Labour’s Growth and Skills Levy: What it means for employers

In its current form, the Apprenticeship Levy is a tax on UK employers, with funds exclusively earmarked for apprenticeships training. Labour’s goal is to broaden its use – creating more opportunities for adults in the UK to gain new skills.

There’s still a lot we don’t know about the future of the Growth and Skills Levy. But, to help employers unpack what a reformed Levy could mean for their business, here’s what we know so far:

The goal to reform the Apprenticeship Levy into the new Growth and Skills Levy sits at the heart of Labour’s mission to boost skills in the UK. As a key manifesto commitment, Labour plans to broaden flexible access to adult training in the hope that it will open up opportunities for growth across the workforce.

The intention of the reform is not to reduce the number of apprenticeships, but to increase flexibility. Eventually, the new Levy could allow businesses to spend some of their Levy contributions on non-apprenticeship training, with a portion still reserved for apprenticeships.

So far, the Government has not announced any non-apprenticeship training. Instead, they have announced new ‘Foundation Apprenticeships’(opens new window). These are targeted at young people, with the goal of providing a broad curriculum and developing both employability and job-specific knowledge skills. The first seven foundation apprenticeships will be available from August 2025, with more likely to follow.

To support this change, employers will be asked to fund more of their Level 7 apprenticeships outside of the Levy. From January 2026, new Level 7 apprentices will only be eligible for levy funding if they are aged 16-21.

A new minimum duration for apprenticeships has also been announced. Apprenticeships can now be as short as 8 months, provided they still meet specific requirements. If you are interested in learning more about these changes, please reach out to a member of the team.

The Government has also created a new agency, ‘Skills England’, with the functions of the Institute for Apprenticeships and Technical Education (IfATE) transferring to Skills England in June 2025.

Skills England will develop a single picture of national and local skills requirements, bringing together businesses, providers, unions, Mayoral Combined Authorities (MCAs) and national government to assess the skills the economy needs.

Skills England will also shape the future of the Growth and Skills Levy, holding a list of approved qualifications and training that businesses will be able to spend Levy money on. The list will be developed in collaboration with businesses and experts.

Labour’s mission statement refers to the vital need for upskilling and training – alongside apprenticeships – to meet the needs of developing technology in the workplace.

Under the current system, Apprenticeship Levy-paying employers are only using 55.5% of available funds, on average.(opens new window)

By creating more flexibility over how the money is spent, the new Growth and Skills Levy could help some employers utilise a greater proportion of their Levy funds – with training that meets specific business needs and skills gaps. For example, it could provide an opportunity to level-up teams with shorter courses in technical skills, such as AI and data. These are vital areas that will be necessary for future business success and to maintain a competitive edge.

This isn’t just beneficial for employers. Employees also stand to benefit from increased investment in training opportunities – being empowered to learn new skills and feeling valued by their company. For employees, upskilling means opportunities to continuously learn and progress in their roles – which also helps improve retention(opens new window). In fact, we see 94% of individuals remain at their employer beyond their Multiverse apprenticeship.

The Growth and Skills Levy is a commitment from the Labour Party to upskilling employees. Fundamentally, the new policy should not change how employers should think about their investment in training: through the lens of increasing employees’ access to gain in-demand skills.

With careful implementation, new opportunities could be created for all workers across the economy – delivering ROI for employers and supporting a culture of work-based lifelong learning.

And while we don’t have all the answers just yet, the key to making a reformed Levy successful will be in making sure it's designed with the support and expertise of employers.

Read more about our perspective on the new Levy in our Skills Mission Report.
Want to speak to us about the Levy or other ways to support upskilling in your workplace? Get in touch.

Last updated: 12 June 2025