Written Evidence by Association of Employment and Learning Providers (FES0115)

Further Education and Skills

AELP’s Response to the Education Select Committee Inquiry into Further Education and Skills

Foreword

Skills policy cuts through all the government priorities like words in a stick of Blackpool rock. It ensures people have the right knowledge, training and behaviours to contribute to and benefit from economic growth. It opens opportunities and can help people secure quality, stable employment that gives them a sense of dignity and purpose. For these reasons, it is crucial that the government ensures skills policy is effective, funded and aligned with industry needs. Without this, there will be an insufficient supply of skilled workers to deliver key national missions and the decade of national renewal.

Take economic growth and productivity. If businesses are going to increase productivity and innovate to compete globally, they need a workforce that is equipped with relevant and future-ready skills. International investors report skills shortages as a major factor in investment decisions. Skills are a critical enabling asset, fostering a positive environment for inward investment and ensuring that UK plc can capitalise on domestic capital investment. Investing in skills means investing in our national capability to deliver.

The government’s broader missions—breaking down barriers to opportunity, making Britain a green energy superpower, building an NHS fit for the future, and ensuring public safety—all hinge on a skilled workforce and accessible skills programmes. For instance, the NHS Long-Term Workforce Plan anticipates that by 2030, 22% of all allied healthcare professionals recruited will be apprentices. Similarly, the Climate Change Commission has stated that “skills are a fundamental enabler of net zero.” Study after study underscores how education and skills improve quality of life, reduce crime, enhance public health, and build trust. Skills, education, and labour market participation create stakeholders in society, fostering social cohesion and economic resilience.

The government has other priorities that link to the five missions, for which skills are again vital. It has set an ambitious target of an 80% employment rate, which, if achieved, would save billions in welfare spending while deepening civic engagement. Achieving this requires robust employability programmes, not just rhetoric. The government has introduced eight Trailblazer programmes linking skills, health, and careers advice—a promising start. However, it must resist the short-term temptation to cut skills budgets by a few hundred million, only to see the welfare bill rise by tens of billions.

Additionally, the government has reaffirmed its commitment to national security, with the Prime Minister pledging to raise defence spending to 2.5% of GDP in the next Spending Review, with a further increase to 3% in the next parliament. Skills and apprenticeships will be instrumental in supporting defence supply chains, ensuring the effective deployment of this increased budget. In the military—where performance is a matter of life and death—the government relies heavily on apprenticeships to enhance skills. 80% of military personnel are offered an apprenticeship, a testament to their value. If apprenticeships are trusted in the armed forces, they should be properly funded and respected across all sectors.

To make the skills system function effectively, three key players must be aligned: employers, providers, and learners. If any one of these groups is overlooked, the system breaks down. Skills programmes must be relevant to employers, attractive to learners, and deliverable for providers. The final point deserves emphasis: without further education and skills providers, we have no skills system. The government must recognise and support all types of providers—independent training providers, colleges, and universities—to ensure the system delivers. And just as we rightly cherish learners and employers, so too must we cherish our providers – without them skills, and the country, will fail.

The success of the UK economy, society, and security depends on getting skills policy right. It must not be an afterthought.

Overall recommendation

Nurture the provider base: The Education Select Committee should ask the Government to create a clear plan for how it will nurture and support the skills training sector, in a coherent and sustainable way.  This plan must address issues such as how capital is to be funded (public, private or a blend), how the sector can capture and keep the training talent required and how innovation and appropriate risk taking are to be enabled.

The Association of Employment and Learning Providers (AELP) welcomes the opportunity to respond to the Education Select Committee’s inquiry into further education and skills. AELP has consulted with its members to inform its submission, including multiple roundtables on the different sections, and an employer roundtable to include employer voices.

AELP consulted 89 stakeholders specifically for this submission, a mix of independent training providers, colleges, universities and employers, who collectively represent thousands of practitioners and learners. This is against a backdrop of continued consultation with our over 650 members and others in the sector. AELP’s senior management team engage with hundreds of providers each month, and last year AELP held a roadshow visiting every region of the country.

Our evidence base for this submission is a mix of member consultation, roundtables with stakeholders, and secondary research based on official data and reports.

AELP calls for policy reforms that prioritize funding sustainability, greater provider flexibility, and employer-engaged but sector-informed skills development. Addressing these challenges will ensure the further education system is better equipped to meet workforce and economic demands.

