UK Apprenticeship Overhaul: What are the changes and how will they impact your social value offer?

By Tilly Crowhurst Samtaler Social Value Consultant

Apprenticeships in the UK are currently undergoing significant changes which will have a significant impact on social value commitments. Requirements for suppliers to generate Apprenticeships are a common feature in public sector social value tenders and most large suppliers to the public sector will have some kind of apprenticeship offer in their social value toolkit. 

Before you continue to include apprenticeships in your social value commitments, take a minute to read this.

How do apprenticeships create Social Value?

Apprenticeships are viewed as a key means of delivering social value because they provide a route into the workforce, particularly young people from disadvantaged backgrounds or those without formal qualifications. They can also help employers in sectors facing skills shortages by creating a pipeline of skilled workers that can contribute to the long-term sustainability of their industries. 

Why is the Government making changes to the apprenticeships?

Concerns have been raised that the current Apprenticeship Levy system isn’t working. Department of Education figures show that the number of apprenticeships has decreased since it was introduced.  Rather than being a vehicle for social value, a recent report by the Chartered Institute of Personnel and Development (CIPD) found that the current system is incentivising employers to “rebadge training for existing staff as apprenticeships so they can claim back funding”.

In its 2024 General Election Manifesto Labour pledged to “rebalance” apprenticeships. Since taking office, the new Government has introduced significant reforms to the UK’s apprenticeship system. 

What are the key changes?

1. The Institute for Apprenticeships and Technical Education (IfATE) is becoming Skills England
   The IfATE is being replaced by a new body, Skills England, that will oversee government funding for adult training courses and aims to bring together businesses, training providers, combined authorities, unions and national government to address skills shortages and upskill workforces. Employers wishing to engage with this new body can them at skills.england@education.gov.uk.

2. The Apprenticeship Levy is being replaced by the Growth and Skills Levy
   The apprenticeship levy is a tax on large UK employers which was introduced in 2017 to fund apprenticeship programmes and encourage investment in workforce training. The tax creates a fund which can only be used to pay for apprenticeship training but if it isn’t spent or transferred, then employers lose it. The levy also works differently in England and other parts of the UK. The revamped levy allows for more flexibility: Employers will be able to use up to 50% of their levy funds for training beyond traditional apprenticeships although we’re still awaiting details about what the new courses will be.

3. Restrictions on Level 7 Apprenticeships
   The government will place restrictions on using levy for some level 7 apprenticeships – equivalent to a master’s degree-to rebalance the benefits of the levy in favour of younger people.
   These highest-level apprenticeships are often accessed by older or already well qualified employees and going forward may need to be funded by companies from outside of the levy. The shift has raised concerns, especially in industries like tech and healthcare, where high-level skills are in huge demand.  However, Skills England continue to decide which level 7 apprenticeships will be subject to the restriction.

4. Introduction of new Foundation Apprenticeships
   New foundation apprenticeships will be introduced to offer training to young people who are not ready to start at level 2 or 3 - equivalent to GSCE/further education level. 

5. Shorter Apprenticeships Allowed
   The rule requiring apprenticeships to last at least 12 months is being scrapped. This means some courses can now be shorter, which will be handy for specific training needs.

6. More levy transfers encouraged.

   Employers can now transfer up to 50% of their levy funds to other organisations, up from the previous 25%. This change is aimed at helping smaller businesses hire more apprentices. 

7. Apprentice Minimum Wage is Increasing
   From April 2025, the apprentice minimum wage will go up by 18% from £6.40 to £7.55 an hour.

2025 Apprenticeship Reforms - Key Changes at a Glance:

Since taking office, the new Government has introduced significant reforms to the UK’s apprenticeship system and this diagram shows the key changes for 2025.

What do these changes mean for Social Value commitments in procurement?

At the time of writing (January 2025) we’re still waiting for more information and detail around these changes to become available but with contracts being tendered so far into the future it’s vitally important to make sure that what you’re putting in bids now, is deliverable.  As many will know, once a commitment is made at tender stage, it becomes contractual so it’s vital to think carefully about how these changes could affect your promises.

Here are seven things Social Value professionals can do to prepare for the changes to apprenticeships :

• Make sure your social value solutioning teams know about the changes.  You can continue to include apprenticeships in your bids but make it clear that delivery depends on levy funding and your ability to deliver is subject to government policy changes.

• Ask for clarification from procurers.  If a tender specifies delivery of apprenticeships ask for clarification from the Procuring Authority about what impact the changes will have on these requirements and what the opportunity will be to change your commitments at a later date once more detail becomes available. 

• Assume you will be funding Level 7 Apprenticeships independently – If these apprenticeships are critical to your social value delivery, budget to fund them without the levy.

• Plan for Wage Increases –Make sure you’re ready to cover the higher apprentice wages starting in April 2025. These costs must be covered by individual employers.

• Explore how you can better use Levy Transfers - If you can’t spend all your levy funds, you can offer to transfer them to VCSE or MSME suppliers to boost skills across your supply chain.  For more information on how to transfer your levy, see this UK Gov site.

• Support Your Apprentices - Build strong support systems to help apprentices succeed and stick around... before making bid commitments to hire them.  44% of apprentices drop out before their end-point assessment with many saying the reason they do so is because they are not supported through their training. Hiring apprentices does not add social value if they are not supported through their qualification and retained. When embracing the changes, organisations must also look to improve the quality of the apprentice experience.

• Talk to training providers & stay in the loop - Work with local training providers and keep an eye on updates for new opportunities that could suit your organisation’s needs. Could there be emerging training opportunities which would suit your contracts and workforce?  

These changes offer opportunities for greater flexibility and inclusivity but also pose challenges for employers who rely on apprenticeships in their bids and commitments. To navigate this evolving landscape, it’s crucial for social value professionals to stay informed, proactively engage with training providers, and carefully assessing the implications for their workforce and social value strategies. By staying flexible and ahead of the game, you can keep apprenticeships at the heart of your social value strategy.

How we can help

At Samtaler, we specialise in helping businesses navigate the complexities of apprenticeship programmes and integrate them into their social value strategies. Whether you’re looking to align with the latest government reforms, maximise the potential of your levy funds, or design apprenticeship initiatives that truly deliver social value, our team is here to support you. We provide expert guidance on creating sustainable, impactful apprenticeship programmes, ensuring your commitments are realistic, achievable, and aligned with procurement requirements. With our tailored advice and hands-on support, we’ll help you turn apprenticeships into a powerful tool for building skills, driving inclusion, and creating lasting social impact. Contact us at hello@samtaler.co.uk  

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