The UK government has announced that a new Growth and Skills Levy will replace the existing apprenticeship levy, backed by a £40m investment — but what does this mean for Gloucestershire businesses?
Introduced in 2017, the Apprenticeship Levy was designed to boost quality and quantity of apprenticeships in the UK. It required larger employers, with an annual pay bill exceeding £3 million, to contribute 0.5 per cent of their payroll to fund apprenticeship training.
This initiative encouraged investment in apprenticeships and workforce upskilling while providing employers with greater control over their training budgets.
However, many employers found it restrictive, as funds could only be used for specific, year-long training programmes, limiting opportunities for broader skill development.
This led to a call for reform, with businesses urging the government to make the system more adaptable to meet today’s workforce challenges.
Key changes for employers
The Growth and Skills Levy puts more focus on supporting young people at the start of their careers. This shift means businesses will need to allocate a portion of their funding specifically to younger employees.
Notably, Level 7 apprenticeships will no longer be funded by levy contributions from January 2026. Employers will need to cover these costs directly, as the government sees these qualifications as serving older, more experienced workers.
Some short courses in England will be funded through the Growth and Skills Levy. They will support Industrial Strategy sectors such as digital, advanced and engineering, with starts from April 2026.
English and maths requirements
While funding will continue to be available for English and maths qualifications for all apprentices, new and existing adult apprentices, who are aged 19 and over at the start of their apprenticeship training, are no longer required to hold or achieve English and maths qualifications to pass their apprenticeship.
Instead, apprentices will demonstrate their English and maths skills by using them in real work tasks as part of their apprenticeship.
But apprentices who are aged 16 to 18 at the start of their training are still required to achieve English and maths qualifications to support their career progression.
Shorter duration
Some apprenticeships will see changes in the typical duration to below 12 months, to reflect where competence will normally be delivered more quickly in future.
This change means apprentices will be able to achieve occupational competence more quickly where that makes sense, for example, because they have significant prior learning or to better align training with the industry.
What this means for Gloucestershire businesses
For local employers, the Growth and Skills Levy could be a game-changer:
- Closing the skills gaps in critical areas like engineering, cyber, construction and green technologies
- Upskill existing employees with flexible training that fits business priorities
- Attract and retain talent through structured funded pathways such as apprenticeships, T Levels and higher-level qualifications
Gloucestershire College is already working closely with employers to understand how these reforms can be applied in practice.
With strong partnerships across sectors and with universities such as UWE Bristol, they are well-placed to help businesses make the most of the new system.
Next steps
With employer National Insurance contributions having risen to 15 per cent in April 2025, apprenticeships present a compelling option for businesses, as employers are exempt from Class 1 NICs for new apprentices under 25 earning less than £967 per week.
Gloucestershire College’s Employer Training and Apprenticeships Team can help you understand the reforms in detail, map opportunities to your business needs and ensure you’re ready to take full advantage of the Growth and Skills Levy.
To book a no-obligation consultation, contact the team at employer.training@gloscol.ac.uk; 0345 1552020; or visit gloscol.ac.uk/egloscol.ac.uk/employers.