Recommendations

1. The trailblazer groups that design Growth & Skills Levy programme curricula and assessments should involve industry sector bodies, individual employers, assessment organisations, training providers and learners.  This should be Skills England’s ‘apex task’.
2. The Francis Review into curriculum and assessment should lead to Functional Skills Qualifications becoming more functional and less academic. 
3. To reduce the number of adults without basic numeracy and literacy skills, government should reverse the proposed cuts to the Adult Skills Fund and aim to bring adult education funding back to 2010 levels whenever fiscally possible.
4. Trial lifelong learning accounts with a view to their introduction for adult education programmes.
5. Review the growth cap for providers of 16-19 Study Programmes. Larger providers should be subject to a percentage of allocation rather than the £500,000 growth cap. This will help tackle rising NEET numbers, and the growing number of 16-18 year olds entering further education.
6. Government should create and publish a clear strategy on how it would like private, commercial training providers to use their status to ‘crowd in’ private investment to fund capital expenditure.
7. Treasury must stop top slicing £800m from the Apprenticeship Levy and the apprenticeship programme budget must be brought into direct alignment with the receipts from the Levy, with a goal of closing the gap entirely.
8. Local authorities should be mandated to track the time taken between a request for a EHCP and its completion.
9. Schools that do not comply with the Baker clause should be subject to an Ofsted limiting grade to ensure compliance. 
10. Review the child benefit policy for families of apprentices.

Curriculum and qualifications in further education

• Apprenticeship standards are set by employer-led trailblazer groups, but these groups should be employer-informed rather than employer-led, incorporating provider and assessment expertise to improve and ensure the deliverability of the curriculum and the subsequent assessments.

• Chronic underfunding in FE (e.g., a 23% drop in total skills funding since 2009/10) is directly impacting quality.

• The removal of English and maths Functional Skills Qualifications as an apprenticeship exit requirement was a positive move, but further investment in adult education is needed.

1.1               Curriculum as a term is more relevant for schools, than for post-16 education. There is no set curriculum for adult education courses, for Skills Bootcamps, or for 16-19 Study Programmes. In each case the necessary outcomes are set by the Department for Education, often centring around employable skills and soft skills, while the content of the learning is less restricted. This is a good thing. It allows providers to be both responsive and innovative to deliver education and skills to learners of all inclinations and all interests, recognising that skills that employers want like teamwork, communication, punctuality, and hard work are not subject specific.

1.2              It is different with apprenticeships, where standards, defined until now by the Institute for Apprenticeships and Technical Education (IfATE) convened trailblazer groups set out the knowledge, skills and behaviours that a person needs to be able to demonstrate to be acknowledged as occupationally competent – the goal of an apprenticeship. Upcoming changes to End Point Assessment, to make them more streamlined and proportionate, are welcome. Involving the voice of assessment experts as well as of training providers in this process will help to avoid the mistakes that IfATE made in its first few years, where it encouraged employers to create ‘perfect’ standards that were then hard or impossible to deliver and/or assess in an economically viable way.

1.3              As Skills England takes on this task from IfATE, AELP strongly recommends that it considers this to be its ‘apex task’ – as the economy evolves, and as lessons are learned about how to develop standards more effectively, blockages in creating relevant programmes could become a significant brake on skills and therefore growth.

1.4              This will move into sharper focus as Skills England not only takes on responsibility for the current suite of apprenticeships from Level 2 to Level 7, but also takes responsibility for Foundation Apprenticeships (which need careful design) and ‘higher value’ programmes (which we suggest should be called ‘Career Lift’ programmes) – the 1-3 month programmes that will deliver specific skills for employers and their employees, albeit through the same ‘triple helix’ construct that is common to all programmes funded by the Growth & Skills Levy (I.e. the learner is in a job, they are getting off-the-job/underpinning training and their employer is bringing those two elements together in practice and on-the-jo learning in the job).

1.5              Based on our extensive consultation with our members, the sector and employers, Skills England should convene employers not just as individual employers (as has happened until now) but industry sector bodies, together with those representing training providers and assessors in those sectors. It should also seek input from devolved areas who have local and regional perspectives on the programme under consideration. If it wants to be bold, then it should also seek the input of learners, who, after a few months in role, often have a different and vital perspective on what it is they need to learn to succeed.

1.6              One of the main barriers to the creation and the updating of standards has been the need for 100% agreement across all members of the trailblazer groups for the whole Standard. By allowing a small degree of optionality in the standards, not only will Skills England enable more employers to have a programme that is even closer to what they need, they will also have a greater sense of agency and ownership in the standard (meaning greater commitment) and, crucially, it will allow for at least some differences in views about what should be in each standard without derailing the whole process.

