further education colleges and providers will be in scope for a new tax on international higher education students that will cost £925 per learner, according to a consultation published today.
The levy will apply to any international student on a course at level 4 or above at a provider registered with the Office for Students.
Published alongside the budget this afternoon under the title “international student levy technical detail”, consultation documents say the tax will be collected by the Office for Students, take effect from the 2028 academic year and increase in line with inflation.
Providers will not be charged on the first 220 students, equivalent to the first £200,000 of levy liabilities, in recognition of the “administrative burden” of paying it and the “disproportionate impact” the policy could have on smaller providers.
An impact assessment published alongside the consultation estimates that the overall revenue generated will start at £445 million in 2028-29 and rise to £480 million by 2030-31.
However, it estimates that this will be partially offset by increased income from tuition fees.
Emma Meredith director of skills policy and global engagement at the Association of Colleges said: “An exemption for the first 220 international students is a welcome step as AoC data indicates many colleges recruit smaller international cohorts.
“The government has had difficult financial decisions to make, and the reintroduction of targeted maintenance grants will support the most disadvantaged students, including for the first time those taking courses at Levels 4 and 5: support that is critical to delivering the Prime Minister’s commitment for two-thirds of young people to undertake higher-level learning.”
The DfE’s college accounts data for 2023-24 academic year suggest that income from international students’ tuition fees across 46 English colleges was about £22 million.
Colleges with the highest levels of international student fee income include NCG, which earned £2.9 million, New City College, which brought in £2.6 million, and Chichester College Group, which had an income of £2.1 million.
‘Share the benefits’
Announced in the immigration white paper earlier this year, the government said the levy would “share the benefits” of the estimated £20.65 billion generated by overseas students at UK universities.
The government added that the income will be “fully reinvested into the higher education and skills system”, including by funding targeted maintenance grants, progression through the post-16 system, “and for wider skills”.
It argues that while the government “welcomes and values” overseas students’ contribution to UK society, it is “right” to ensure the financial benefits help the most disadvantaged students.
Details about how it is spent will be set out at the next spending review.
Questions in the DfE consultation are targeted at HE providers and tax professionals, and focus on its “proposed design and delivery”.
The consultation closes on February 18 next year.
University and College Union general secretary Jo Grady said called the tax a “regressive levy” on a crisis hit university sector.
She added: “This new tax on education will do more harm than good and undermines the vital contribution international students make.
“Labour is echoing Reform by scapegoating migrants instead of addressing the real, deep-rooted challenges facing higher education.”
Andy Burnham has staked his reputation on transforming Greater Manchester into the UK’s flagship region for technical education. His ‘MBacc’, billed as the country’s first employer-driven alternative to the EBacc, is a bold attempt to shift the hierarchy of school subjects and tilt a whole system towards skills.
It even now has its own accreditation – the ‘MBacc award’ – created with the Baker Dearing Trust.
But behind the high-profile launches and minister-baiting speeches, the rollout has been slower, messier, and more contested than the mayor lets on. Education leaders praise Burnham for elevating the status of vocational education. But privately some are questioning whether Burnham’s zeal for school-level reform is distracting from the adult learning policy he actually controls.
MBacc lowdown
Burnham launched the MBacc in 2023 as a set of post-14 subjects aligned to Greater Manchester’s growth sectors.
It was designed as a direct counterweight to the EBacc – a school accountability measure assessing how many pupils achieve a grade 5 or above in English, maths, science, a humanity and a language GCSE. Only 36 per cent of Greater Manchester’s 16-year-olds achieved the EBacc, far below the former Conservative government’s 90 per cent ambition.
The MBacc promises English, maths and science alongside specialist subjects aligned to the region’s key growth sectors: construction and the green economy, creative and cultural industries, digital, early years, engineering and manufacturing, financial services, and health and social care.
But the MBacc has since broadened into a more vague promotion of technical education, with almost any new FE-related policy in the region brought under its banner.
Greater Manchester mayor Andy Burnham when he announced his Mbacc in 2023
Teething problems
Fourteen months after launch, the numbers remain modest. Only 53 schools – 17 per cent of the region’s secondaries – are engaged in the curriculum changes. The original deadline for every school, college and specialist provision to have an MBacc route “embedded into the curriculum” has quietly shifted from 2030 to 2035.
Sitting in a classroom at Laurus Ryecroft secondary school in Tameside on the day he announced the ‘MBacc award,’ Burnham admitted that the “backing from the centre” to his MBacc policy had been “slower than I’d hoped”.
