This article outlines how the new Growth and Skills Levy could reshape workforce development, economic growth, and regional equality in the UK.
The Labour Party geared up for the next general election in July this year, with one of its most crucial policies under discussion: their proposed Growth and Skills Levy. It’s a levy which plans to reshape how businesses invest in training, development, and future economic growth. The new body governing the system is Skills England. The first report from Skills England is an initial assessment of the nation’s working skills. It also looks at future skills needs and the gaps which employers are struggling with across the country. is there growth in the governments new Growth and Skills levy/
Is the Growth and Skills Levy a replacement for the Apprenticeship Levy?
The Prime Minister, Sir Keir Starmer and Education Secretary, Bridget Phillipson formally announced on 24thSeptember, that the new growth and skills levy will replace the existing apprenticeship levy and will include new foundation apprenticeships. Furthermore, the new levy will be a major part of the party’s future economic strategy.
The current system requires large employers with an annual pay bill of more than £3 million, contribute 0.5% of their payroll towards an apprenticeship fund. This allows them to spend their levy budget on apprenticeships in the UK. Significantly Personnel Today reported “Apprenticeship levy-paying employers are only using an average of 55.5% of available funds, according to research that finds the regime is not working as well as employers perceive it should”.
How will the Growth and Skills Levy help employers?
To fund the new levy, employers will be asked to rebalance their funding for apprenticeships and think about their investment in learning and development. One of the key focus areas is to ask employers to invest in younger workers. This will also involve businesses funding more of their level 7 apprenticeships outside of the levy. These are equivalent to a master’s degree and often accessed by older or already, well qualified employees.
The new Growth and Skills Levy could help achieve the government’s aim of employers utilising more of their levy funds. The Department of Education says that the new levy will also allow funding for shorter apprenticeships (less than 12months). These are designed to give learners and employers greater flexibility over their training. Additionally there is a possibility that any upskilling will be more likely to fill skills gaps and help reach business goals. Employees will also benefit from further investment in more targeted training opportunities. to learn new in-demand skills.
What happens next?
What we do know is that the training eligible for funding under the new levy will develop over time. It will be informed by Skills England’s assessment of priority skills needs. Although it’s a ‘shadow’ form of Skills England until law has been enforced, it does show a commitment to upskilling employees. Further details on this, the scope of the offer and how it will be accessed will be released in due course by the Department for Education.
Will the Growth and Skills Levy boost productivity?
The new Growth and Skills Levy is connected to wider efforts by the new government to boost the UK’s productivity. A more comprehensive skills development framework, paired with a reformed industrial strategy, will aim to drive business innovation. it will also raise the country’s overall productivity levels, making the levy an engine for economic transformation.
in addition, it will align with Labour’s broader vision of creating a “green industrial revolution”, where businesses are encouraged to transition towards low-carbon solutions while ensuring workers are equipped to thrive in renewable industries.
Will the Growth and Skills levy help regional disparities?
The Skills England report highlights the need for government reforms. Labour is vocal about its commitment to “levelling up” across the country. The Growth and Skills Levy could be designed in a way that ensures investment flows into regions that have historically been underserved, particularly in areas where economic growth has lagged behind London and the South East. By linking levy funds to regional skills councils or local growth initiatives, Labour will use the levy as a tool to reduce inequalities and foster balanced regional development. This is in line with one of the Government’s five missions: to kickstart economic growth in every part of the country.
Our conclusion: It’s a transformative opportunity for employers and employees
In our view, there is growth in the government’s new Growth and Skills Levy and it represents a significant opportunity to reshape how businesses in the UK think about learning and development. By offering greater flexibility, focusing on high-quality, future-proof skills, and fostering regional and SME growth, it will play a key role to help unlock potential. While details are still forthcoming, the broad principles of the Growth and Skills Levy suggest it is a policy that aims to balance economic growth with social fairness. Furthermore, its place as a replacement for the Apprenticeship Levy, aims to provide the foundation for a new prosperous and equitable future. We are keeping a close eye on further information that is released. Please let us know if you need help with any questions about the Growth and Skills levy.
For more information : https://www.gov.uk/guidance/pay-apprenticeship-levy