Recommendation – The trailblazer groups that design Growth & Skills Levy programme curricula and assessments should involve industry sector bodies, individual employers, assessment organisations, training providers and learners. This should be Skills England’s ‘apex task’.

Driving better standards in further education; the quality and consistency of provision and outcomes.

1.7              Regulators and oversight bodies need to work with providers and be enablers of quality provision. Ofsted recently hosted its Big Listen initiative in which it welcomed views from the sector about how it can better inspect for quality and is now consulting with the sector on the proposed changes. 

1.8              While AELP welcomes the move away from single word judgement, consultation with our members has revealed concerns about the timescales of the proposed changes. The new inspection system, including report cards, is due to commence in November 2025. This leaves providers with little time to adjust their organisations, including their quality improvement plans, in time for new inspections. Providers also need clarity on how the new report card system will impact contract intervention by the Department for Education.

1.9              There is no separating the funding question with quality. The further education sector consistently has its funding squeezed, whether through Treasury top slicing £800m from the Apprenticeship Levy, 16-19 funding being around 11% below 2010 levels[1], or classroom based adult education being cut by 40% since 2009/10. All of this puts a squeeze on quality, with providers having to deliver more for less. By 2024/25 total skills funding will be 23% lower than in 2009/10 according to the Institute for Fiscal Studies.

Post-16 numeracy and literacy, including GCSE resits.

1.10              Nine million adults in England lack essential literacy or numeracy skills. However, the number of adults improving these skills in England has reduced by more than 60% over the past decade as Government investment in skills is set to be £1 billion less in 2025 compared to 2010.[2]

1.11              Within these numbers there are significant geographic disparities. Modelling by the Learning and Work Institute showed that the differences between the region with the highest and lowest needs is only a gap of 2%, but within these regions gaps of up to 16% exist. London has the third lowest percentage of people with essential skills needs among the combined authorities; it is also home to 10 of the 20 wards with the highest essential skills needs.[3]

1.12              Despite these needs the government was right to remove English and maths Functional Skills Qualifications as an exit requirement for apprenticeships. This is because they were having the opposite impact of that intended: Functional Skills Qualifications acted as a barrier to thousands of learners who were functionally competent in the occupation, including in the relevant maths and English skills, but couldn’t pass an overly academic qualification. Further, AELP analysis for our Mini Commission on Functional Skills Qualifications in Autumn 2024 showed that FSQ policy was excluding learners without GCSE maths and English, with over three quarters of apprenticeships requiring English and maths at GCSE as an entry requirement.[4]

1.13              One of the central problems with Functional Skills Qualifications is that they are not functional. They are not contextualised to the standard the learner is on, and are therefore overly academic. The Francis Review into curriculum and assessment should lead to Functional Skills Qualificaitons becoming more functional and less academic.

Recommendation - The Francis Review into curriculum and assessment should lead to Functional Skills Qualifications becoming more functional and less academic. 

1.14              The Adult Skills Fund (ASF) funds English and maths courses for adults without a GCSE grade C/4 in English and maths. This is the fund that should be used to help tackle the lack of maths and English in the population. However, this fund has been cut significantly in the past two decades. The Institute for Fiscal Studies reports that the AEB in 2024/25 will be 23% below its 2009/10 level.[5] Worse, it is the subject of further cuts. Mayors have been told to expect cuts of around 2% of their ASF allocations for 2025/26.[6]

Recommendation – To reduce the number of adults without basic numeracy and literacy skills, government should reverse the proposed cuts to the Adult Skills Fund and aim to bring adult education funding back to 2010 levels whenever fiscally possible.

1.15              The non-devolved Adult Education Budget returned a £294m underspend over the last four years, from 2020/21 to 2023/24[7]. Meanwhile the total underspend by devolved authorities on Adult Education Budget and Free Courses for Jobs from 2019 – 2023 was just under £180m. This represents a near half a billion in unspent skills funds at a time when the UK faces a significant skills crisis. This calls for doing things differently.

1.16              Introducing individual learning accounts as a means of distributing adult skills funding would move it from a supply led model to a demand led model, on the lines of the apprenticeship budget. The apprenticeship budget has proven successful at meeting demand, with on average 98% of the budget spent each year over the last three years.

1.17              Learner accounts would empower learners and employers and help create a culture of lifelong learning. Proven examples of them working effectively exist in countries and regions across the world, including Singapore adding top-up credits for the priority sectors in its industrial strategy. Software for operating digital accounts can also be bought off the shelf rather than trying to reinvent the wheel.