His divergence from national policy, and a failed bid for control of 16-19 funding in the run-up to his 2023 trailblazer devolution deal, has occasionally put him at odds with the Department for Education. He said the “skewing effect of the EBacc” had lingered “too long”, which has been “a frustration”.
Reactions to the policy among local school leaders vary. One regional expert said they “generally ignore” the MBacc and questioned Burnham’s jurisdiction over them. But Glyn Potts, CEO of Greater Manchester Youth Federation and a former Oldham headteacher, said he had not met a school leader who was “dissatisfied” with the policy.
“Most of us are really relieved government are rethinking the EBacc. We want Greater Manchester to be a place where young people can go into skilled work without needing a university route.”
Potts attributes the slow MBacc uptake to schools waiting for multi-academy trust-level decisions and for the outcome of the curriculum and assessment review.
The government’s decision to scrap the EBacc and consult on an alternative accountability measure that “balances a strong academic core with breadth and student choice”, is, in some ways, vindication for Burnham’s mission.
Burnham believes “the pendulum is swinging back towards the technical side”, and that for previously reluctant schools, “the light is going green” for his MBacc.
Andy Burnham with Lord Baker at Laurus Ryecroft School
The MBacc award
The launch of the MBacc award at Laurus Ryecroft showcased the political theatre that now accompanies Burnham’s technical-education mission. “What can I say, Andy? You’re just the King of the North,” quipped Linda Magrath, CEO of the Laurus Trust, after Burnham swept in with his entourage.
Burnham was joined by 91-year-old former education secretary Lord Kenneth Baker, president of the Baker Dearing Trust which oversees England’s 44 university technical colleges (UTCs). A peculiarly warm front has formed between the Tory peer, who in 1988 introduced the national curriculum, and Burnham, who has probably done more than anyone outside government to override it.
Burnham praised Lord Baker for being “the voice in the wilderness at times saying ‘technical education matters’”. “Not enough people were listening, but we were listening,” he added.
Greater Manchester Combined Authority (GMCA) hopes to sign up over 100 “MBacc centres” – both schools and colleges – by the start of the next academic year, and to fully roll out the MBacc award to all those on technical pathways by 2029.
These learners will undertake a series of employer projects embedded into their curriculums, aligned to the MBacc subjects and built around the skills employers want.
They will receive a certificate of completion at an awards ceremony, bringing what GMCA describes as a “currency” to the MBacc pathway, recognised by employers.
Last year, a survey of young people in the region found only 10 per cent had heard of the MBacc.
But Burnham told pupils how, in the future, “everyone” in Greater Manchester will “recognise” his award as being “really high quality”, and “as good, if not better, than the university route”.
Andy Burnham talking to pupils with Andrew Law behind him
UTC sleeves
Baker Dearing is also partnering with GMCA to bring its ‘UTC sleeves’ model into the region’s schools, including Laurus Ryecroft.
The model involves UTCs providing alternative technical educational pathways for mainstream secondary school pupils, who would spend two days a week in classrooms converted into workshops or on placements with local employers.
Greater Manchester’s history with UTCs is chequered – both Oldham and Bolton saw closures after poor results and safeguarding concerns – though the two that remain, Aldridge UTC and Bolton University Collegiate School, are now rated ‘good’. Nationally, the UTC brand has regained some esteem.
On the day of FE Week’s visit, Policy Exchange recommended the government pilot 10 UTC sleeves in priority growth areas at a cost of £25 million, pointing to higher apprenticeship progression and lower NEET rates. But the Budget failed to provide any Treasury backing for the proposal.
In Greater Manchester, the model has the financial backing of Laurus Trust sponsor Andrew Law, a Manchester-born hedge-fund billionaire, who hopes to open two sleeves by 2027. “Lots of things have been tried,” Law said. “But our belief is this is the one that’s going to work.”
A personal mission
Burnham’s passion for shaping an education system reflecting employer needs stems from his own experience. After graduating in English from Cambridge and looking for work back in his home region, he said: “I couldn’t find [a job] anywhere, because all the old industry had closed. To get on in life we had to go south.”
Now, “that’s not the case” with Greater Manchester’s economy growing faster than anywhere else in the UK. Hollywood superstar Robert De Niro has just visited Manchester as a key investor in the city’s soon-to-be tallest skyscraper, Nobu Manchester Building.
The MBacc is a “path that leads you to those skyscrapers”, Burnham told pupils.
