The Autumn Budget and the Post-16 Education and Skills White Paper

Overview of Budget changes

Amidst the drama of the Autumn Budget, there were some major policy changes in relation to apprenticeships and skills. The beneficiaries of the changes were mostly SMEs and ultimately young people who are Not in Education Employment or Training. Levy paying employers will feel the brunt of the policy changes in 2026.

For SMEs:

check Apprenticeship training costs will be 100% funded for learners under 25 at SMEs.

Previously, SMEs received 100% funding for apprentices under 22, and 95% funding for apprentices 22 and over. So this change brings into scope 100% funding for apprentices aged 22-24. Note that Level 7 will not be funded as from 1 January 2026, and this new funding change for SMEs does not change that ruling.

Implementation date: August 2026.

For levy payers:

The Budget was less positive for levy paying businesses, through the change in funding policy as well as the threshold for paying of the levy not increasing from £3 million payroll a year.

close The shelf life of levy funds in an employer’s account will be cut from 24 months down to 12 months, at which point unused funds are returned to the Treasury. Note it’s only new funds from August 26 which will only have a 12 month life span, not funds already paid into the levy account before the implementation date in 2026.

close The levy uplift from the government of 10% after an employer had exhausted its own levy funds for apprenticeship training is being removed.

close The 95% co-investment for further apprenticeship training from government for employers who’d spent all their levy funds plus the 10% uplift will be reduced to 75% co-investment.

Post-16 Education and Skills White Paper

The government's recent Post-16 Education and Skills White Paper provides a welcome strategic intent at a time of multiple policy announcements. At Kaplan Professional Education, we believe this is the moment for business and education to collaborate more closely than ever before, transforming policy intent into tangible results. For productivity reasons alone, the argument is undeniable that the workforce across almost all sectors of the economy needs upskilling.

More announcements are to come: assessment reform of apprenticeships is underway, with the Level 3 Accounting Assistant standard in the first group of three apprenticeships to trial the simplified assessment methodology. Uncertainty must be resolved for the higher-level standards, where the transfer from IFATE to the Department for Education to Skills England to DWP has resulted in delays to the much-needed updating of certain standards. The Curriculum Assessment Review by Professor Becky Francis has just been published, with V Levels already heralded in the White Paper as one method of simplifying the education system for the country’s young people.

But the calls to action on employers are extensive: from youth guarantees, to ‘stepping forward’ to fund more employee training, to offering T Level placements, to providing interviews for bootcamp students in devolved authorities.

Kaplan is urging the government to provide clarity that employers need on the financing of new initiatives, what incentives are to be paid and what co-funding is expected. And for investment for all providers of further education to be tangible, so that the words of encouragement within the White Paper become a reality.

Growth and skills offer

Flexible and modular learning become ‘apprenticeship units’

To provide some levy flexibility, the Government introduced the concept of ‘apprenticeship units’ as a way of upskilling existing employees in priority sectors. The details were finally released in late April 2026. There are:

• three AI leadership units
• each set at Level 5 (second year of a degree equivalent)
• lasting 30 hours
• with a current funding rate of £750 (for which the levy can be used by levy-paying employees and are currently funded by Government for non-levy payers
• for employees over 19 years old who have roles relevant to the AI leadership knowledge and skills outcomes.

There is some small print in the Government documents to bear in mind: they can switch off the available funding with four weeks’ notice. We will notify employers if the Government were to make this decision. There have also been notes of caution by DWP, stating in public that if there is too much take up of the units (i.e. too much Government budget allocated), DWP may consider ‘streamlining’ further full apprenticeship funding.

Digital, AI, and priority sector focus

The government is committing significant investment to 'Techfirst' digital skills and AI learning, and is focusing funding on eight priority growth sectors through the Industrial Strategy, which include digital and technologies, and Gen AI. In our view, it rightly recognises that technical excellence and skills are at the core of economic growth. With Professional and Business Services and Financial Services forming a quarter of the growth areas of the Industrial Strategy, it’s essential that Skills England genuinely listens to the guidance from employers in those sectors, especially those looking to upskill their workforce. Government strategy should be shifting toward a more integrated, employer-led skills system, with Strategic Authorities taking a greater role in local coordination. Employers should aim to participate actively in consultations and local Employer Representative Boards, to ensure the voice (and needs) of employers of all sizes are heard by funding and policy decision makers and reflected in Local Skills Improvement Plans.

Building the 'missing middle': Higher-level skills (Levels 4-6)

The White Paper highlights a critical national challenge

The UK lags behind G7 peers in the proportion of adults holding qualifications at Level 4 or 5 – the 'missing middle' essential for an Industrial Strategy.

Employers should be aware that the government will intensify its promotion of the Lifelong Learning Entitlement as a way for individuals to gain qualifications at Levels 4 and above. Whether individuals will take out a Lifelong Learning Entitlement loan to fund their own higher-level skills remains to be seen, particularly when the cost of living crisis continues to bite.