Budget 2025: What you need to know

The government is set to scrap co-investment payments that small and medium-sized employers must pay for apprentices under the age of 25.

Chancellor Rachel Reeves has also set aside £820 million to fund her promised "youth guarantee" for young people aged 18 to 21 over the next three years.

Reeves made the announcements during her budget speech before the Treasury revealed further tweaks to the apprenticeship system in the chancellor's red book, including removing the 10 per cent top up for levy payers and halving the time big businesses must use their funds.

Apprenticeships

Programme Budget Uplift

There's an extra £725m added to the Apprenticeship Programme Budget for the next three years i.e. £242m a year. This is a start - but really, given the massive levy take that will occur (without any changes or announcements from the Government), it's frankly a bit of a disgrace that it is only this much.  

Levy top-up removed

The 10 per cent uplift applied to levy accounts will end. This uplift was introduced in 2017 to encourage employers to engage with the levy, but its removal is one of several measures reducing the purchasing power of levy-paying employers.

Levy funds expire sooner

Levy funds in digital accounts will now expire after 12 months, rather than 24. Government intends this to unlock unspent funds more quickly, with over £5bn currently unused. The message is clear: use it or lose it. This will start from 1 April 2026.

Levy-payer co-investment rises

When a levy payer exhausts their account, co-investment will shift to a 75:25 model, making employer contributions significantly higher. This aims to push large employers to invest beyond their levy payments. For providers, reduced SME co-investment may be offset by increased contributions from levy-payers who dip in and out of overspending their levy. For low levy payers, this could be a damaging ceiling on their appetite to do more.

Fully funded apprenticeships for SMEs (under-25s)

SMEs will now receive full funding for apprentices aged 25 and under (up from under-22). This removes a long-standing administrative headache and supports more young people into training. For concerns about employers' "skin in the game", off-the-job time already provides that commitment.

Streamlining apprenticeship standards

The Budget signals work to simplify the suite of apprenticeship standards. Employers will be watching closely for how this aligns with the new apprenticeship unit offer from April 2026. The Apprenticeship Service is being prepared to accommodate units next year.

Employer Measures

Minimum wage rates will rise from 1 April 2026, including the Apprenticeship Minimum Wage:

• 21 and over: £12.71
• 18-20: £10.85
• Under 18: £8
• Apprentice rate: £8 (first year only if aged 19+)

For more details please read the full FE Week Budget 2025 Article.

For all budget announcements read the Budget 2025 document.