Andy Burnham with Andrew Law, Lord Baker, Baker Dearing CEO Kate Ambrosi and Laurus Ryecroft pupils
45-day placements for all
Another key aspect of the MBacc mission is creating work placements. By 2035, GMCA’s aim is for every young person by the age of 19 to have 45 days of “high-quality experiences of the workplace”.
For some stakeholders, Burnham’s target feels unrealistic. “If I’m a kid who needs to look at five different industries, the last thing I want is to be stuck somewhere for 45 days… it’s madness,” one source said.
GMCA’s own assessments show access to work experience is currently “unequal” across the region. The short-term goal is for half of schools to work towards 10 days.
Burnham denied his target is too ambitious.
“We’re building them up all the time,” he said. “There’ll be a 45-day work placement for everybody.” He argues the UK has never “got work experience right”, describing the government’s two-week placements pledge as “awkwardness in the corner, opening the post”. Longer placements, he says, “professionalise it”.
All hands on deck
As well as the “significant team” of around 20-30 people Burnham has working on his “core, flagship priority” of the MBacc, he also has GMCA’s business support team, the Greater Manchester Growth Hub, engaged in asking businesses to provide T Level placements. They are now close to meeting a target of 1,000.
“The whole system through the business growth side is leaning into the [MBacc] reform,” he said.
GMCA is highly praised by college representatives for these efforts. But one questioned how much the mayor is spending on staff working on the MBacc “vanity project”, for which he has “no legal duties or responsibilities”, compared to adult education, a topic on which he is “too quiet”.
Laurus Ryecroft pupils with Lord Baker
Championing apprenticeships
Another representative said they were “desperately trying to get” the GMCA focused on lower-level apprenticeships, which are in relatively short supply, but Burnham’s interest lies more in degree apprenticeships.
The University of Manchester is about to expand its degree apprenticeships and Burnham is pushing for more of them across the region, telling Lord Baker: “We need to work together on this”.
The Baker Clause – named after Lord Baker himself, who proposed it in 2018 – is a duty on schools to provide year 8-13 pupils with access to a range of technical education and apprenticeship providers. Within Greater Manchester, some elements of the MBacc are helping to ensure compliance, but that is not the case everywhere.
Dale Walker, director of education at Apprentify, described compliance as “inconsistent and often tokenistic”. Meanwhile, Dan Thomas, CEO of The Learning Partnership MAT with 15 schools across Cheshire and Staffordshire, said the clause is “not being enforced”. It had taken his UTC in Crewe three years to get “any view into” local schools.
Adults sidelined
Although Burnham failed to secure control of 16-18 funding, his trailblazer deal established a joint board for post-16 technical oversight. FE leaders, however, are concerned that adult learning is falling down the agenda.
The Greater Manchester Colleges Group’s proposals to provide an adult education maintenance allowance did not reach Burnham’s election manifesto, and while GMCA papers reference an “all-age” MBacc, its practical focus remains on young people.
Burnham said the adults’ element “remains the ambition”, but is “harder to achieve” because of the need for “more control” over employment support from the Department for Work and Pensions.
“It’s just, we don’t yet have full control of those levers. A shrinking adult education budget hasn’t helped.”
This year GMCA’s adult skills fund streamlines core funds, free courses for jobs and skills bootcamps into a £108 million pot – a 3.58 per cent real-termsreduction, due to national cuts.
Burnham now has the power to move funding between policy areas based on local priorities, which poses an even greater threat to adult education and worries some college leaders.
Wigan & Leigh principal Anna Dawe earlier this year described it as a “great shame” that much of the dialogue is centred around young people’s education.
“The value in FE is all its component parts… we focus in on what seems to be flavour of the day, and that’s never changed,” she said. “I hope we don’t see further cuts to adult education, because it can’t take any more cuts”.
Andy Burnham launching the Beeline platform last year
MBacc as all things
The MBacc brand has continued to absorb new initiatives. Beeline, a digital platform offering information on work placements, courses and jobs, launched last year. A Raspberry Pi Foundation applied computing certificate, a UNESCO-endorsed Skills 4 Living programme, and a mentoring scheme for young people in or at risk of the youth justice system have all appeared under the MBacc umbrella.
Plus, a long-running initiative providing school pupils with taster days in FE colleges has been tweaked and renamed the ‘festival of technical education’, under the MBacc banner.
Burnham is praised for using his convening power to draw impressive initiatives to the region. “People want a little bit of his stardust on their stuff”, said one source.
Others see the MBacc as a political catchphrase for anything related to technical education.
“It almost frustrates people that you’re doing something, then suddenly the MBacc badge appears on it,” another said.
