We have announced radical reforms to the skills system to support 120,000 new training opportunities this Parliament. We are continuing to invest in programmes designed to boost the workforce in key growth sectors and making changes to support opportunity for young people. Skills are an engine of economic growth, improving productivity and giving people the opportunity to thrive in work and life. To deliver on our plan for change, we need a skills system that is geared to deliver the skills we need, focused on economic priorities and supporting opportunity for learners.
Creating more opportunities for young people with the growth and skills levy
Last year, the Prime Minister announced a new growth and skills levy, which is now backed by its largest ever budget of over £3 billion. This will provide greater flexibility to employers and learners and widen the apprenticeship offer, helping more people gain the skills they need, fuelling business innovation, and providing high-quality pathways for young people.
The rate of young people’s apprenticeship starts have fallen more dramatically than the overall decline over the last decade. We want to rebalance the programme back towards young people beginning their careers. As a first step, we are introducing new foundation apprenticeships, which are an employment-based training offer that give young people a route into careers in critical sectors, enabling them to earn a wage while developing vital skills.
The first foundation apprenticeships will be available from August 2025. They will be focused on industrial strategy priority areas including construction and the built environment, engineering and manufacturing, health and social care, and digital. They will be underpinned by an employer incentive payment to contribute to the extra costs of supporting someone at the beginning of their career, such as through coaching and mentoring. We will continue exploring how to make foundation apprenticeships work in other sectors like hospitality and retail too. We expect this to drive up to 30,000 apprenticeship starts across this Parliament.
This reform will be complemented by changes to the wider apprenticeships offer that we have already set out, such as shorter duration apprenticeships and more flexible English and maths requirements.
Creating more opportunities for young people at the start of their working lives means we need to prioritise public funding towards them, rather than those already in work with more prior learning and qualifications. That is why we announced our intention to move funding away from level 7—masters-level—apprenticeships, to support a more flexible offer at lower levels.
I am now confirming that we will proceed with this reform. We will continue to fund level 7 for those aged 16 to 21—when they start their apprenticeship—and support apprentices already on a level 7 apprenticeship through to completion. This change will apply from January 2026 across all sectors.
Skills England was asked to provide insight into the impact of defunding level 7 apprenticeships. They engaged with over 700 stakeholders from various sectors, employer representative bodies, and young people, which indicated that, in general, level 7 apprenticeships were high-quality and were well supported, by employers. Many learners who completed these apprenticeships saw higher wages one year after study, compared with the average UK salary. It was also clear that these apprenticeships are important for meeting the skills needs of the economy. However, alternative routes are well supplied and Skills England’s evidence suggested there was unlikely to be a significant or unavoidable fall in the supply of these skills in the long term, post-defunding. Therefore, we will be encouraging employers to invest in upskilling their staff to this level, to enable levy funding to be rebalanced towards training at lower levels.
Skills England did not find a strong enough economic rationale to exempt a small group of level 7 apprenticeship standards from defunding. While level 7 apprenticeships can be a valuable route for some disadvantaged learners, a significant proportion are from non-deprived backgrounds and are significantly less likely to be deprived than apprentices at lower levels. Level 7 generally has a higher proportion of older learners than other apprenticeships, particularly the senior leader apprenticeship—where 99% are over 25—and standards with an embedded postgraduate qualification.
However, there are several exceptions which benefit young people at the start of their careers, like solicitors and accountancy or taxation professionals. This is why we have decided that younger learners, from all backgrounds, will continue to be funded under our reforms. Level 7 apprenticeships are a valuable entry point for young people into good careers, such as law, accountancy and town planning; we have seen thousands take advantage of these opportunities and this will continue under our new approach.
This decision was informed by a wide range of evidence, including Skills England’s analysis of official apprenticeship statistics and engagement with a wide range of stakeholders. We also considered wider data and representations and weighed this up against the Government’s clear priorities.
This decision to prioritise young people is a crucial step in delivering the Government’s plan for change and achieving its missions of driving growth and breaking down barriers to opportunity. We are prioritising funding towards young people and creating more opportunities for those entering the labour market, who need skills and training to get on in their careers, and powering growth across the country by providing the skills businesses need.
Expanding skills funding via the immigration skills charge
We are also expanding funding in the wider skills system to support growth and opportunity. In the immigration White Paper published on Monday 12 May, the Government confirmed a 32% increase in the rate of the immigration skills charge, which will be used at the oncoming spending review to support skills funding for priority sectors to upskill the domestic workforce and reduce reliance on migration over the medium term. The increase in the immigration skills charge could help deliver up to 45,000 training places across this Parliament.
Boosting investment in skills for growth
We are also increasing investment in construction skills, building on more than £600 million announced by the Chancellor in March. We are boosting job prospects for adults interested in jobs in the sector, expanding training in priority sectors via skills bootcamps and free courses for jobs:
The Department will devolve around £14 million of additional adult skills funding for the construction sector to local mayors for next academic year, giving them the freedom to make the right choices for their areas. We expect this to deliver up to 5,000 additional adult learners on training courses.
For non-devolved areas, 13 new construction courses at level 2 will be added to the free courses for jobs offer available for adults so more people can upskill, improve their job prospects and earn a higher wage.
The Government are also launching technical excellence colleges (TECs) specialising in construction skills. Colleges will be able to apply to become construction TECs and the application process will open this term for 10, to launch in September 2025. These colleges will be leaders in delivering specialist skills, directly training learners and supporting other providers of construction skills across their regions—ensuring local people can benefit from this investment. They will serve as leaders in world-class skills training, combining excellent teaching standards with close working with industry experts.
Formal establishment of Skills England
These reforms will be driven forward by Skills England, which today becomes an Executive Agency of the Department for Education. Skills England will build our nation’s world-class skills, enabling growth and opportunity by:
Understanding the nation’s future skills needs and improving our skills offer.
Simplifying access to skills to boost economic growth.
Mobilising employers and other partners, co-creating solutions to meet national, regional and local skills needs.
To do this, Skills England will combine new functions with some of those previously undertaken by the Institute for Apprenticeships and Technical Education (IfATE). On 15 May 2025, the Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Act received Royal Assent. This provided functions and assets to the Secretary of State that were previously held by IfATE, which has now been formally closed. These functions will broadly be exercised by Skills England and, combined with its broader work in the skills system, enable it to take its work forward as an Executive Agency of the Department for Education, with the approval of Cabinet Office and HM Treasury Ministers. Final accounts for IfATE will be presented to Parliament in due course.
The Government are also confirming board appointments to Skills England, and the latest analysis from Skills England is being published to help develop the Government’s understanding of skills needs and how they can be met.
The reforms announced today mark an important step in Government’s comprehensive strategy for post-16 education, delivering our youth guarantee, and our commitment to addressing skills shortages to drive growth while creating better opportunities for young people and adults across England.
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