With a new government settling into No.10, ISE along with leading experts dissected the likely policy shifts set to impact early careers in the coming years.
ISE hosted a webinar with Nichola Hay MBE, Director of Apprenticeship Strategy and Policy at BPP, Lorcan Seery, Apprenticeship Manager at Irwin Mitchell, and Jeremy Swan, Head of Policy and Advocacy at AGCAS.
The webinar offers insight into the government’s approach, the challenges they aim to address, and the compromises that are inevitable along the way. Here are some of the key takeaways:
The UK government’s skills agenda: what’s at stake?
At the heart of the government’s agenda is the reform of the apprenticeship levy, which is seen as vital for meeting workforce demands.
Former Education Secretary David Blunkett’s skills report offers a roadmap for these changes, with a particular focus on aligning the levy with real-world labour market needs—especially for younger individuals.
The proposed reforms aim to inject greater flexibility into the apprenticeship system by offering shorter, modular training tailored to various employment needs.
A pressing issue the government hopes to tackle is the growing number of young people not in education, employment, or training (NEETs), which currently stands at around one million. Redirecting funds from the apprenticeship levy is seen as one solution to this pressing problem.
Keir Starmer and other ministers have made key statements regarding the skills agenda. Starmer’s focus on transforming the system is directly tied to the goals of boosting productivity and economic growth.
Home Secretary Yvette Cooper’s remarks on limiting skilled visas for STEM roles suggest a shift in government policy toward forcing employers to invest more in domestic talent – an expectation that businesses will need to prioritise homegrown talent over immigration, especially through apprenticeships.
Higher education (HE) isn’t immune to these changes. Funding challenges, including stagnant tuition fees and visa restrictions on international students, threaten to constrain HE institutions’ ability to deliver necessary skills training, which could have long-term effects on their role in addressing the country’s economic needs.
Skills England: a game-changer for workforce development?
A key player in the government’s industrial strategy is Skills England, a newly established body that will oversee skills development across sectors. ISE’s Stephen Isherwood explored Skills England and the skills and education reforms in an earlier article.
The organisation is tasked with integrating cross-departmental efforts to align skills training with major government priorities like clean energy, healthcare, and digital industries.
Skills England’s role will be to ensure that skills development is woven into broader government initiatives, including infrastructure and economic policies.
One of Skills England’s primary responsibilities will be to oversee reforms to the apprenticeship structure. These reforms are expected to include the introduction of foundation apprenticeships, the modularisation of training, and a focus on making apprenticeship programs more flexible for learners at all levels.
Significant changes are anticipated by August 2025, with updates particularly aimed at benefiting young people.
Early careers and apprenticeships: flexibility, funding, and the future
A key theme of the discussion was the potential impact of apprenticeship levy reforms on early careers. There is growing concern that cuts to funding for higher-level apprenticeships, such as Level 7, could hinder opportunities for social mobility.
One reason many businesses have embraced apprenticeships as a way to attract and develop talent is because they offer an alternative to traditional graduate routes. Limiting these programs could therefore scale back important pathways for young people from disadvantaged backgrounds.
The panellists stressed the need for flexibility within the apprenticeship system, allowing businesses to adapt to evolving labour market demands.
Employer-led consultations were highlighted as crucial in shaping government policies that align with the actual needs of the business community.
The funding challenge
One of the central challenges identified by the panel was the restricted budget for the current apprenticeship system.
The Treasury are collecting about £4bn a year in levy from employers. The budget treasury set for employers to spend through the levy pot in England is around £2.7 billion. And out of that there’s only about 1% to 2% underspend in that budget. So, when we talk about flexibility, there isn’t a lot for increased provision on short courses because we’re spending 98% of that budget already.
One idea floated is that employers in the future cover the cost of level 7 apprenticeships – this could free up about £200m in in the levy pot. The potential reallocation of costs to employers—particularly for higher-level apprenticeships—was concern for some of the panel.
If businesses are required to cover more of the training expenses themselves, there is a risk that fewer companies will offer these opportunities, particularly at a time when many are scaling back their budgets. This could disproportionately affect young people from underrepresented communities, undermining efforts to improve social mobility through education and training.
If level seven programmes were removed, this could also tarnish the reputation and credibility of apprenticeships amongst employer teams that have worked so hard over the last 10 years to build and promote the programmes.
Implications for HE
HE institutions face mounting challenges, including stagnant tuition fees and a reduced international student intake due to visa restrictions. The panellists emphasised the importance of universities playing a visible and active role in Skills England’s plans, particularly in key sectors like healthcare and digital industries.
Collaboration between universities and businesses was identified as a key solution to ensuring that curricula align with labour market needs. By working more closely, employers and universities can better prepare students for the jobs of tomorrow and help contribute to the country’s overall economic growth.
ISE’s position and strategy
ISE is determined to collaborate with both the government and sector bodies to address the pressing issues facing the early careers sector.
Since the election, several key themes included in our manifesto have gained momentum—particularly around the apprenticeship levy, skills development, and careers support. However, as the panellists pointed out, many of the details are still unclear, and the effectiveness of these reforms will largely depend on their execution.
While the government’s direction offers reason for optimism, businesses and educational institutions face challenging constraints – there are few if any quick fixes.
Over the coming months and years, ISE will continue to advocate for the interests of its members, ensuring their voices are heard as the government refines its approach to early careers and skills development.
ISE members can watch the webinar in full.
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