Burnham’s big ideas
One of the most eye-catching MBacc proposals is “Our House” – university-style living accommodation for apprentices. Burnham argues that “the ability to live independently at 18 should be available to all young people”.
A Co-op Bank survey suggested the halls would boost apprenticeship uptake, but some local leaders remain sceptical. “Why can’t he accept an apprenticeship is just a different way? Not everything needs to mirror university,” said one.
Equally divisive is Burnham’s plan for a UCAS-style centralised technical admissions system by 2030. Under the proposal, every Year 11 pupil would apply online for technical courses, with an attached work placement. Colleges would specialise more, meaning some learners may travel further.
Critics say this undermines the principle of local provision. “A fundamental waste of time, money and energy,” said one college representative. Another warned that “a Level 1 bricklaying student isn’t travelling just because he has a free bus pass”.
With Greater Manchester’s 16-19 population set to rise sharply in the coming years, technical participation is likely to increase regardless of policy intervention. As one source put it: “The MBacc may be doomed to success – whatever its complexities.”
Whether that success is credited to Burnham’s leadership, demographic inevitability or institutions adapting around him may be a question for a future Labour leadership contest.
The government’s new ‘youth guarantee’ places FE at the heart of the national growth agenda and was included in this week’s Budget announcements. But is this policy focus undermined by a dangerous disconnect?
The youth guarantee’s cap at age 21 ensures there is no guarantee at all for young people with SEND. This, combined with the recent delay of the schools/SEND white paper until the spring and the lack of specific SEND commitment in the new skills white paper, creates a policy vacuum. This suggests an intention to weaken the statutory nature of education, health and care plans (EHCPs) until 25. This is a move that overlooks a fundamental truth: disabled children inexorably become disabled adults, with the same aspirations and dreams as anyone.
Failing to invest in specialist FE, the crucial mechanism for translating years of prior education into life-long impact, entrenches a policy failure that prioritises short-term cost over essential long-term investment. This systemic failure is irresponsible and socially unjust, rooted in a lack of aspiration for young people with additional needs.
The current system views support as a cost to be managed, not a crucial investment in futures.
The government’s Get Britain Working white paper aims for an 80 per cent employment rate. But this goal is impossible if it neglects young people with complex needs. The white paper’s complete failure to mention SEND or the EHCP system demonstrates a profound lack of co-ordination between the Department for Work and Pensions and the Department for Education.
The most damning evidence lies in the jobs market: employment rates for young people who had their disability diagnosed during childhood can be as low as 24 per cent. This statistic is the product of policy disconnect and failure, not just a fact of life.
Children and young people with SEND have been subject to substantial public investment in education, therapies and tailored support. Allowing this investment to vanish at the point of transition into adulthood is short-sighted, squandering years of public spending.
Failure to provide necessary specialist FE support at the point of transition pushes capable individuals onto a lifetime reliance on benefits, becoming a costly drain on public funds rather than contributing to their communities. Tackling the 24 per cent statistic is essential for meeting national growth targets.
With the youth guarantee ending at 21, a college leaver with SEND at 22 or 23 who needs more time to develop skills into adulthood will be ineligible for government support. This omission strongly suggests an intention to curtail the financial and statutory burden of the full zero-to-25 system, effectively drawing a line under the most costly cohort: those aged 21-25 with complex needs.
The solutions are not theoretical; they have been clearly laid out by experts and sector leaders. The government must use the upcoming policy white papers to formally adopt the unified framework recommended by the education select committee, which requires some immediate changes:
Secure the statutory requirement for EHCPs to continue to 25 and mandate that this legal framework is fully integrated into DWP and DfE employment initiatives, including the youth guarantee.
Create a dedicated ministerial brief for specialist FE, moving policy responsibility to the skills minister. This would embed specialist provision within the national skills strategy.
Require collaboration between providers, local authorities and adult services to establish structured, long-term transitions, ending the ‘dropping off’ of responsibility once formal education ends.
The government is right to champion the youth guarantee. But a guarantee that excludes SEND young people is a moral failure. The cost of complacency far outweighs the necessary investment.
Investing in a young person’s agency and independence delivers a valuable societal multiplier effect, benefiting their wider communities. For some young people with SEND, paid employment will not be directly part of their own future. But supporting their independence broadens the scope for their immediate support network to return to the workplace.
The upcoming SEND white paper is a pivotal moment. By securing EHCPs to 25 and properly resourcing employment pathways, the government can transform a vulnerable cohort into independent, contributing members of society. We urge government to make the youth guarantee a promise that holds true for every young person.
