The long-awaited transformation of apprenticeships has arrived, promising more routes into employment and greater opportunities for young people. The reforms have seen more investment in routes into education and training for artificial intelligence, engineering, and the government’s IS-8 priority sectors.
Expanding entry routes will make it easier for more young people to access education and careers, broadening participation, addressing skills gaps and supporting long-term economic growth. This is undoubtedly positive for young people and for the future workforce in these critical areas.
What do the changes to the Growth and Skills Levy mean for universities? How have the funds been spent, and what needs to change to ensure future funds are used effectively?
Levy underspend
Before the Growth and Skills Levy was introduced, a multi-million-pound underspend of the Apprenticeship Levy was reported by the UK Institute for Technical Skills & Strategy.
Research estimated that most universities used less than 25% of their available levy funds, with an estimated £30,000 to £4 million per institution remaining unspent each year, citing a limited understanding of the apprenticeship landscape.
Other reasons for this significant underspend include over-reliance on traditional academic career pathways, a lack of engagement with apprenticeships in broader workforce planning across faculties and departments and the administrative burden of managing apprenticeships.
The insights highlight an opportunity to embed apprenticeships into workforce development plans to attract new talent, develop and retain existing technical expertise.
These reforms could prevent us addressing these challenges. As mid-career pathways are removed, higher education institutes are left with fewer meaningful options to spend levy funds on their existing workforce.
The “missing middle”
Whilst the focus on career entry is positive, we must not ignore that almost 30% of the technical workforce in higher education is aged over 50. This presents a growing risk in university teaching spaces and research laboratories, and one that the imminent defunding of Level 5 and 6 leadership standards will only accelerate. Emerging and developing leaders are not optional in higher education.
The growing “missing middle” are skilled professionals responsible for managing research laboratories, leading advanced facilities, and supporting the delivery of higher education programmes. Technical leaders translate specialist expertise into operational leadership, maintain continuity, and ensure that complex research and higher education teaching environments function effectively over time.
Retaining technical talent is increasingly challenging whilst accessible high-level apprenticeships have been vital for career progression and reskilling in response to emerging technologies.
Given the UK is projected to need 120,000 new technicians in the digital and technologies sector by 2035, the system risks strengthening entry-level supply while weakening the capacity needed to scale and retain talent in critical areas over time.
A narrowing window for action
Now these changes have come into force, there’s a window of opportunity for universities to utilise the levy as a strategic workforce tool, not just a funding mechanism.
From 1 August 2026 levy funds will expire after 12 months, rather than the previous 24 months, forcing faster use of the budget.
Universities will continue to pay into the fund, but the 10% top up from the government will end, meaning they can only access the exact amount of their own contributions. For universities, where decision-making is often complex and multi-layered, unspent funds could expire if not used.
Higher education is experiencing a double hit: losing vital talent due to the aging workforce and, as providers of apprenticeships, reduced income streams where standards are due to be defunded.
To mitigate this, institutions need strong employer apprenticeship leadership, clear internal advocacy for investment in existing staff, and the embedding of skills gap analysis within workforce planning.
Coordination between HR, finance, and academic and technical departments will be essential to ensure workforce planning is aligned with levy utilisation. Routes into apprenticeships can often be unclear and overly complex; they must become more straightforward and visible across the breadth of the workforce. Technical managers and staff across institutions will benefit from better understanding the opportunities available, and the importance of avoiding levy underspend.
It has never been more important to prioritise mid-career development pathways. There is a limited window to make use of leadership and management apprenticeship standards available until September 2026, offering a critical opportunity to invest in our technical leadership and address the Growth and Skills levy underspend.
Universities can make the most of this opportunity by responding quickly – and strategically – to the reforms to leverage future funds and address technical skills shortages in higher education.
This article is authored by Jo Hartley Metcalfe, Universities T Level Support Manager for the UK Institute for Technical Skills & Strategy. It was originally published on WonkHE.