What changes are the Labour Government planning to make to apprenticeships?

The Labour Government has proposed significant changes to the apprenticeship system, aimed at tackling skill shortages and boosting opportunities for young people. The key aims of these proposals are to address current gaps in the workforce while equipping young adults with the necessary skills to succeed in a rapidly evolving job market.

This article discusses the Labour Government’s proposed changes regarding apprenticeships, the reason for these changes and their impact.

Skills Guarantee for young adults

The Labour Government party have raised concerns stating “Apprenticeship numbers have plummeted. Skill shortages are widespread. Young people have been left without the opportunities they need. The result is an economy without the necessary skills, nor any plan for the skills needs of the future”.

In response to this concern, the Labour Government is proposing a Skills Guarantee for all young adults ages 18 to 21. This initiative aims to provide every individual within this age range guaranteed access to an apprenticeship, training or support in funding employment, to ensure that every young adult has a pathway into the workforce. The primary aim of this proposal is to combat youth unemployment by offering opportunities for skill development in industries with high demand.

Reform of the Apprenticeship Levy

Since the introduction of the Apprenticeship Levy in 2017, apprenticeship numbers have dropped significantly, particularly among small and medium-sized enterprises. Many businesses have voiced concerns that the levy’s strict focus on traditional apprenticeships is too limiting, preventing companies from investing in alternative forms of training that might better meet their needs. Additionally, the Labour Government have expressed themselves that they feel the current Apprenticeship Levy is too restrictive and fails to meet the needs of businesses and apprentices.

The Labour Government is planning to reform the Apprenticeship Levy by replacing it with a new and more flexible ‘Growth and Skills Levy’. Under this new model, businesses will be able to spend up to 50% of their levy contributions on non-apprenticeship training.

Additionally, companies who do not pay the levy will continue to receive 95% funding, though it is not clear if this is just for apprenticeships, or whether this includes non-apprenticeship training too. This shift is intended to offer businesses greater autonomy in how they develop their workforce, allowing them to focus on skills that are critical to their own operations and future growth of their organisation.

The Labour Government has suggested that Skills England will hold a list of approved qualifications that the new Growth and Skills Levy will apply to. The Labour Government have stated that the list would be created in collaboration with businesses, devolved authorities, unions and wider experts. The Labour Government has suggested that the categories will include modular courses such as social care and childcare. Additionally, the Labour Government have stated that the categories will include functional skills and pre-apprenticeship training, mainly focusing on digital skills and technology.

What is the impact of these changes?

For young people, especially those aged 18 to 21, the Skills Guarantee offers much-needed support in entering the job market. By offering young people opportunities to enter the workforce, the Labour Government’s proposals could significantly reduce youth unemployment while aligning workforce training with the future demands of the economy.

Additionally, the changes to the levy system could be transformative for both businesses and young people. By allowing companies to allocate funds to modular courses and non-apprenticeship training, the Growth and Skills Levy aims to address the evolving needs of businesses. This approach will not only help businesses fill immediate skills gaps but may also prepare and enhance their workforce for the future.

Conclusion

The Labour Government’s proposed changes do not suggest that any amendments are being made to the current form of apprenticeships or their existence, and there may even be an increase in the number of apprenticeships with the Skills Guarantee. Additionally, the changes to the levy do not suggest that the existing levy itself is changing, but the ways it can be spent are being adapted. If successfully implemented, these changes could provide businesses with the tools they need to thrive and offer young people and workers the opportunities they need to succeed in a rapidly evolving job market.

Our Peace of Mind Team will keep all our clients up to date with the changes as more information becomes available and our Document Audit Team can help draft or amend relevant policies. Contact our Employment Law team by emailing employment@warnergoodman.co.uk or by calling 023 8071 7717.