The apprenticeship landscape is undergoing its most significant overhaul since the introduction of the levy. ISE’s Anne-Marie Campion explains what employers can expect in 2026.
Following the replacement of the Institute for Apprenticeships and Technical Education (IfATE) by Skills England, and the shift of apprenticeship responsibility from the Department for Education to the Department for Work and Pensions, the direction of travel for employers is becoming clear.
There will be more focus on spending levy funds to align with Skills England priority skills tighter funding conditions, and a rebalancing towards SMEs and young people.
In an earlier blog I covered how the government’s Post‑16 Education and Skills Strategy White Paper and the Autumn Budget would reinforce this shift, prompting employers to rethink how and where they invest their levy funds.
At our recent ISE webinar, expertly led by Simon Ashworth (AELP) we unpacked the practical implications for employers, providers and apprentices.
Here are the key themes shaping apprenticeships in 2026
A new apprenticeship landscape: ‘employer-led’ to ‘pro-employer’
A subtle shift in language signals a big change. The apprenticeship system will no longer be moulded by employer demand – specifically big employer demand - in the way it has been since 2017. Instead, government policy now prioritises:
- Skills shortages
- Regional needs
- SME access
- Opportunities for young people
Employers whose programmes align with these areas will continue to see strong support and funding. Those that don’t may find apprenticeships increasingly harder to sustain.
Skills England are also driving a significant reform of the apprentice assessment process. With an ambitious timeline of by August 2026 there will be a review of all apprenticeship standards, streamline of the apprentice products, and overhaul assessment.
With over 700 existing standards (150 of which have never been used) rationalisation is inevitable. Employers should expect fewer, more targeted programmes aligned with economic and regional priorities.
Additional investment, but with strings attached
The government has allocated £725m in new apprenticeship funding over the course of this parliament. However, the extra funding was specifically described as ‘to help support apprenticeships for young people’. In addition:
- £140m is ringfenced for Strategic Mayoral Authorities, with a strong emphasis on supporting SMEs.
- Large employers typically crowded out SMEs in the past, but there is a rebalancing and regional shift. Smaller employers are the biggest consumers of young people and lower-level apprentices.
Even with the uplift, overall funding will rise by just 6%, and demand is expected to outstrip available budget.
New financial rules
From August 2026, large employers face three major financial changes:
- Removal of the 10% levy top‑up
Employers will no longer receive the additional 10% monthly government contribution.
- Reduction of the levy expiry window
Funds will now expire after 12 months, not 24, doubling the pace at which employers must spend.
- Lower government co-investment rate
Once an employer’s digital account is depleted, the government will fund 75% of training, down from 95%.
Many details remain to be clarified, including the impact on current apprentices and whether different rules will apply depending on age.
There is however good news for non‑levy payers. From August 2026, SMEs will receive fully funded training for 16–24-year-old apprentices, with employer contributions removed entirely.
This represents a major incentive for smaller organisations and fits with the government’s wider rebalancing agenda.
Flexibility: realistic expectations for employers
Many employers may recall previous Labour Party commitments to introduce broad flexibility - up to 50% - for using levy funds beyond apprenticeships. However, this never made it into the manifesto, and employers should not expect such freedoms soon.
Instead, government is making the apprenticeship product itself more flexible:
- Programme duration reduced from 12 to 8 months for specific pathways
- Adjustments to on-the-job training requirements
- Greater flexibility in delivering Maths and English
- Launch of the first Foundation Apprenticeships in August 2025, with more coming in 2026
- Introduction of apprenticeship units from April 2026
Apprenticeship units
Apprenticeship units are coming in April 2026. These will be limited initially to AI; Digital and Engineering and will be built from existing standards and targeted at acute skills shortages. Employers need to be aware that:
- Only 5–10 unit-based products are expected initially with likely expansion in late 2026.
- Future waves may eventually include bootcamps or Higher Technical Qualifications.
- Key details (costs, Guided Learning Hours (GLH), on the job training (OTJT) requirements, levy transfer rules) are still to come.
These reforms signal a gradual shift in the flexibility of the apprenticeship system. Employers should note that all apprenticeship units must align to one of: critical skills gaps for growth, skills to accelerate growth, emerging new skills or address market failure.
The new assessment model
Perhaps the most significant reform relates to assessment, with Skills England aiming to refresh and review all standards by August 2026.
The reforms aim to ensure assessment is:
- More proportionate and less duplicative
- Integrated into the programme where appropriate
- Delivered partly by training providers where suitable
- Still overseen by EPAOs (End Point Assessment Organisations) to ensure quality
A major shift will see ‘behaviours’ removed from formal apprentice assessment. Instead, employers will be responsible for verifying behaviours within their standard performance management processes. This places greater emphasis on employer capability and consistency.
Assessment for knowledge and skills will vary according to the nature of the apprenticeship programme:
- Mandatory qualification-only assessment: when the qualification fully covers required knowledge and skills.
- Standard low-prescription apprenticeship assessment: designed for most occupations, focussing on high level requirements and potentially using a sampling method.
- Exceptional additional prescription apprenticeship assessment: designed for high-risk roles especially involving health and safety.
While these changes promise a more responsive system, much operational detail remains outstanding.
A year of significant transition
The apprenticeship landscape in 2026 will be shaped by sharper priorities:
- Young people (under 25)
- SMEs and regional balance
- Critical and emerging skills
- Economic growth and productivity drivers
Major opportunities remain for employers, particularly those aligned with priority sectors, but the era of broad employer autonomy over levy funds is ending. Flexibility is growing within the apprenticeship product, but not yet across the wider skills system.
As changes continue to roll out, we’ll keep ISE members updated and supported in navigating this evolving landscape.
Join ISE's Apprenticeship Conference on 4 March to hear more expert views on apprenticeships, discuss current challenges and solutions, and network with like-minded professionals.