1.18              The Chief Secretary to the Treasury, when talking about this Spending Review, said “we have to do things differently – and we will”. In this spirit, the government should trial individual learning accounts, with a view to empowering learners, creating a culture of lifelong learning, and creating an efficient model of funding that delivers funding directly to learners, rather than subsidising institutions. Individual learning accounts were recommended by the Labour Council of Skills Advisors in its 2023 report into generating growth through skills.[8]

Recommendation – the government should trial lifelong learning accounts with a view to their introduction for adult education programmes.

What are the strengths and weaknesses of T Levels?

1.19              The biggest concern with T-Levels is that they don’t fit into the wider skills system. In many cases learners have completed the T-Level, but have not fully met the knowledge, skills and behaviours of the equivalent level 3 apprenticeship. However, the close alignment of the two programmes means that there isn’t sufficient on-the-job training required by the learner to be able to enter into the apprenticeship at level 4 or for a level 3 apprenticeship as they will not meet the minimum duration required due to significant prior learning. This can act as a barrier to progression for the learner.

1.20              Where T-Level routes have been introduced alternative level 3 provision has been removed from funding causing a reduction in choice for young people when choosing post-16 study options. Although many T-Level qualifications have the ability to lead to employment they are not suitable for all post-16 learners nor do they offer a route to the preferred outcome for many post-16 learners. The ability to choose qualifications, unitised content and the size of qualifications to fit employer requirements, to contribute to local and regional skills needs and to offer flexible training options must be front and centre. Funding is currently reliant on planned learning hours therefore, the incentive to deliver T-Levels is evident in the enhanced income for T-Level course however a fairer funding model could allow T-Levels to exist alongside alternative level 3 provision offering more learners the opportunity to gain valuable skills and qualifications. In addition, as the evidence shows many young people arrive in post-16 education without the ‘entry’ requirements in English and maths to study a T-Level but would, given the opportunity excel on an alternative qualification pathway.

Reform of level 3 qualifications

1.21              The qualification landscape at level 3 is the subject of significant attention and review following the government’s decision to pause the defunding of the majority of qualifications. It is important that through this process it is understood that learners need progression routes to and through level 3 that are alternatives to A level and T levels, and that learners need a significant degree of choice to reflect the myriad different learning approaches, needs and interests of learners. For example, there is a need for qualifications that do not require a full academic year to complete, accommodating those with non-traditional routes into work, for example those waiting to join the Armed Forces.

Delivering Further Education

• The 16-19 education sector is under strain due to a growing population, requiring additional capacity and funding. Independent Training Providers (ITPs) are well-positioned to meet demand but face restrictive funding barriers.
• FE sector salaries are significantly lower than industry counterparts, creating recruitment challenges—especially in high-demand sectors like digital and engineering.
• The FE capital budget of £1.12 billion is not accessible to all providers—ITPs, which deliver most apprenticeships and Skills Bootcamps, should have equal access.

2.1              Technical education provision for 16-19 year olds is a major part of the further education and skills sector, with a budget estimated at £6.7 billion for 2024/25. This part of the sector is going to come under increasing pressure in the coming years due to a population bulge. The number of 16-18 year olds in England has been increasing since 2017, and will continue to increase until 2028. For 16–18-year-olds, there is a legal entitlement to access study, but capacity needs to be increased to match an increased need. This means a rise in the number of students taking 16-19 study programmes, estimated at 110,000 students.[9]

2.2              In early March 2025, the Department for Education admitted that it cannot afford to fund unprecedented requests for in-year growth to cover rising student numbers. Its statement said:

“because of the size and distribution of this growth in student numbers, it does create an unprecedented amount of in-year growth. The current growth is significantly above the budget available for in-year payments.”[10]

2.3              In the Autumn Budget the government announced an extra £300 million for providers of 16-19 Study Programmes, both colleges and Independent Training Providers. While this may not be sufficient to meet the ‘unprecedented’ rise in student numbers, it should distributed equitably, effectively and with the learner as the focus, not the institution they study at. Despite this, £50 million of the funding is reserved for general further education colleges and sixth forms colleges, excluding some providers of 16-19 Study Programmes. Independent Training Providers cannot access government capital funding to support the delivery of 16-19 education. With the population bulge becoming an increasingly pressing issue and evidence from the sector (Leeds) that colleges are not able to manage without significant capital investment, a wider investment remit could not only serve the increased volume required but also support the wider Further Education sector (namely ITPs) to deliver the skills needed to support the Governments Invest 2035 strategic growth priorities outlined in the Industrial Strategy.

2.4              The coming population bulge is a medium term challenge, that requires fast moving providers who can step in to meet regional cold spots in provision. Along with delivering high quality provision, often to the most disadvantages students, ITPs have ready access to working capital, expertise in commercial property and rapid decision making cycles. This makes them well placed to meet this need. For example, in Leeds, an extra £3.5 million has been allocated to support specific, targeted hot-spots where colleges have run out of room and where more flexible provision is needed. Juniper Training, one of the ITPs helping to fill the gap, took just two months to go from initial exploration with Leeds City Council to starting their first cohort. 

2.5              Current funding arrangements include arbitrary barriers for providers wanting to deliver 16-19 provision. ITPs face an in-year responsive growth cap of £500,000 a year and/or 30% of current allocation.[11] The concept of a growth cap is understandable, helping to ensure sustainable growth, and protect quality of provision. However, for large providers the cap of £500,000 is arbitrary and limits their ability to expand to meet the increasing demand for 16-19. In fact the £500,000 growth cap allows non-established providers to grow at a faster rate than established providers. The government should remove the £500,000 growth cap. This means the ITP with the largest allocation, of approximately £25 million, has an effective growth cap of 4%.

2.6              In addition, colleges and ITPs are reconciled based on 16-19 learner numbers using different methodologies. It should be recognised that both colleges and ITPs offer training and education for young people outside of traditional ‘term time’. Therefore, ITPs can find themselves meeting local and regional need, supporting NEETs and the hardest to reach back into education and training whilst having to carry significant costs without the guarantee that this will be funded. The providers in the sector are fast moving and can pivot their provision very quickly, flexibility in funding and reconciliation processes would ensure that ITPs are well placed to deliver the skills, education and training needed to drive growth. It should be considered that the feedback and outcomes from this review could have significant influence over the Government’s modern industrial strategy due to be launched in Spring 2025.

Recommendation – Review the growth cap for providers of 16-19 Study Programmes. Larger providers should be subject to a percentage of allocation rather than the £500,000 growth cap. This will help tackle rising NEET numbers, and the growing number of 16-18 year olds entering further education.

Workforce pressures

2.7              Workforce pressures are real and worrying in the FE and skills sector. In many cases salaries in FE lag far behind the wages commanded in industry. Ironically this is most acute in areas of skills shortages. This dynamic is a feature, not a bug. Labour shortages are driving up wages in industry, meaning it is much harder for experts to step away from increasingly well paid work in industry to teach, meaning fewer teachers; fewer teachers means fewer people getting the skills, driving the next cycle of skills shortages and wage increases.

According to government data in 2022/23 the median annual salary across FE was as follows:

• Sixth form college - £44,256 
• General FE College - £34,708 
• Private sector public funded (ITPs) - £30,000 [12]

2.8              Further, ITPs do not receive pension contribution grants. This highlights the disparity not only between FE and industry, but also within FE.

2.9              The median salary for an FE teacher in computer science is £36,856, while according to CWjobs, the average salary for computer science positions is £57,500.[13]

The median salary for an FE teacher in design, technology and engineering is £36,585, while according to The Engineer's 2024 Salary Survey, the average salary for UK engineers is £64,869.[14] These are just two rough examples of the wage pressures that FE providers face. These are sectors with significant skills gaps, yet provider face clear difficulties in recruiting teachers to train the next generation.

Capital Investment Strategies

2.10              The Department for Education has a significant capital investment budget. However not all providers of post-16 education have access to this budget. In 2024/25 the further education capital budget was £1.12bn. This capital budget should be made available to all providers of further education, including apprenticeships providers. Independent training providers (ITPs) deliver 65% of apprenticeships and 89% of Skills Bootcamps yet have no access to capital funding to help bring state of the art facilities to apprentices and learners. There is currently limited ITP involvement in T-Level deliver because they have no access to capital.

2.11              Many of the priority sectors outlined in the industrial strategy green paper, such as advanced manufacturing, clean energy industries, defence, digital and technologies and life sciences are capital intensive industries[15]. As the green paper notes, ‘skills’ is a central pillar for delivering on the industrial strategy. It is therefore imperative for all providers of post-16 technical education to have access to current FE capital funding pots, helping ensure apprenticeships, bootcamps, 16-19 study programmes and Adult Skills Fund programmes are keeping up with industry standards and helping learners get work ready skills to boost productivity and employability.

