As the UK grapples with significant skill shortages, the Apprenticeship Levy—launched in 2017 to boost vocational training—faces mounting scrutiny.
Recent reports highlight that billions in levy funds remain unspent, largely because the current structure struggles to meet the needs of modern businesses, who often find traditional apprenticeships rigid and cost prohibitive.
Calls for reform from bodies like the Confederation of British Industry (CBI) and the Chartered Institute of Personnel and Development (CIPD) urge a more adaptable approach to help businesses upskill their workforce and drive productivity. Emerging educational technologies (EdTech) could play a vital role in this transformation by offering more flexible, on-demand training solutions aligned with industry needs, whilst also significantly reducing the cost of delivery.
The Challenge with the Current Levy System
The Apprenticeship Levy requires UK employers with an annual payroll over £3 million to contribute 0.5% of their wage bill into a digital fund, which they can draw on to fund apprenticeships. However, CIPD research shows that many employers find the rules too restrictive, preventing them from using the funds effectively to upskill their employees. SMEs, in particular, face challenges because the levy only covers traditional, formal apprenticeship programs that can be lengthy, inflexible, and costly to implement. Consequently, levy-paying employers have reportedly forfeited over £2 billion of funds, which expires if not used within 24 months.
The government’s current system overlooks the fact that many businesses, especially in sectors impacted by automation or emerging green technologies, need tailored, responsive, and shorter-term training solutions. While apprenticeships are beneficial for young people entering the workforce, they may not meet the immediate, evolving skill needs of experienced workers who need quick upskilling.
Microlearning—delivering content in small, digestible units—enables learners to develop specific competencies on their schedule, and it’s particularly well-suited to today’s digital workforce.
How EdTech Can Bridge the Gap
EdTech platforms, through tools like microlearning, AI and industry-specific bespoke modules, can address these issues, enabling organisations to access relevant skills training without the burdensome framework of traditional apprenticeships.
Microlearning—delivering content in small, digestible units—enables learners to develop specific competencies on their schedule, and it’s particularly well-suited to today’s digital workforce. Unlike conventional apprenticeships, which often demand extensive time commitments, on-demand training modules allow employees to acquire skills as needed, often with minimal disruption to daily responsibilities.
For SMEs, these digital platforms are a game-changer. With scalable options, small businesses can upskill their workforce in high-demand areas, like digital skills, project management, or sustainability practices, without having to commit to full apprenticeships.
Generative AI allows for a user to have an interaction with a ‘virtual tutor’, fed with a knowledge bank of pre-defined information to gain access to the information they need, when they need it.
Proposing a Flexible Levy System
We welcome calls for a reformed Apprenticeship Levy that accommodates on-demand training. We challenge the UK and Welsh Governments to help create a more agile, responsive workforce by considering how technology can support a more cost effective and productive training system.
By allowing levy funds to be used for shorter, targeted courses and digital upskilling platforms, the government could enable businesses of all sizes to participate meaningfully in workforce development. The result would be a dual benefit: addressing the UK’s skills shortage while providing a more flexible, efficient training model for employers.
In a rapidly evolving economy, adapting the levy to support flexible, technology-driven learning solutions would help the UK stay competitive and prepared for the future. With EdTech and microlearning, employees gain the ability to upskill swiftly, while SMEs are empowered to build resilient, future-ready teams.
This model could ensure that the levy achieves its original purpose: to fuel the upskilling that will drive productivity, innovation, and economic growth across the UK.
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