THE BUDGET & APPRENTICESHIPS: THE GOOD, THE BAD & THE GAPS

On the surface, you could be forgiven for thinking a step forward has been taken. Once you dig into the detail, it feels more like small steps than the meaningful change many of us were hoping for.

One of the main changes is the decision to fully fund apprenticeship training for SMEs taking on apprentices under 25. It removes the 5 percent co investment that some small businesses currently need to pay. That sounds helpful, but in truth, training fees are not the thing stopping SMEs from hiring apprentices. The real challenge is wages and the time it takes to support someone who is learning on the job. Until the Government faces that directly, the system will continue to feel out of reach for many smaller employers.

From April 2026 the apprenticeship levy will change in several ways. The Government has been clear that “The Growth and Skills Levy will replace the existing Apprenticeship Levy.” This is not a small adjustment. It signals a shift towards a different way of using employer training funds. 

• Levy funds will expire after 12 months instead of 24. This means levy payers will have half the time to use their funds before they are lost, which puts pressure on employers to plan and spend more quickly.

• The government uplift added to levy accounts will be removed. At the moment, levy pots receive a small top up from government. This will stop, so employers will have less overall funding available.

• Once a levy paying employer has used all their levy, the government contribution will drop from 95 percent to 75 percent. In simple terms, once your pot runs out, the government will cover less of the training costs than it does now. The employer contribution will therefore increase.

• Apprenticeship standards will be rationalised. This means the government will reduce and streamline the number of apprenticeship standards available. Some may be combined, rewritten or removed. The intention is to simplify the system, but it may also mean fewer options for employers and potential gaps if certain standards are closed.

• Short courses will be introduced under the Growth and Skills Levy. These will sit alongside apprenticeships as separate training options. They are expected to be shorter, technical courses in high demand sectors. The official briefing states that under the new system, levy funds will be able to pay for “short, high quality training courses in priority sectors such as digital, artificial intelligence and engineering.” It is not yet clear whether funding for these short courses will impact the funding available for full apprenticeships.

These reforms are described as simplification, but in reality they are tightening up the system. Large employers will need to spend levy funds faster and will receive less government support once they run out. It is also not yet clear how short courses will sit alongside full apprenticeships, or whether they could draw funding away from them.

The levy still needs proper reform. Employers have been calling for more flexibility for years. A shorter expiry window and reduced co investment do not address the underlying issues.

Beyond apprenticeships, the Budget also hints at changes coming to the wider skills system. Technical Excellence Colleges. Modular training. More short courses in high demand sectors. All interesting developments, but none of them deal with the daily practical barriers that stop businesses, especially SMEs, from taking on apprentices right now.

Add to this the apprentice minimum wage increase to £8.00 per hour from April 2026, and you start to see the full picture. Fair pay is essential, but it does increase the cost pressures for the very employers the Government is relying on to create these opportunities.

My view remains the same. If the aim is to support more small businesses to hire apprentices, the Government needs to face the reality that wages and capacity are the real sticking points. Removing a small training contribution is not the game changer it may appear to be. Levy reform is overdue, and while the move towards the Growth and Skills Levy signals a shift, it does not yet answer the questions employers have been asking for years.

There are some positive moves in this Budget, but they do not add up to the full support that employers, and apprentices, genuinely need.