For years, employers have paid into the apprenticeship system while struggling to make the funding work for the skills their business needs.

Now, the rules are changing, and for businesses facing an increasingly urgent need to build AI capability, that could be significant.

The Growth and Skills Levy is designed to give employers more flexibility over funded training, expanding the options beyond traditional apprenticeships as the Government looks to tackle skills shortages and respond more quickly to changing workforce needs.

And the timing matters. AI is already changing roles, reshaping skills requirements and forcing businesses to think differently about how they develop their people. When the capabilities you need can change in a matter of months, waiting for traditional training mclaudaodels to catch up isn’t much of a workforce strategy.

So, what is the Growth and Skills Levy, what’s changed in 2026, and how can employers use it to build the skills they’ll need next?

What is the Growth and Skills Levy?

At its simplest, the Growth and Skills Levy takes the Apprenticeship Levy a step further, giving employers more flexibility to put their funding towards the skills that matter to their business.

From 1st August 2026, that funding can be used for apprenticeships, foundation apprenticeships and apprenticeship units. These shorter, more targeted programmes are designed to build critical skills for someone’s current or future role, opening up more options than the traditional full-apprenticeship route.

It might sound like a technical change, but the thinking behind it is important. Instead of starting with the question, “What apprenticeship can we spend this money on?”, employers have more scope to ask, “What capability do we need, and what’s the best way to build it?”

When AI is changing those capability needs at pace, that’s a much more useful question to be asking.

Growth and Skills Levy changes: what’s different in 2026?

The Growth and Skills Levy isn’t just a rebrand. Several important Apprenticeship Levy changes have taken effect during 2026, giving employers more flexibility in how they use their funding, but also less time to put it to work.

One of the biggest changes is the introduction of apprenticeship units. Launched from 28th April 2026, these shorter, targeted programmes give employers a new way to fund training focused on specific, critical skills, without necessarily committing to a full apprenticeship.

The rules changed again on 1st August. Employers continue to receive levy funds based on their English pay bill, but the Government’s previous 10 per cent top-up has ended. New funds entering accounts now also expire after 12 months rather than 24, effectively halving the time businesses have to use them.

Government funding is also being refocused towards younger apprentices, while changes to assessment are intended to give employers and training providers more flexibility in how apprenticeships are delivered.

For employers, the takeaway is clear: the levy is becoming more flexible, but there’s less time to leave the money sitting there while you decide what to do with it.

What does the Growth and Skills Levy mean for AI skills?

This is where the changes become particularly interesting.

AI is changing what people do inside existing roles as well as creating demand for entirely new capabilities. Businesses don’t necessarily need hundreds of employees completing identical programmes. They might need a small group of people in data to develop one capability, leaders to understand another, and employees elsewhere in the organisation to build practical AI literacy.

That mismatch came through strongly during La Fosse’s AI Workforce Council discussions.

There was a clear frustration that existing levy-funded training can be too generic or geared towards large cohorts to solve highly specific capability gaps. If a business needs to develop five people in a specialist AI or data capability, a programme designed around a cohort of 50 or 100 isn’t necessarily the answer.

The move towards greater flexibility therefore creates an opportunity for employers to think differently about the levy: not simply as money that needs to be spent, but as part of a wider reskilling strategy.

Why employers struggle to use their levy funding

Funding is only useful if the training available matches what the business needs.

That sounds obvious, but the discussion behind the Beyond Headcount Blueprint highlighted several practical barriers.

One is specificity. Standard programmes don’t always map neatly onto a particular capability gap, especially when businesses need relatively small numbers of people trained in emerging areas.

Another is the practical cost. The price of a programme isn’t the only investment involved in developing an apprentice. Someone within the business also needs the time and capacity to support, supervise and develop them.

And then there’s speed. AI capability is moving rapidly, while formal training programmes inevitably take time to design and deliver.

The result is that levy funding can become something employers try to use because it’s there, rather than a strategic tool for building real capability.

That needs to change.

How can employers use the Growth and Skills Levy more effectively?

Start with the capability gap, not the funding pot.

Rather than asking, “What training can we spend our levy on?”, businesses should first identify the work they expect their people to do, how that work is changing and which capabilities they need to develop as a result.

Only then should they look at the funding routes available.

That might mean a full apprenticeship for one employee, targeted development for another or a wider programme designed around a specific workforce transformation goal.

It also means acting sooner. With new levy funds now expiring after 12 months, employers have less time to leave training budgets untouched while they decide what to do with them.

The Growth and Skills Levy creates more flexibility, but businesses still need a clear view of the capability they’re trying to build.

Putting the levy to work on AI capability

La Fosse Academy is already applying that principle through its AI-enhanced apprenticeships.

The programmes combine established apprenticeship pathways across leadership, business operations, data and digital and technology with role-specific AI skills, allowing employers to use levy funding to develop both core professional capability and the AI skills increasingly needed alongside it.

It’s a practical example of what a more useful approach to levy-funded development can look like: start with the skills the workforce needs, then use the funding available to help build them.

Ultimately, success shouldn’t be measured by how much of the levy gets spent, but by whether it helps businesses build the skills their workforce needs.

Building the workforce of the future

The Growth and Skills Levy won’t solve the AI skills gap on its own.

But greater flexibility gives employers another lever to pull as they rethink how work gets done, which capabilities they need and where those capabilities should come from.

Beyond Headcount explores that bigger picture, bringing together the insight of ten senior AI, data, technology and transformation leaders to create a practical blueprint for workforce planning in the AI era.

Download the Beyond Headcount Blueprint – coming soon