Across the FE sector, colleges routinely confront twin pressures: sustaining high learner attendance and retention, and maintaining a motivated, stable workforce. Yet most interventions act reactively, rather than identifying early warning signs. We focus on attendance rates after students stop turning up. We track retention after learners have already disengaged. We address staff wellbeing once burnout has taken hold. This approach, which is baked into the way the system currently operates, could be holding back performance and progress.
This is why ImpactEd Group is launching the Further Education and Sixth Form Commission on Engagement: the first national study exploring how engagement can serve as a lead indicator of outcomes across our sector. This is not an arm’s length, observational research project. It’s about supporting a fundamental shift in how we understand and respond to the dual challenges of learner and staff engagement facing every college.
The evidence base on engagement in education has been growing significantly in recent years, with ImpactEd Group publishing our own research from over 100,000 school-aged pupils in May 2024. This study revealed that more than one in four students disengage during their first year of secondary school, with engagement levels never fully recovering thereafter. Measures of enjoyment, trust, agency, and safety decline sharply in early secondary school too, particularly for girls and disadvantaged pupils.
And perhaps the most significant insight for colleges to pay attention to was the finding that learners in the top quartile of engagement are ten percentage points less likely to be persistently absent than those in the bottom quartile. So not only is engagement data affording schools a much richer picture of the dynamics of their cohorts, but it is also supporting them to focus precious time and resources in the right places, before a lack of engagement turns into poorer outcomes.
The same kind of engagement insights can be valuable for staff too. In ImpactEd’s school research project, analysis of staff surveys showed the predictive ability of engagement in relation to staff retention. Those who showed poorer levels of buy in to organisational strategy and leadership were less likely to still be at the school later in the academic year.
The FE sector will see a lot of parallels in this research, but in post-16 settings, where learners arrive already carrying years of positive and negative educational experience, understanding these engagement patterns could be even more vital. This is reflected in the growing evidence base from FE itself, where attendance data is signalling a rising engagement challenge across colleges, one that mirrors, and in some cases exceeds, the trends seen in schools. This is where the commission comes in.
Commission’s mission
By bringing together experienced FE leaders alongside researchers, practitioners and policy experts, we’re creating space to translate these learnings from schools into tools shaped specifically for colleges and sixth forms.
The commission will shape research design, bring together front-line practitioners and analyse national findings to consider how proactive approaches to engagement can move us from reactive management to front foot improvement strategies. Colleges participating in the research will take part in a learner and workforce census, which will enable us to build a national picture of college engagement and produce local and national benchmarks.
With attendance and retention challenges compounded by funding constraints and workforce instability, the time to do this work together is now. Every learner who disengages and leaves represents not just lost potential, but lost funding and a failure of our fundamental mission. Every member of staff who burns out and departs represents institutional knowledge lost and recruitment costs incurred.
The FE sector has always been pragmatic and focused on what works. This commission embodies that spirit – building evidence, testing assumptions and translating findings into tools that leaders need.
By participating, colleges won’t just contribute to national understanding, they’ll gain insights that help them act earlier, target support more effectively and create environments where learners and staff can thrive.
ImpactEd Group are providing a subsidy for participating FE and Sixth Form Colleges and we encourage you to reach out to take part: rajbir.hazelwood@impactedgroup.uk
The government is set to scrap co-investment payments that small and medium-sized employers have to pay for apprentices under the age of 25.
Chancellor Rachel Reeves has also set aside £820 million to fund her promised “youth guarantee” for young people aged 18 to 21 over the next three years.
Reeves made the announcements during today’s budget speech before the Treasury revealed further tweaks to the apprenticeship system in the chancellor’s red book, including removing the 10 per cent top up for levy payers and halving the time big businesses have to use their funds.
Reeves told the House of Commons: “Today I am announcing funding for training for under 25 apprenticeships completely free for small and medium-sized enterprises.
“And funding for our new youth guarantee, providing £820 million pounds over the next three years to give young people who are let down by the Conservatives the support and the opportunity that they deserve, guaranteeing every young person a place in college, an apprenticeship or personalized job support, and after 18 months, 18 to 21 year olds will be offered paid work, not benefits.”
Co-investment ends for under 25s
Since the apprenticeship levy was introduced in 2017, only large employers with a payroll in excess of £3 million pay into the levy at a rate of 0.5 per cent of salary costs.
The contributions go towards funding all parts of the apprenticeship system, including 95 per cent of training of apprentices in non-levy paying businesses. SMEs then make a co-investment payment of 5 per cent.
