Growth and Skills Levy to Replace Apprenticeship Levy
The government has unveiled plans to establish Skills England, a new body that will oversee the growth and skills levy, set to replace the current apprenticeship levy. This initiative aims to address the fragmented training system in the UK.
Skills England, led by interim chair Richard Pennycook, a non-executive director at the Department for Education, will manage this new levy. The primary goal is to unify the diverse skills landscape and enhance the nation’s workforce capabilities, with a significant focus on reforming the apprenticeship levy.
Although specific details about the growth and skills levy are yet to be released, the intention is to foster apprenticeship training in line with demand and eliminate the existing barriers businesses face with the current system. Between 2017 and 2022, skills shortages doubled to over half a million, now constituting 36% of job vacancies.
Skills England will collaborate with central and local governments, businesses, training providers, and unions to meet the skills requirements for the next decade across all regions. This new body will provide strategic oversight of the post-16 skills system, aligning with the government’s industrial strategy.
Prime Minister Keir Starmer stated: “Our skills system is in disarray, which is why we are overhauling our approach to meet future skills needs. Skills England will help deliver our top priority of kickstarting economic growth by creating new opportunities for young people and enabling British businesses to recruit more home-grown talent. From construction to IT, healthcare to engineering, our country’s success depends on delivering a highly skilled workforce for the long term. Skills England will establish the framework needed to achieve this goal while reducing our dependence on overseas workers.”
The overhaul of the apprenticeship levy will see Skills England identifying critical skills shortage areas and directing investment in training to open up broader opportunities, as outlined in the Skills England Bill.
Education Secretary Bridget Phillipson commented: “Employers want to invest in their workers but have been hindered from accessing the necessary training for too long. Skills England will jumpstart young people’s careers and invigorate local economies. The organisation will identify the training for which the growth and skills levy will be accessible, an important reform giving businesses more flexibility to spend levy funds on training for the skills they need, which employers have long been calling for.”
The government has confirmed that Skills England will be established in phases over the next nine to twelve months to create a responsive and collaborative skills system.
Shazia Ejaz, Director of Campaigns at the Recruitment and Employment Confederation (REC), said: “The shift to a more flexible growth and skills levy, where apprenticeships are not the sole option for employers to spend their levy funds on, will be a significant help for temporary workers. Training must be accessible to people working flexibly, as not everyone works full-time or with the same employer for long periods. There are one million temporary workers on assignment on any given day, most of whom have missed out on training opportunities. Skills England must focus on addressing this, perhaps by allowing the new levy to fund modular courses in worker-short sectors.”
The Skills England Bill, announced in the King’s Speech, will transfer functions from the Institute for Apprenticeships and Technical Education (IfATE) to Skills England and is planned to be introduced in the first session of Parliament this autumn. This move is part of broader efforts to simplify and devolve adult education budgets to Mayoral Combined Authorities, enabling them to address their adult skills needs directly and support local growth.
Skills England
The first phase of Skills England’s launch involves setting up the organisation in a shadow form within the Department for Education (DfE) and beginning work on an assessment of future skills needs while building strong relationships with employers. A permanent board, chair, and CEO will be appointed in due course.
Currently, the Institute for Apprenticeships and Technical Education (IfATE) offers employers a route to shape skills training. IfATE’s functions will transfer to Skills England as part of the new organisation’s broader remit. IfATE will continue its essential work in the interim as the transition of functions to Skills England is finalised.
Skills England will be responsible for maintaining a list of levy-eligible training to ensure value for money and that the mix of government-funded training available to learners and employers aligns with the identified skills needs.