2.12              Further education capital funding should be available to the most innovative and impactful further education providers, not limited to one category of provider. Safeguards should be put in place to ensure the funding is protected; for example, if an ITP recipient of capital funding is sold on the open market at a profit, there should be a formula in place for some form of pay-back to the taxpayer. Capital funding should be directed to where it will deliver the best outcomes for learners and employers, and therefore the best value for money to the taxpayer.

2.13              Alongside Government capital funding asks, the Education Select Committee should press the Government to create and publish a clear strategy on how it would like private, commercial training providers to use their status to ‘crowd in’ private investment, as many AELP members currently do, through private equity and other private capital markets. Private capital needs to be incentivised to come into any market, and there needs to be healthy respect for margins created for investors through their upfront and ongoing investments. Clarity from Government about what it wants to see will be helpful for investors and investees alike.

Recommendation - Government should create and publish a clear strategy on how it would like private, commercial training providers to use their status to ‘crowd in’ private investment to fund capital expenditure.

Skills and apprenticeships

• The Apprenticeship Levy raises more funds than the apprenticeship budget allocates, with the Treasury diverting £800 million away from skills investment.
• The government should reinvest at least £500 million of the Levy’s top-sliced funds to increase funding bands, maintain Level 7 apprenticeships, and fund levy flexibilities.
• Apprenticeship funding must not be devolved to local authorities.

How to resolve the skills shortage and narrow the gap between the skills that employers want and the skills that employees have.

3.1              First, it is important to identify skills gaps before understanding how to resolve skills shortages. Skills England’s first report went some way to mapping skills gaps, but this is also done by industry bodies, and membership associations.

3.2              Resolving skills shortages is only possible through policy that helps employers engage with the skills system, that ensures a thriving provider base and gives learners a positive learning experience.

3.3              One of the key drivers for high-quality skills investment in the UK is the Apprenticeship Levy. This raised £3.84bn in 2023/24[16], a figure that is estimated to be £4.00bn in 2024/25 and rise to £4.70bn by 2029/30 according to the Office for Budget Responsibility[17]. Meanwhile, the apprenticeship budget is £2.73bn in 2024/25[18]. On average over the last three years, 98% of the apprenticeship budget allocated by Treasury has been spent. There is little transparency about how much is distributed to the devolved nations through the Barnett formula, but it has been estimated at around £500m. This means the Treasury is top slicing £800m from the Apprenticeship Levy. This is money raised for skills not being spent on skills. Employers are increasingly aware – and angry – about this redirection of funds, which in turn has damaged the backdrop for the conversations Government wants to have with UK Plc about spending money beyond the levy, for example with Level 7 apprenticeships.

3.4              The government has introduced various reforms of the apprenticeship system, each aimed at increasing flexibility and pivoting the system towards young people. These include:

• Removal of the 12 month minimum duration
• Removal of functional skills qualifications as an exit requirement for adult apprentices
• Introduction of foundation apprenticeships
• Proposals to remove government funding for level 7 apprenticeships.

The first three of these proposals are welcome and have the backing of British business. However the final proposal, to remove funding for level 7 apprenticeships, is a backward step, that will exacerbate skills gaps in key sectors, hurt the apprenticeship brand, and limit opportunity. In 2023/24, spending on Level 7 apprenticeships reached £238 million. This is a small figure next to the approximately £800m Treasury is top slicing from the levy.

3.5              There is a danger that the apprenticeship system loses its legitimacy with businesses as a result of the Treasury hoarding more and more of the budget and introducing restrictions on the apprenticeships that can be funded. There is a risk this is seen by employers as a decoupling of the Levy from the system itself. Employers are already facing increasing National Insurance contributions, an increase in the minimum wage, and stronger employer rights from day one. As a result of the Budget one in five (19%) firms plan to cut back on training. Combine this with a system where money raised from businesses for skills is not being spent on skills, when it is spent on skills through the apprenticeship budget firms cannot use it on level 7 apprenticeships, while the government exhorts businesses to invest more in skills, and it can be understandable why employers feel disengaged.

Recommendation – Treasury must stop top slicing £800m from the Apprenticeship Levy and the apprenticeship programme budget must be brought into direct alignment with the receipts from the Levy, with a goal of closing the gap entirely.

Skills England

3.6              During the various roundtables hosted by AELP to inform this submission, providers and employers were asked to describe the skills system. Invariably the words fragmented, confusing and complicated arose. Skills England has a central role to play in simplifying the system and providing clarity to providers, employers and learners.

