Unpacking the Government’s £725m Apprenticeship Reform Package
The landscape of professional training in the UK is shifting. In a major move to "get Britain working" and drive economic growth, the government has unveiled a significant £725m package of reforms to the apprenticeship system.
At Temple, we have always championed the power of apprenticeships to transform businesses. These latest announcements mark a pivotal moment for employers, particularly Small and Medium-sized Enterprises (SMEs)—offering new financial incentives and greater flexibility to build the workforce of the future.
Fully Funded Training for SMEs
Perhaps the most impactful change for many of our clients is the removal of the financial barrier to entry for smaller businesses.
As part of this package, the government will cover the full cost of apprenticeships for eligible young people under 25 at small and medium-sized businesses. By removing the previous 5% co-investment rate, training costs for this demographic are now fully funded.
This initiative is designed to:
Remove the administrative and financial burden from businesses.
Open up thousands of opportunities for young talent.
Make it significantly easier for SMEs to recruit and train the next generation.
Connecting Talent with Local Opportunity
The reforms also introduce a targeted approach to regional skills gaps. A £140m pilot scheme will empower Mayors to directly connect young people—specifically those not in education, employment, or training (NEET)—with apprenticeship opportunities at local employers.
By partnering with regional leaders who understand the unique DNA of their local economies, these pilots ensure that training is not just a box-ticking exercise, but a strategic move that meets the specific needs of employers in the area.
Future-Proofing with Flexibility
Looking ahead to April 2026, the government is prioritising agility. The Growth and Skills Levy will be reformed to introduce short courses in cutting-edge sectors, including AI, engineering, and digital skills.
This shift acknowledges that businesses need flexible, work-based training options to upskill their existing workforce, not just new recruits. This includes a new Level 4 apprenticeship in AI and dedicated work with the defence sector to develop flexible training suites.
A National Ambition
These reforms are designed to reverse the trend of the last decade, where apprenticeship starts among young people fell by nearly 40% since 2015/16. The goal is clear: to ensure two-thirds of young people participate in higher-level learning, whether academic, technical, or via apprenticeships.
Prime Minister Keir Starmer emphasised the need to change the narrative around vocational training:
“For too long, success has been measured by how many young people go to university. That narrow view has held back opportunity and created barriers we need to break. If you choose an apprenticeship, you should have the same respect and opportunity as everyone else.
“That’s why the government is investing £1.5bn through the Youth Guarantee and the Growth and Skills Levy – creating 50,000 more apprenticeships and foundation apprenticeships for young people over the next three years.
“It’s time to change the way apprenticeships are viewed and to put them on an equal footing with university. This is a defining cause for this government and a key step towards our ambition to get two-thirds of young people in higher-level learning or apprenticeships.”
Investing in the Future
This announcement follows an £820m investment aimed at guaranteeing young people the chance to gain skills and find employment. The combined effort is expected to create 300,000 opportunities to "earn and learn."
Work and Pensions Secretary Pat McFadden highlighted the importance of this investment:
“Every young person deserves a fair chance to succeed. When given the right support and opportunities, they will grasp them.
“That’s why we are introducing a range of reforms to help young people take that vital step into the workplace or training and to go on and make something of their lives.
“This funding is a downpayment on young people’s futures and the future of the country, creating real pathways into good jobs and providing work experience, skills training and guaranteed employment.”
What This Means for Temple Partners
With Skills England set to work intensively with businesses to balance apprenticeship starts with operational flexibility, now is the time to review your training strategy.
Whether you are an SME looking to take advantage of fully funded training for under-25s, or a larger organisation preparing for the flexible short courses coming in 2026, Temple QMS is here to guide you through these changes and ensure you maximise the benefits of the new system.
View Temple’s apprenticeship opportunities:
Level 2 Supply Chain Warehouse Operative
Level 3 Fire Safety Advisor
Level 3 Supply Chain Practitioner
Level 4 Quality Practitioner Apprenticeship
Our blended learning approach includes: