UK employers are facing a run of significant changes to how publicly funded training works. The Work and Pensions Secretary has described the reforms as the biggest transformation of apprenticeships in a decade, as reported by FE Week in March 2026. The Apprenticeship Levy, introduced in 2017 for employers with an annual pay bill above £3 million, is being reshaped into the Growth and Skills Levy. Alongside the new name comes a set of funding changes that affect how far your levy pot stretches, what you pay once it runs out, and which programmes you can fund at all.
For HR directors and L&D managers, this isn’t just an administrative update. It affects budgets, planning cycles, and succession plans. The sooner you understand what’s changing, and what it costs, the more room you have to plan rather than react.
What's changing and what it costs
The headline change levy payers is co-investment, the share of training costs you pay once your levy funds are used up. Until now, when your levy pot was empty, the government covered 95% of apprenticeship training costs up to the funding band maximum, and you paid the remaining 5%. This is set out in the Department for Education’s Digital Apprenticeship Service guidance. From 1 August 2026, that split changes. Once your levy funds are exhausted, the government will fund 75% and you will contribute 25%, as confirmed in the government’s Growth and Skills Levy guidance and reported by the CIPD.
The financial impact is significant. As an illustration, take an apprenticeship with a £15,000 funding band. Applying the current 5% rate, continuing that apprenticeship after your levy runs out costs you £750. Applying the new 25% rate, the same apprenticeship costs £3,750. For organisations that regularly exceed their levy allocation, that difference adds up quickly across a cohort.
Two further changes tighten the picture. First, the government is removing the 10% top-up it currently adds to levy accounts, so employers will access only the value of their own contributions, according to the CIPD and government guidance. Second, the window to spend levy funds has been cut. Government guidance confirms that new funds entering your account from August 2026 will expire after 12 months rather than 24. Together these mean less money in the account and less time to use it.
The bigger shift for many employers comes in the autumn. From later this year, the government is withdrawing levy funding from 16 apprenticeship standards, and some of the most widely used leadership and management routes are on the list. That includes Team Leader Level 3, Operations Manager Level 5, Coaching Professional Level 5, and the Chartered Manager Degree Apprenticeship at Level 6. This was confirmed by the Department for Work and Pensions through Skills England and reported by FE Week in March 2026.
If you’ve built your management pipeline around those routes, this is a real change to plan for, though the detail offers some reassurance. Anyone enrolled before the cut-off finishes under their existing funding, so no one part-way through is left stranded. It’s new starts afterwards that lose funding. To put the scale in context, Team Leader alone had 12,670 starts in 2024 to 2025, according to FE Week, which shows how many organisations have leaned on it to develop their first-line managers.
Where bespoke training fits
These changes don’t diminish the value of apprenticeships. They remain a strong route for structured, funded development, and for many roles they are exactly right. What’s changing is the cost and the constraints, which makes it worth looking at how other forms of training complement them.
Bespoke commercial training sits outside the levy system entirely. It isn’t drawn from your levy account, and it isn’t governed by the apprenticeship funding rules, so it comes with a different set of trade-offs. You pay for it directly and commercially, but in return you gain flexibility that many apprenticeships can’t offer.
That flexibility matters in three practical ways:
- No eligibility restrictions tied to age, prior qualifications, or level, so you can develop an experienced senior manager as readily as a recent graduate.
- No minimum duration or off-the-job training requirement, so a programme can be as short or as focused as the need demands.
- Content built around your organisation rather than a national standard, so you can target the specific skills gaps you actually have.
This matters most where funded routes are being withdrawn. For the first-line and middle management development that Team Leader, Operations Manager, and Coaching Professional apprenticeships supported, and for the senior leadership that Level 7 covered for older learners, bespoke programmes offer a practical way to keep that development going once funding stops. The same is true for niche technical skills, culture-specific programmes, and fast-moving areas where waiting for a full apprenticeship standard isn’t practical.
None of this makes bespoke training a replacement for apprenticeships. The point is balance. Apprenticeships give you funded, accredited pathways for the roles that suit them. Bespoke training gives you the agility to fill gaps the levy can’t reach, especially as co-investment rises and eligibility narrows. A blended approach lets you commit levy funds to the highest-impact apprenticeships early, then use commercial training to cover the rest.
Planning for a blended approach
The shift to the Growth and Skills Levy asks HR and L&D leaders to plan more deliberately than before. With co-investment rising to 25% from August 2026, a shorter 12-month window to spend funds, Level 7 funding narrowed for older learners, and 16 standards losing funding from September 2026, the cost and the risk of relying on a single funding route have both gone up. The organisations that adapt well will treat apprenticeships and bespoke training as parts of the same strategy. That means committing levy spend to the apprenticeships that matter most, and using commercial programmes to develop the people and skills the levy no longer reaches.
If you’d like to see how bespoke training could sit alongside your apprenticeship strategy ahead of the changes, you can explore the options on our bespoke training page. Or if you’d prefer to talk it through, book a call with us to work out what fits your organisation.
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