The pros and cons of recent changes to the Growth and Skills Levy

The Apprentice Levy is now renamed The Growth and Skills Levy. There are some recent changes which will affect all agencies with an office in England. (Please note some incentives cover the whole of Great Britain; and one is aimed only at non levy players.)

The Pros

1. It can now also pay for short courses

This is the first time this levy can be used for non-apprentices training, despite them being called (unhelpfully) apprentice units. For levy payers they use the levy money, non levy payers have their costs covered by Government. "Apprenticeship units are short, flexible training courses that upskill existing staff in critical skill areas to support business growth and productivity. Apprenticeship units are for those aged 19 and over who are already employed, who need to upskill where new skills are required or need to adapt to a changing job role. They are not designed for those looking to begin a new occupation or career.” So far only one of eight ‘units’ appears suitable for our industry - ‘AI Leadership - Developing AI Strategy’ - all the others are aimed at engineering or manufacturing. Details of this short course are very sketchy so far – nothing on length, costs, tutors, mode - and more info has been promised before month end. (In the meantime there are many free basic e learning modules on AI sponsored by Government partners like Google.)

2. There are monetary incentives to take on young apprentices

• No NI paid on under 25s
• £2,000 incentive for each new apprentice aged 16-24 hired by a non-levy payer.  This has led to mass confusion because their original wording said ‘SMEs’ when they really meant ‘typically’ SMEs.  Due to our higher than average salaries the point at which someone starts being a levy payer (salary bill of £3M) in our industry often comes around 50 people so this is a less helpful incentive than it sounds.
• £1,000 if anyone takes an apprentice aged 16-18
• £1,000 if anyone take an apprentice 19-24 years old who was in care or has an EHC plan
• £3,000 incentive (Youth Jobs Grant) to take an 18-24 year old who has been claiming Universal Credit and unemployed for over 6 months (this is available for both apprentices and non- apprentice hires and for all Great Britian’s employers.)

Some of these can be stacked, for example if an employer takes on a young person aged 18-24 who has been on UC and looking for work for six months they can receive the £3,000 Youth Jobs Grant. If that employer is a non-levy paying employer in England and the young person also starts an apprenticeship, then they could also receive the £2,000 incentive payment. (For employers in the rest of GB, they would only qualify for the GB-wide Youth Jobs Grant.)

Always check with your provider before you hire someone.  Please also note that the monies are not given to the agency on day one - anywhere between one month and 12 months depending on which incentive. Finally, from when the hire would count is different for different incentives.  For the £2,000 incentive ‘the policy will take effect for those starting apprenticeships from 1 October 2026, as long as they have joined their employer within the past 3 months (i.e. from July 2026).’

3. 20% or minimum of six hours ‘off the job training’ is being phased out

20% or minimum of six hours ‘off the job training’ is being phased out, and each apprenticeship will need to state the minimum. However, they still need enough time to study, although applying learning will be a factor.  We suggest that training providers advise on this for now.

4. Up to 50% of the levy can now be transferred

We know from the IPA Census 2025 that 5% of agencies have been able to work out how to do that!

The Cons

1. Unspent levy fund will be taken back by Government at 12 months, not 24

Funds that enter your account before 31 July 2026 will continue to be taken back at 24 months, and your oldest fund will always be used first. But from August we are down to 12 months.  This is unhelpful and makes it even more a tax in some eyes, although it might also spur us to action given that ‘loss aversion’ is a behavioural economics thing.

2. Funding for Level 7 (master’s degree level) has been withdrawn from candidates 22+

Which is a pity as many agencies used the Level 7 Leadership standard. However, those under 22 will still be fundable, although there are few suitable Level 7 apprenticeships that an agency would fund for a junior person coming into the workplace. This is part of Government policy to rebalance apprenticeships to help the NEETs.  

3. Defunding

Unfortunately, the Government is also defunding (from 1 September 2026) some mid-level apprenticeships that are popular ways to upskill e.g. Coaching, Team Leader, Operations Manager. So get someone on those now!  Government is also looking at more to defund.

4. Shorter Foundation Apprenticeships, but none in our sector 

The minimum duration has been reduced from 12 to 8 months, lowering the time to competency.  So far, there have not been any written for our sector.  Which is a pity because there is (yet another) employer incentive of £2,000.  Theoretically, this will help where candidates with too much prior learning were not eligible for a standard apprenticeship; however, it is not at all clear how.

Any questions on apprenticeships or entry level talent please contact [email protected].

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