England's existing apprenticeship levy is set to be replaced by a new growth and skills levy under a raft of recently announced government reforms.
The new levy, says the Department for Education (DfE), will allow funding for shorter apprenticeships, providing learners and employers with greater flexibility than under the current system, where apprenticeships must run for at least 12 months.
The training eligible for funding under the new levy will develop over time, informed by Skills England's assessment of priority skills needs.
Foundation apprenticeships
Foundation apprenticeships are also set to be introduced to young people who are post school age. Their purpose is to give younger learners better access to job opportunities in critical sectors - and enable them to earn a wage while they develop vital skills.
This type of apprenticeship has been available to secondary school pupils north of the border since 2016. Scotland's Foundation Apprenticeship programme is embedded in the school curriculum and offers pupils the chance to gain and develop the skills they'll need when they enter the world of work.
Research suggests that younger learners benefit from work-based pathways. A report by the Organisation for Economic Co-operation and Development (OECD) found that young people completing schemes such as Foundation Apprenticeships, experience better employment outcomes, higher wages and greater job satisfaction than their peers.
Levy funding
To fund the new system, employers are being asked to rebalance how they pay for apprenticeships and invest in younger workers. Under the reforms, more levy funding will be channelled towards younger learners instead of level 7 apprentices, who are usually older and already well qualified employees.
This will involve businesses having to fund more of their level 7 apprenticeships - which are equivalent to a master's degree - outside of the levy.
Latest apprenticeship statistics
Apprenticeships continue to grow in popularity across all age groups and at all levels.
Latest figures for the 2023/24 academic year so far (August 2023 to April 2024) show that apprenticeship starts were up by 1.1% to 278,590 compared to 275,630 in the same period of 2022/2023.
Under 19s accounted for 25.1% of starts (70,020), advanced apprenticeships made up some 43% of starts (119,900) while higher apprenticeships accounted for 36.1% of starts (100,490).
Higher apprenticeships continued to increase in 2023/24 with starts up by 7.3% to 100,490 compared to 93,670 in the same period of the previous year.
Starts at Level 6 and 7 grew by 6.6% to 44,060 in 2023/24, which is 15.8% of all starts in this reporting period. There were 41,340 Level 6 and 7 starts last year (15.0% of starts in the same period). Starts supported by Apprenticeship Service Account (ASA) levy funds accounted for 66.6% (185,450).
Skills England
The apprenticeship reforms were announced at the same time Skills England, the new body for the skills system, published its inaugural report.
Skills England is seen by the new Labour government as central to its first mission of growing the economy through harnessing workers' talent and breaking down barriers to opportunity.
The report gives a first assessment of the nation's working skills, highlighting future skills needs and identifying gaps employers across the country are struggling to fill.
Its findings reveal that employer investment in training has been falling steadily over the past 10 years. Spending is at its lowest level since records began in 2011 and investment per employee is down by 19% in real terms.
More research is needed, but from the available evidence, the study suggests that this decline has been driven by a range of factors including employers not having the resources to upskills staff beyond minimum requirements, a lack of a clear industrial strategy, and low overall business investment. Across the UK, almost 1 in 10 or over 2.5m roles are in critical demand, with more than 90% of these in roles requiring work-related training or education.
Of all sectors, Health and Social Care was found to have the greatest need for jobs and skills, with education, manufacturing and professional scientific and technical industries also experiencing high demand. Click here to see how you can use Onefile for delivering Health and Social Care apprenticeships!
Further details on the scope of the new levy and how it will be assessed will be set out by the DfE in due course.