A major shake-up in apprenticeship funding will begin to rollout from April 2026, with further detail emerging throughout the year.
The Growth and Skills Levy will supersede the current Apprenticeship Levy, with the reformed framework aiming to introduce more flexible training options and respond more quickly to skills shortages.
However, a growing body of employers has questioned whether the new levy is genuinely funding skills development, raising concerns among employers about whether funds are fully reinvested.
What went wrong with the Apprenticeship Levy?
Introduced in 2017, the Apprenticeship Levy required large employers to contribute 0.5% of their wage bill into a training fund to drive investment in upskilling staff.
The most fundamental problem was the gap between what employers paid in and what came back as training. Estimates suggest by 2025-26, levy income would reach around £4.4 billion a year, while the apprenticeship budget in England is forecast to stand at roughly £3.1 billion.
After accounting for funding allocated to devolved administrations, an estimated £700-£900 million annually is left not directly spent on apprenticeships. That gap is projected to widen, providing an even larger portion of funds for employers to utilise to upskill their workforce.
The mix of provision shifted sharply too. Larger employers increasingly use the levy to fund postgraduate-level training for already-qualified staff. Entry-level and younger workers lost out. That skew proved politically unsustainable and the consequence was clear following the funding restrictions on Level 7 programmes introduced in January 2026 – leading to employers reassessing their leadership and advanced skills strategies.
What changes under the new model?
The Growth and Skills Levy aims to introduce more flexibility. Employers will have a greater control over their training spend and be able to spend a portion of their contributions on a broader range of training – including modular learning, shorter courses and targeted upskilling – rather than being restricted to apprenticeships alone. This enables them to provide more targeted skills investment but this will require careful planning, navigating the new funding rules.
Advocates say this better reflects how modern workforce development actually works. Critics warn it could dilute apprenticeship funding at entry and intermediate levels unless firm safeguards are in place.
Questions around transparency also remain: how much levy income will genuinely be reinvested in skills?
What does this mean for supply chain employers?
For many logistics and supply chain businesses, the frustration is acute. Funding caps, programme restrictions and the restrictions around the Level 7 provision have already limited employers’ ability to invest in leadership and advanced technical skills.
Constant policy changes make long-term workforce planning difficult, and training providers face rising costs and mounting uncertainty with the need to use their levy pot quicker than before with an increase in employer co-investment.
Despite this, the shift to the Growth and Skills Levy could offer an opportunity to align training more closely with operational needs, invest in shorter skills interventions and broaden professional development.
Outcomes will depend on how effectively employers adapt their training strategies to the new funding landscape; it’s key to utilise funds as soon as possible to maximise the learning opportunities available.