In 2024, the Conservatives scrapped the 5 per cent co-investment payment for SMEs when they hire an apprentice under the age of 22.
Reeves today announced she will extend this co-investment relief to those aged 22 to 24.
It is unclear whether this change will kick in immediately or from the new financial year in April 2026.
The move will be funded from an extra £725 million set aside over this Parliament “to help support apprenticeships for young people” under 25, according to Budget documents.
Other big levy changes for big businesses
The documents added that alongside this funding, the government will introduce new reforms to “simplify the apprenticeship system and make it more efficient” as short courses are introduced from April 2026 when the apprenticeship levy is reformed into a “growth and skills levy”.
This will include:
Removing the additional [10 per cent] uplift to levy accounts;
Changing the expiry window to 12 months [from the current 24 months];
Changing the government’s co-investment rate to 75 per cent [from currently 95 per cent] for levy-paying employers once they have exhausted all their fund
The Treasury also said government will continue “working with employers to streamline the suite of apprenticeship standards available”.
More details on these policy changes “will be announced shortly”.
Minimum wage rates for all workers, including apprentices, will also rise from April. Apprentices aged under 19, and 19 and over in their first year, will be paid at least £8 per hour, up from the current £7.55 minimum. This also applies to working 16- and 17-year-olds not doing apprenticeships.
The mininimum wage for 18-20 year olds will rise to £10.85 per hour and the national living wage for workers aged 21 and over rises to £12.71 per hour.
Levy receipts to hit £5bn by 2030
Meanwhile, the government’s spending watchdog has today updated its forecasts of how much money the apprenticeship levy is expected to raise.
The Office for Budget Responsibilities now estimate the levy will raise £4.4 billion in 2025-26 – £200 million more than they forecast in March.
The Treasury has this year set an apprenticeship budget for England of £3.075 billion while the devolved nations receive just over £500 million. It means the top-slice the Treasury takes between how much the levy generates and how much is dished out for apprenticeship spending hits around £820 million.
Forecasts for 2026-27 show the levy intake will rise to £4.6 billion in 2026-27. If the Treasury fails to increase apprenticeship spending budgets then the Treasury margin will hit £1 billion.
And the OBR now expects the levy to raise £5 billion for the first time by 2029-30.
England’s apprenticeship budget is at breaking point and went overspent for the first time last year.
Ben Rowland, CEO of the Association of Employment and Learning Providers, said: “There’s a bitter irony in Rachel Reeves’ ‘Bingo Budget’.
“Government is wrestling with how to create the growth the country needs, while urging employers to do more on productivity, investment and for wider society. Yet an obvious and pre-funded solution is sitting right under its nose, and one that employers will back: investing in apprenticeships.
“And as a bonus, with levy receipts set to burst the £5 billion mark, releasing a substantial portion of the Treasury’s apprenticeship levy topslice is the one tax rise the chancellor doesn’t even need to announce, because it happens automatically.”
Charlotte Bosworth, CEO of apprenticeship training giant Lifetime Training, added: “While the increased funding for apprentices under the age of 25 is a positive step, the continued withholding of unspent apprenticeship levy funds is also a missed opportunity to address the urgent challenge of young people not in employment, education, or training (NEETs).
“With nearly a million young people in this position, greater funding is essential to ensure fair access to career opportunities and to support the government’s ambitions for growth and reduced unemployment.”
Youth guarantee spending revealed
The £820 million youth guarantee will offer a six-month paid work placement for every eligible 18 to 21-year-old who has been on Universal Credit and looking for work for over 18 months.
The government said this will help young people across the UK take the first “crucial step” into sustained employment.
An estimated 12.7 per cent, or 946,000, of 16 to 24-year-olds were not in education, employment or training (NEET) in July to September this year, down 0.3 per centage points on the year.
It follows eight youth guarantee “trailblazers” overseen by regional mayors that have been testing a range of initiatives aimed at reducing youth inactivity and unemployment.
Each area has been allocated £5 million for 2025-26 and a further £5 million for their programmes to run until April 2027.
Endless hints and speculation on tax has left the UK in limbo of late, hasn’t it?
In fact, for one reason or another, it has been that way for a quite a while now. Pockets and purses are being squeezed tighter, balance sheets are not so easy to balance, and yet the demands and need for growth haven’t gone anywhere, in fact, growth of our economy is needed more than ever.
