The Growth and Skills Levy: Is It Still the Government’s Most Underrated Investment?

It’s rare to find a government initiative that delivers clear value to businesses and individuals, boosts productivity and tackles inequality, all without financial risk to employers. Yet the Growth and Skills Levy (formerly the Apprenticeship Levy) does exactly that, making it one of the most effective uses of taxpayer money.

Still, usage remains staggeringly low, with just 4% of employers using their full Levy funding. That inertia is a hangover from the Levy’s early years, when rigid structures made it feel inflexible and bureaucratic. But good news, that red tape is now being slashed.

The rebrand to the Growth and Skills Levy signals not just a name-change, but a broader, more strategic and more accessible outlook on workforce development. One that could catalyse long-term value creation, turn upskilling into a growth engine, and, for individuals, provide a door to opportunity that might otherwise remain closed. 

A Levy transformed: What’s changed & why it matters

The Levy of 2025 is not the Levy of 2017. What began as a stiff, narrow mechanism is now entering a period of genuine transformation.

One of the biggest shifts is the rise of shorter-duration apprenticeships. Offering faster, more flexible ways to build skills, businesses can respond to change, speed up impact and avoid the long lead times of traditional multi-year programmes.

We’re also seeing employer incentives trialled in construction to tackle workforce shortages and make training more attractive to firms that have historically opted out.

Add to this the proposed Youth Guarantee (aimed at ensuring every young person has a route into work, education or training), and the picture becomes clear: the Levy is being recast as a lever for national renewal.

And while full flexibility isn’t here yet, it’s coming. Labour’s proposed reforms would allow up to 50% of Levy contributions to be spent on non-apprenticeship training, including modular, stackable courses that target real-time skills gaps.

The focus is shifting from rigid frameworks to practical outcomes, and it’s unpicking the constraints that have held the Levy back. 

How HR Leaders Can Use the Growth and Skills Levy to Drive Long-Term Success

The Growth and Skills Levy hands HR leaders more influence to shape their organisation’s long-term trajectory, allowing them to tackle strategic challenges with adaptable programmes that are targeted and business-aligned.

Smart HR leaders are also designing training opportunities not just for entry-level staff, but for managers and future leaders, the very people trusted with the next phase of growth. Management-level (3-5) apprenticeships deliver the same outcomes as high-cost MBAs or PRINCE2 certifications, only with direct application to the business and no personal debt for the learner. 

The best HR teams know it’s not about spending the funds, it’s about doing so with purpose: closing mission-critical gaps, diversifying development and embedding a culture where learning drives progress.

How the Growth and Skills Levy Removes Financial Risk

The common objection to training investment, “what if they leave?” misses the mark. Because what if they stay, under-skilled? Managers have already answered that: 72% say skills shortages hurt team efficiency and productivity.

And since the Levy clawback still exists, that hesitancy has another price tag. With funds expiring after 24 months, businesses are haemorrhaging opportunity if they don’t use them. Clawback has already seen billions returned to the Treasury, that’s billions that could have been used to future-proof teams and businesses.

But with the recent reforms, it’s now easier (and compelling) to tap into that unused gold pot. There’s never been a lower-risk, higher-impact moment to invest in training.

The Broader Societal Impact

The Growth and Skills Levy remains one of the few mechanisms that actively supports social mobility, particularly through reforms like the Youth Guarantee.

For individuals locked out of traditional career paths, apprenticeships offer a structured, achievable route to progression. This can be life-changing, creating access, mobility and autonomy, while equipping people with the confidence and credentials to build meaningful careers.

And the impact ripples outward. As individuals gain competency, so do the businesses they work in. Productivity increases. Innovation becomes possible. Communities benefit from higher wages, stronger local economies and reduced unemployment. 

Research also shows that 20% of the UK workforce could be significantly underskilled by 2030, an alarming figure that threatens national economic growth. The Levy, if harnessed properly, is one of the few levers we have to reverse that trajectory.

Will the Changes go Far Enough?

The latest reforms mark a watershed moment. But structural change alone won’t deliver lasting impact. To succeed, they must be acted on with care, intent and alignment. That’s where a consultative approach becomes essential.

When apprenticeships are shaped around real business goals, co-owned by managers and coaches, and supported from the top down, they stop being a compliance exercise and instead become embedded tools for performance, retention and growth.

To capture the full value of the Growth and Skills Levy, employers must stop evaluating it through the lens of what it was, start seeing it for what it’s becoming, and meet the new opportunities halfway by matching the reforms with meaningful action.

Looking Ahead: A Future Built on Skills

If the new changes hold, and business engagement catches up, the Growth and Skills Levy could signal a new chapter in the UK’s workforce story. One where skills aren’t a side note, and apprenticeships aren’t limited to early careers or the privileged few.

There’s a strong commercial case: companies that embrace apprenticeships see stronger retention, pipelines and productivity. There’s a compelling social argument: apprenticeships build futures and open doors. And there’s an economic imperative: every pound spent on training has the potential to return many more in GDP growth.

The future of apprenticeships under the new Levy is faster, more inclusive and better aligned to business needs. If employers meet that momentum with purposeful action, the payoff won’t just be skills, it will be resilience, growth and long-term edge.

By Al Bird, CEO at Instep