3.7              Skills England will clearly have a significant role to play in helping the government deliver the industrial strategy and economic growth. According to the first Skills England report it will focus on the eight high growth Industrial Strategy sectors, along with construction and health and social care. While each of these sectors is undoubtably important for economic growth, Skills England should not forget everyday economy sectors, such as hospitality and retail. For many people these sectors are a route in to employment, and ensuring there are appropriate training opportunities for entry into them will go a long way to helping the government reduce the welfare bill and reach its 80% employment rate target.

Current challenges for apprenticeships, including employer engagement, funding issues, and apprentice pay.

3.8              There are several funding challenges providers face with apprenticeships, many stemming from the fact that Treasury is top slicing £800m a year from the Levy. Funding rates are often not reviewed on a regular basis, and inflation is eating away at what funding is available. The funding formulas also do not account for mandatory provision, such as British values.

3.9              Meanwhile the government is proposing to introduce effective flexibility around what training can be funded through the budget, including foundation apprenticeships and mid career apprenticeships. It has also confirmed that some level 7 courses will no longer be funded through the budget, with employers now expected to fund them.

3.10              Training providers have experienced inflation every bit as much as everyone else: heating for workshops and classrooms, costs of premises and wage inflation are all major costs. Despite this, funding bands set by government have not kept pace. The fact that training provision has continued is testament to the passion and commitment of many staff in training providers – even as their pay falls behind that of people in other sectors. The committee should be concerned about how sustainable this is: as experienced, passionate trainers and coaches retire (or leave the profession to earn more money), what is the pipeline of future skills providers? Why should someone in industry choose to sacrifice their income? What reasons are we giving young people to aspire to join the skills provision sector? The Government should be challenged to say how it is going to cherish and nurture the provider base – without providers, then Government is solely reliant on employers, whose spending on training has halved in the last 20 years and who have lost the habits and rituals of training, which is why government intervention is needed in the first place.

3.11              The government should release the £800m top slice from the levy over the course of the Spending Review. This is in line with the projected increase in Apprenticeship Levy receipts over the next three years, therefore closely matching the increased costs of overall apprenticeship provision. This will help it:

• Fund foundation apprenticeships and mid-career apprenticeships without a parallel decrease in apprenticeship funding. As we have seen, 98% of the apprenticeship budget has been spent, indicating that demand for apprenticeships among employers is high. Without an increase in the budget, any funding used to implement foundation apprenticeships and mid-career apprenticeships will result in a parallel decrease in apprenticeship funding.
• Continue to fund level 7 apprenticeships vital for public services, the industrial strategy and the missions, such as the level 7 Artificial Intelligence and Data Specialist and level 7 Advanced Clinical Practitioner. Where these are defunded, taper the defunding to avoid a cliff edge.
• Improve the fiscal position of the UK. The government’s own analysis shows that investment in apprenticeships provides good value for money to the taxpayer. Apprenticeships at level 2, level 3 and levels 4/5 deliver a net present value of £16, £16 and £25 respectively for each pound of government funding.[19]
• Fund increased apprenticeship programme completions and incentive payments.

3.12              The responsibility for updating funding bands is passing from the Institute for Apprenticeships and Technical Education (IfATE) to Skills England. According to the impact assessment for the Institute for Apprenticeships and Technical Education (transfer of powers) Bill, many of the staff from IfATE will transfer to Skills England, while the remit of Skills England will be much greater than IfATE. Given that the process of reviewing standards was often laborious due to the large remit of IfATE, it is imperative that Skills England finds a way to review standards in a more timely manner.

The role of devolution in addressing regional skills needs and apprenticeships.

3.13              Apprenticeship funding should not be devolved to Strategic Authorities but should be responsive to employer needs. Shifting commissioning to local leaders would undermine the employer-led approach and create a postcode lottery for employers who want to access apprenticeship delivery. Local authorities do not have the understanding of shifting industry needs that employers have. Devolving apprenticeships would be a backward step, creating a more fragmented offer for employers and create barriers to engaging with the system. The government is committed to simplifying the system and should therefore avoid this path.

3.14              Further, devolving apprenticeships would increase administrative costs. Currently 98% of the apprenticeship budget is being spent. Any extra administrative costs would reduce the funds available for the actual deliver of training, undermining the primary purpose of the programme.

3.15              What should be devolved, where possible, are the programmes that prepare people so that they can get a job and/or an apprenticeship: SWAPs, Bootcamps etc. Local knowledge and relationships are vital in stitching together the intricate and delicate pathways for individuals and small groups, which require not just employability and skills programmes, but transport and other practical solutions. The exception to this is Bootcamps for national employers, which should be funded nationally.