In the build up to today’s Budget, it has been so encouraging to see the profile of FE and the vital role it plays in delivering growth, raised on a national stage:
Our prime minister referenced further education as being a ‘defining focus’ of this government
During the recent Association of Colleges conference, CEO David Hughes referenced this being a decade of opportunity for colleges and how our sector is so central to the five missions of this government
The much-anticipated FE skills white paper was a welcome read and the sector looks forward to more clarity on the content and how we can support the achievement of its aims
The reformation of the apprenticeship levy into the skills and growth levy is welcomed by the FE sector as a way to break down the barriers to CPD (career professional development) and employer-led training, making it more affordable to businesses
The introduction of construction technical excellence colleges (CTECs) and V Levels will support more young people accessing meaningful careers
Additionally, today’s announcement of the completely free apprenticeship training for those aged under 25 and employed by SMEs (small and medium sized companies), and the confirmed £820 million investment into the new youth guarantee for our young people is good news to be celebrated.
All of this – as a collective package – will support the journey to economic growth.
I fully welcome today’s Budget, not least because it signals a commitment to a plan of action to ensure better lives for the UK and all who occupy her. But – and there is always a but – no matter how difficult this Budget has been for the government to pull together, if they are to ensure the UK understands the task at hand and supports that task, going forward all of this flip-flopping, leaking and so-called ‘financial fandango’ has to stop. Especially if the aim is to reverse opinions of the 0 per cent of polled UK residents who feel the economy is in ‘very good shape.’
What lies ahead will be challenging if we are to solve the problems together and each “do our bit”.
UK residents must be able to have confidence that when the government makes a decision, that decision must be written out in indelible ink and communicated appropriately.
Our colleges are attended and staffed by people who are feeling the financial pinch. They are supported by employers who are trying to maintain efficient operations, on top of whatever other personal and professional pressures they each may be experiencing – the constant need to reforecast finances is an unnecessary additional strain.
All of this confusion and constant leaking – right up to today’s OBR leak – has led to a hesitancy for employers to invest in skills, business confidence has been reduced, and economic confidence is at an all-time low. To get on with it and indeed ‘do our bit’, we need consistency in plan and message, and direction must be maintained.
We must be able to focus on teaching, studying and working so that when the growth of our economy comes – and it will – we are ready to take advantage of what that means and truly be a part of it.
The government’s proposed reforms to apprenticeship assessment have sparked serious concern from employers. This is particularly the case for employers represented by sector skills bodies Cogent Skills and Enginuity across safety-critical industries including engineering and manufacturing, life sciences and nuclear.
While the intention may be to streamline processes and reduce duplication, the unintended consequences could undermine apprenticeship credibility and compromise safety. For apprenticeship assessment, a one size fits all approach won’t work.
Ignoring employer expertise
Historically, industry-led trailblazer groups have ensured apprenticeships meet real-world standards. The current approach is ‘pro-employer’ rather than ‘employer-led’ which is a subtle but significant difference. Moving away from employers leading development of assessment plans with support from sector skills bodies risks diverging from the people with deep technical knowledge and expertise. Whilst there was room for streamlining of processes and reducing bureaucracy, this can’t come at a risk to quality. Within a manufacturing setting, continuous improvement never undermines the quality of the output.
Why consistency matters
Occupational competence underpins apprenticeships. Employers need to feel confident that an individual completing their programme is competent and ready for the job. Whilst some assessment plans were probably overly long and prescriptive, moving to very short plans means that different assessments could be delivered, which risks consistency and the reliability of the apprenticeship brand as a kitemark for competence. Moreover, employers are concerned that a sampling approach is not appropriate in all circumstances.
Safety and compliance risks
The employers we represent tell us that sampling-based assessment models prioritise speed and cost over rigour. In safety-critical environments, this approach is unacceptable and could have catastrophic consequences. They worry that if there are no standardised assessments, there is no basis for a recruiting employer to understand what work that individual can competently carry out. At best this could mean that the employer retests the individual, at worst, that they are not recruited.
The sectors looked after by Cogent Skills operate under strict regulatory frameworks, from nuclear safety standards to chemical process regulations. A sampling approach to assessments risks compromising competence and increasing operational risk. Employers are concerned that in environments where safety is non-negotiable, these reforms feel like a race to the bottom.
In the engineering sector, employers hold apprenticeships in high regard and trust the robustness and reliability of the assessment of competence. These employers are also concerned that the mandatory qualification can replace the end point assessment. In real terms, this risks competence being judged on a multiple choice test and off the job assessment rather than the assessment of practical ability in the workplace. All this will reduce employer confidence in apprenticeships over time and could lead to some smaller employers walking away from apprenticeships completely.
