The Department for Education recently announced that from January 2026, apprenticeship levy funding for Level 7 (master’s level) apprenticeships will be restricted. The restrictions mean that only those individuals aged between 16 and 21 will receive new funding for the level 7 apprenticeships.
The government say that this change is necessary as part of a wider ‘radical skills revolution’, believing this specific measure will rebalance the focus of funding towards lower-level training which it says has the ‘greatest impact’. It believes that businesses are (legitimately) taking advantage of the apprenticeship levy to upskill or re-train existing, skilled employees, rather than using the levy to train and develop younger unskilled and inexperienced individuals.
Industry leaders have reacted with concern to this announcement, particularly those in the health, construction, engineering, education, and financial services. For example, the NHS provide one third of all apprenticeships in the public sector, including level 7 apprenticeships. Danny Mortimer, Chief Executive of NHS Employers has said:
“There will be real concern in the NHS at the ending of funding from the levy for Level 7 apprenticeships for anyone aged over 21 – a route which has provided an increasingly important method of investment in experienced clinical staff to receive education which supports advanced practice in nursing and allied health professions.”
With employers such as the NHS becoming responsible for the costs of level 7 apprenticeships for those aged 22 and over, this will inevitably be factored into future recruitment and budgeting. Attracting skilled workers is already a huge issue for many employers, so this is an unwanted change and represents further pressure. Employers are already contending with the NIC rise, uncertainty arising from the Employment Rights Bill and planned visa changes. This comes, all at a time when the government need businesses to succeed, if they are to achieve their stated aim of substantial and sustained economic growth.
Whilst the government’s ambition to provide skills to more young, unskilled individuals is merited, it is doubtful that this policy change will help achieve that. We do not consider it likely that employers will recruit lower-level apprentices, as a direct result of this change. Why would they? Whilst the funding pot may be the same, if an employer requires an employee at level 7 qualification or equivalent, simply pivoting to a lower-level apprentice is unlikely to achieve the same aim. Further, as we have noted, employers will need to bear the cost of upskilling existing workers or recruiting new to meet their requirements – an additional burden that may change their recruitment and staffing policies.
Alan Vallance, Chief Executive of the Institute of Chartered Accountants in England and Wales (ICAEW) described the policy as a "major blow to the thousands who rely on this route into highly skilled roles that support the broader economy". With the average starting age for Level 7 ICAEW apprenticeships at 22, Vallance cautioned that the restriction could deter recruitment and impact economic growth.
Many are calling for the government to reconsider its thinking and revise the age-limit to 16-25. This would allow for school leavers to progress through the qualifications required to begin a level 7 apprenticeship and remove what is likely to become a cap on development and ambition. It would ensure that an incentive remains for employers and young people alike, whilst ensuring the maintenance of a talent pipeline and investment in a homegrown workforce.
The government is surely listening to the concerns of industry, but whether it pivots remains to be seen. For now, this change is yet another challenge for employers to consider and plan for.
