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The UK Government has announced significant reforms to the apprenticeship system, set to take effect from August 2026.
These changes are designed to expand opportunities for young people, streamline apprenticeship delivery, and ensure employers can access the skills they need for future growth. For businesses, understanding these reforms is essential to maximising the benefits.
Key Changes for Employers
1. Full Funding for Apprentices Under 25 in SMEs
- From August 2026, training for apprentices under 25 employed by non-levy paying employers (SMEs) will be fully funded.
- This eliminates the co-investment requirement, building on the 2024 policy change that removed co-investment for apprentices under 22.
- Benefit: SMEs can recruit and train young talent at no cost, reducing barriers to entry and encouraging workforce renewal.
2. Changes for Levy-Paying Employers
- The 10% top-up for levy payers will be discontinued. Employers will only receive the amount they pay in.
- Levy funds will now expire after 12 months, requiring faster decision-making and planning.
- Once levy accounts are fully utilised, employers must contribute 25% of apprenticeship costs, with the Department for Education funding the remaining 75%.
- Benefit: Encourages strategic workforce planning and ensures levy funds are used efficiently. Providers can support employers by helping them maximise return on investment.
3. Streamlining Apprenticeship Standards
- Apprenticeship standards with very low uptake will be rationalised.
- Benefit: Employers will have access to a more efficient, focused set of programmes, reducing complexity and ensuring apprenticeships align with real labour market needs.
4. Increase in Apprentice Minimum Wage
- From 1 April 2026, the National Minimum Wage for apprentices will rise:
- All under 19s, as well as 19+ apprentices in the first year of their apprenticeship: £8.00/hour
- 18–20-year-olds (after completing the first 12 months of their apprenticeship): £10.85/hour
- 21+ (after completing the first 12 months of their apprenticeship): £12.71/hour.
- Benefit: Higher wages will improve recruitment and retention, making apprenticeships more attractive to young people.
5. Youth Guarantee Initiative
- £820 million allocated over three years to ensure every 18–21-year-old has access to college, apprenticeships, or personalised job support.
- After 18 months of unemployment, young people will be offered paid work instead of benefits.
- Benefit: Employers gain access to a larger pool of motivated young candidates, supported by government funding.
6. Support for NEETs (Not in Education, Employment or Training)
- 350,000 training or workplace opportunities and 55,000 subsidised jobs for 18–21-year-olds in high-need regions.
- 360 new Youth Hubs will provide training, CV advice, careers guidance, housing advice, and mental health support.
- Benefit: Employers in construction, hospitality, and health & social care will have access to government-backed recruitment pipelines.
7. Expansion of Apprenticeships and New Investment
- £725 million investment will create around 50,000 additional apprenticeship opportunities.
- Foundation apprenticeships will expand into hospitality and retail, alongside construction, digital, engineering, manufacturing, and health & social care.
- £140 million pilot will connect young people with local employers through mayoral initiatives.
- From April 2026, short courses in AI, engineering, and digital skills will roll out, including flexible training options in partnership with the defence sector.
- Benefit: Employers gain access to cutting-edge training, helping them upskill their workforce in critical areas for future competitiveness.
What This Means for Employers
- SMEs: A golden opportunity to recruit young apprentices at zero training cost.
- Levy Payers: A need for sharper planning, but also a chance to align apprenticeship spending with strategic priorities.
- All Employers: Access to a broader, better-supported talent pool, with government investment driving skills in key growth sectors.
How Employers Can Prepare
- Plan early: Levy funds now expire after 12 months - don’t let them go unused.
- Engage providers: Work closely with training providers to ensure maximum return on investment.
- Review workforce needs: Identify where apprenticeships can fill skills gaps, especially in digital, engineering, and hospitality.
- Take advantage of subsidies: Use government-backed schemes to recruit motivated young people at reduced cost.
A final thought…
The apprenticeship reforms represent a major opportunity for employers to strengthen their workforce, reduce recruitment costs, and access government-backed training in critical sectors. By acting strategically, businesses can not only benefit from these changes but also play a vital role in shaping the future of the UK’s skills economy.
To speak to an advisor on these changes and how your business can benefit from apprenticeships visit our Employer Hub.
