The UK is at a turning point in how it approaches skills, training, and economic growth. With 4 out of 5 businesses failing to successfully fill talent gaps due to skill shortages, there is an increasing need for a reformation in the government's approach to training.
With Goverment’s apprenticeship policy proposing a replacement for the current Apprenticeship Levy, many are asking: what is the new Growth & Skills Levy, and what will it mean for employers, apprenticeship training providers, and workers?
This guide breaks it all down. What’s changing, why it matters, and how organisations can get ahead of the curve.
What is the Growth & Skills Levy?
The Growth and Skills Levy is the government’s proposed update to the UK’s current apprenticeship funding system. It aims to replace the Apprenticeship Levy, introduced in 2017, which has been widely criticised for its rigidity and limited impact.
The current Apprenticeship Levy
Right now, employers with a payroll over £3 million must pay 0.5% of their wage bill into a levy pot. These funds can only be used for government approved apprenticeship training. Any unused funds expire after two years, and over the years, billions have gone unspent.
The government’s alternative: The Growth & Skills Levy
The Growth and Skills Levy keeps the same 0.5% payroll threshold but introduces greater flexibility. Here’s what is proposed:
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50% of levy funds could be spent on training outside the formal apprenticeship route
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Approved uses could include modular courses, digital bootcamps, green skills certifications, technical upskilling, and other short courses aligned with business needs
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The system would be simplified to improve access for employers
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Apprenticeships will remain central, especially for young people and entry-level training, but won't be the only option.
This shift aligns with the government’s broader position on investing in people and productivity through practical, employer-led skills development.
Core elements of the proposal
|
Feature |
Current Apprenticeship Levy |
Proposed Growth & Skills Levy |
|
Who Pays |
Employers with £3m+ payroll |
Same |
|
Levy Rate |
0.5% of annual payroll |
Same |
|
What Funds Can Be Used For |
Apprenticeships only |
50% for apprenticeships; 50% for other training |
|
Fund Expiry |
Unused funds expire after 24 months |
Likely to be extended (details TBD) |
|
Training Format |
Rigid, long programmes |
More flexible: short courses, bootcamps, modular learning |
Why replace the Apprenticeship Levy?
The UK Apprenticeship Skills Levy has been plagued by underuse and inflexibility. According to government data:
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Over £3 billion in levy funds have expired without being spent
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Many employers find apprenticeships too long, too rigid, or too complex for their immediate skills needs
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The current model heavily favours large-scale, long-term apprenticeships, while ignoring short-term upskilling that businesses increasingly rely on.
The government sees the skills gap as a major economic risk. Their apprenticeships and skills policy aim to:
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Expand the definition of eligible training
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Give employers a say in how skills funds are used
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Modernise the system to reflect how people learn today, with flexible and targeted training.
In short: it’s about more choice, less waste, and better alignment with economic demands.
How can businesses prepare for The Growth & Skills Levy?
Review your current levy usage
Look at how much of your Apprenticeship Levy allocation you’re using and what’s going to waste. If you’re not using it because you don’t want to commit to long apprenticeships, think about what types of shorter, more targeted training could deliver better results for your teams, especially to those who are not new to the industry but still need upskilling through other means.
Identify your most urgent skills gaps
Start mapping where your workforce needs support, whether it’s in digital capabilities, sustainability, technical expertise, or leadership. This will help you prioritise where to invest once the new system allows for more flexible training options.
Engage early with training providers
The new levy is expected to open funding to a wider range of training. Reach out to training providers now to explore modular, business-focused programmes that could fit your future needs. Those relationships will matter when change comes.
Prepare for a shift in how you approach training
Greater flexibility means more responsibility. Empower team leaders to think about skills development as part of everyday performance and encourage a learning culture that supports continuous improvement across all levels of the business.
What are the benefits of The Growth & Skills Levy for training providers?
The shift toward flexibility is expected to drive demand for faster, modular, and business-aligned programmes that can be tailored to specific workforce needs. This presents a strong opportunity for apprenticeship providers - like Total People - to innovate.
How will The Growth & Skills Levy impact apprentices and workers?
While some fear this change might sideline apprenticeships, the government has made it clear: apprenticeships remain central to their skills agenda. The key difference is that the system will now also support:
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Career switchers looking for short training stints
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Mid-career professionals needing digital or leadership skills
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Young people looking for flexible pathways beyond traditional three-year apprenticeships.
In essence, the new levy model aims to support lifelong learning, not just early-career development.
The government’s view is that this change isn’t just about education, it’s about growth.
A more flexible apprenticeship levy could:
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Increase productivity by aligning training with real business needs
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Reduce skills shortages across priority sectors
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Encourage innovation by helping firms invest in upskilling without red tape.
For a UK economy struggling with low productivity and talent gaps, that’s a potentially significant shift.
Choose Total People as your training provider
With over 30 years of experience, Total People is trusted by employers across the UK to deliver high-quality training that works. We offer apprenticeships across a wide range of industries, from construction and engineering to healthcare, digital, business, and more.
But we don’t stop at apprenticeships. Our flexible training courses are designed to help you upskill your workforce quickly and effectively.
Navigating training funding can be complicated, that’s why we guide you through the entire process. From apprenticeship levy advice to accessing additional support, we make sure you’re getting the most value without the stress.
If you're looking for a provider who understands your sector, supports your goals, and delivers results, choose Total People. Let's build your future workforce, together. Contact our team today.
