Far reaching changes to the way apprenticeships work have been announced in a bid to open up skilled employment opportunities for young people and help match skills training with local job opportunities.

Key reforms announced by the government include fully-funded apprenticeships for under 25s employed by SMEs and accreditation of prior learning through qualifications such as T levels to reduce the length of time some apprenticeships can take.

A more streamlined ‘end point assessment’ process is also planned to make sure more employees actually complete their apprenticeship. A new wave of foundation apprenticeships are also planned to help get more young people into work.

The apprenticeship levy itself will also be replaced new skills and growth levy, announced in the budget last December.

At the moment, SME employers pay a five per cent contribution towards the cost of apprenticeship training, while the rest comes from the levy paid by larger employers.

According to government, removing the requirement to ‘co-invest’ in training will make it easier for young people to find an apprenticeship and reduce the financial burden on businesses, making it easier for them to take on young talent.

The change will also give larger employers greater say over how the levy they pay is spent, with the flexibility to use it to cover the cost of shorter, work-based training options to help employers upskill their workforce in critical skills such as AI, engineering and digital skills.

Adam Tipper, managing director of Next Gen Makers, said: “Reducing financial and administrative barriers should help more businesses, especially SMEs invest in early talent and create clearer pathways into skilled employment via apprenticeships.

“However, there is concern that the proposed changes to end point assessment will place too much onus on employers and risks

inconsistency in final competence assessment across the board, with the potential consequence of lowering perceived quality of the pathway.

“More detail is needed for how these reforms will work in practice. To truly address skills shortages, we also need to ensure young people can see high-quality apprenticeship opportunities, understand what good looks like in practice, and feel confident choosing employers that will support their development over the long term.”

Manufacturing employers’ organisation Make UK has welcomed the changes but, at the beginning of National Apprenticeship Week, it has challenged government to commit to a ‘skills investment pledge’.

The pledge would guarantee that every pound collected through the new skills and growth levy and the immigration skills charge will be spent on developing the workforce the UK needs.

Skills shortages remain one of the biggest barriers to growth and productivity for manufacturers, with around 50,000 live vacancies in the sector.

But, despite record employer contributions through the growth and skills levy, billions are collected each year that are not reinvested in the skills system – effectively hitting employers with an extra tax.

Robert Halfon, Executive Director, Make UK, said: “Manufacturing and engineering apprenticeships are in steep decline, yet billions from the Growth and Skills Levy and Immigration Skills Charge are not being used by the Government where they’re needed most – risking valuable training being cut back. 

“Ringfencing these funds through a Skills Investment Pledge could instead unlock hundreds of thousands of new apprenticeships, plug skills gaps, and deliver at the very least a £4.4 billion boost to the economy. The time to act is now - our young people and our sector cannot wait.