3.16              National training providers who wish to provide further education and skills programmes in multiple regions often face a patchwork of different procurement processes and rules for each Combined Authority. There should be a common framework for skills commissioning when it is devolved.

Supporting young people, widening access, and narrowing the attainment gap

• Delays in obtaining Education, Health and Care Plans (EHCPs) leave SEND learners without support for extended periods.
• Schools should provide at least 12 career guidance encounters (instead of the current six) and better promote apprenticeships as a post-16 option.
• Socioeconomic and regional disparities persist in attainment and apprenticeship participation.

The specific barriers to accessing and pursuing further education for those with special educational needs and/or disabilities (SEND), and children and young people in care across specialist and mainstream settings.

4.1              One of the major issues with SEND learners accessing support in further education is the policies around the Education, Health and Care Plan (EHCP). The EHCP is a gateway through which a learner must pass before accessing the various types of support. EHCPs are obtained by raising the request for one with the local authority. The local authority has 13 weeks to complete the process and make sure the learner has their EHCP. However, AELP understands through our members that 13 weeks is almost never met, and learners have to wait up to and beyond a year to get their EHCP, leaving them without support, and therefore deskilling while waiting.

4.2              The data is not collected to understand how long learners are waiting for their EHCP. We would recommend that local authorities collect this data, and are held accountable for missing the 13 week target.

4.3              Given the delays, the government should also explore how to provide support for learners waiting for their EHCP.

Recommendation – Local authorities should be mandated to track the time taken between a request for a EHCP and its completion.

Access to higher education, other qualification levels, and employment; career and course guidance.

4.4              AELP believes that the system for careers education, information, advice, and guidance for young people has improved in recent years. However, more is needed to ensure that all young people have fair and equal access to high quality and impartial support to help them navigate the right options for them.

4.5              There are several issues with careers guidance:

• Schools are only required to provide six careers encounters with approved providers of apprenticeships and technical education for students between year 8 and year 13. This should be doubled to provide two a year.
• Teachers are strong role models for young people. The government should invest in teacher training programmes to improved the understanding of the range of technical education and apprenticeships available to school leavers.
• Apprenticeships and other forms of technical education should be viewed as positive destinations for year 11 leavers in performance league tables.
• Schools that do not comply with the Baker clause should be subject to an Ofsted limiting grade to ensure compliance.

Recommendation - Schools that do not comply with the Baker clause should be subject to an Ofsted limiting grade to ensure compliance.

Disparity in attainment, including by gender, area of the country in which a student lives, ethnicity, and between disadvantaged students and their peers.

4.6              There are disparities in attainment across further education and across different axes, for example, gender, region and ethnicity.

4.7              From 2014/15 the percentage of apprentices coming from the most deprived quintile decreased from 25.7% to 20.4%, while the percentage of apprenticeship from the least deprived quintile increased from 14.0% to 17.8%.[20] However, caution should be exercised in comparing apprenticeships pre 2017 to apprenticeships post 2017. The transition from apprenticeship frameworks to apprenticeship standards means comparison is difficult.

4.8              Ethnic minorities are starting apprenticeships at an increasing rate, with Asian, black and mixed ethnicities all increasing their share of apprenticeships since 2017. Each category remains below the overall demographic percentage, meaning more needs to be done.

Any other Business

5.1              Skills policy does not exist in a vacuum, but in a system. Transport, health and welfare policies all have a significant impact on the effectiveness of skills policy in bringing people in to quality employment.

Below are two further recommendations that AELP believes the committee should consider:

Transport

Strategic Authorities with single funding settlements should, where possible, connect transport and skills policy to ensure learners have access to employers and providers regardless of their location. This is most keenly felt in rural areas.

Child Benefit

Apprentices are considered independent workers, meaning their families lose access to child benefits that amount to around £80 a week. This is despite the fact that apprentices can often earn below the national minimum wage (which is set above the apprentice minimum wage).

If the government wants to increase the uptake of young people from disadvantaged backgrounds in apprenticeships it should review this policy.

Recommendation - Review the child benefit policy for families of apprentices.

The Association of Employment and Learning Providers (AELP) is a national membership body, proudly representing organisations operating in the skills sector. AELP members deliver a range of training and vocational learning – including the majority of apprenticeships as well as Skills Bootcamps, 16-19 Study Programme, Adult Education Budget and more

April 2025