Potential erosion of a safety critical culture
Equally troubling for employers across our sectors is the decision to remove formal assessment of behaviours. Safety culture, teamwork, and adherence to protocols are not optional extras, they are essential for maintaining site safety and team integrity. Without rigorous assessment of behaviours, we risk diluting the safety culture that underpins these industries.
A better way forward
Employers want apprenticeships to work. They are not averse to continuous improvement, particularly where this reduces unneeded processes. However, maintaining quality is essential to maintaining employer confidence. In safety critical industries in particular, the risks of moving too fast, and without listening to employers, could have serious implications. Comprising on competence could lead to compromising on public safety.
We understand that government wants to strengthen apprenticeships, and would recommend starting with a sector-by-sector rather than a one size fits all approach. As sector skills bodies working together as members of Skills Federation, we are well placed to understand employer needs. We are keen to support government to ensure that apprenticeships work for employers large and small, and individuals across our industries. We believe that not compromising on rigorous assessment and keeping the focus on occupational competency can maintain the credibility and quality of apprenticeships, ensuring they remain a trusted benchmark of skill and safety.
I think I’m having an identity crisis. For years, whenever I’ve stood on stage at conferences and talked to staff at partner colleges, local authorities or training providers, one of the first questions I’ve been asked is simple: ‘What’s your Ofsted grade?’
It’s been the shorthand for quality, safety and credibility. At The Skills Network, we’ve prided ourselves on every partner achieving ‘good’ or better for their adult delivery.
Even in my personal life, Ofsted grades have guided decisions. Every time my family has moved house, the first thing I’ve checked is the local schools’ Ofsted ratings. Estate agents certainly know this – they splash “outstanding schools nearby” across property ads because parents, like me, look for a simple metric.
We all crave simplicity. I rarely watch a film with an IMDb rating under 6.5 and I hesitate to book a hotel scoring below 7 without digging into the comments. The rating comes first; the detail follows later.
End of the elevator pitch
So, what happens now that Ofsted grades are gone?
Until recently, our quality assurance could be summed up in a word – “good”. That was our elevator pitch. But now, the elevator has stopped. The new system feels more like climbing 10 flights of stairs just to explain where we stand.
We’re told that instead of a single grade, there’ll be report cards with coloured dots. Those of us steeped in the inspection framework may know what each colour signifies, but will the average parent, learner or employer? Without that simple label, communicating quality suddenly becomes a complicated conversation.
And then there’s the language. What does expected actually mean?
Having been at OCR when letters changed to numbers, we spent a lot of time with a little chart showing the mapping against the old grades; grade 4 a pass, grade 5 a good pass with a bit of a grade B etc.
Is ‘expected’ the new ‘satisfactory’ with a dash of ‘good’? Or do we now expect good, so ‘expected’ is simply average? Similarly, is ‘strong’ the top end of good with a sprinkling of ‘outstanding’?
To make matters worse, the new ‘secure fit’ approach means that if even one sub-judgement ‘needs attention’”, the overall outcome could be pulled down. In other words, you could be strong in everything but one area and still end up with a negative headline.
That doesn’t feel like “less pressure” to me – quite the opposite.
Promise of greater clarity
The justification for abolishing grades was noble enough. We were promised greater clarity, less pressure and a fairer reflection of institutions’ strengths and weaknesses. But I’m not convinced the reality matches the rhetoric.
Clarity? Not for parents, learners or employers who just want to know whether a place is good and safe. A better reflection? Perhaps, but only for those fluent in inspection-speak. Less pressure? Tell that to a college leader watching one ‘needs attention’ comment undo years of hard work.
FE Week readers will understand the subtleties, but the public won’t. The risk is that the new framework makes quality less transparent to those outside our world.
Keep the playing field level
There is, however, one major positive. The renewed focus on inclusion and disadvantage is welcome and should play to FE’s strengths. FE is the most inclusive arm of the education system, offering life-changing opportunities for those who need them most. If inspection frameworks now highlight this contribution, that’s something to celebrate.
But this advantage only holds if definitions and expectations are consistent across all sectors and there is consistency in the inspection teams. If “inclusion” is judged differently for FE than for schools, we’ll have a problem. The playing field must remain level.
We’ll need to see whether the promised benefits – greater fairness, less stress, more nuance – materialise. Feedback from the first colleges and providers through the process will be crucial.
But the immediate issue is communication. How do we, as providers, describe ourselves now? How do we reassure stakeholders, parents, funders and partners about our quality without that simple, universally understood grade?
I’ll keep my metaphorical step-counter handy – because explaining quality in the post-grade world is going to be one serious workout.
