Growth & Skills Levy 2026: What Training Providers Need to Know About AI Funding

Last updated: 26 March 2026

From the Apprenticeship Levy to the Growth and Skills Levy

The Apprenticeship Levy has collected around £3 billion per year from UK employers since 2017, but it has consistently underdelivered on its promise. The primary structural problem was inflexibility: levy funds could only be used for apprenticeships, which require a minimum 12-month duration and an end-point assessment. This made the levy unusable for shorter, more targeted skills interventions — and as a result, a significant proportion of levy funds have expired unspent each year, particularly among large employers whose workforce needs did not align with available apprenticeship standards.

The Growth and Skills Levy, announced as part of the government’s Skills England agenda and being rolled out through 2025–26, addresses this by expanding the range of training products that can be funded from the employer’s levy account. Apprenticeships remain the core funded product, but the new framework adds apprenticeship units, Skills Bootcamps, and potentially other qualifying short-course products as levy-fundable options. Employers still pay in at the same rate (0.5% of payroll above the £3M threshold), but gain meaningfully more flexibility in how they direct those funds.

What Changes for AI Training Specifically

For AI skills training, the Growth and Skills Levy creates three new funding routes that did not exist under the old framework.

Apprenticeship units. The April 2026 launch of modular apprenticeship units, including the AI Leadership unit (AU0002) and others in the digital skills cluster, means employers can now use levy funds for 30–140 hour AI skills programmes without needing to put employees on a full 12–15 month apprenticeship. This is a significant change for employers who want to upskill existing managers and professionals in AI governance, AI leadership, or AI application — roles that are generally unsuitable for full apprenticeship programmes.

Skills Bootcamps. Skills Bootcamps have always been government-funded, but the Growth and Skills Levy framework creates additional flexibility for employers to use levy accounts alongside or instead of direct DfE Bootcamp funding for qualifying AI training. This opens funding options for AI upskilling programmes that are too long to be units but too short to be full apprenticeships — the 6–16 week intensive skills programmes that are increasingly common in the AI skills market.

New short-qualification routes. The Growth and Skills Levy framework is expected to include qualifying short courses — specific approved qualifications under a new regulated qualifications category — as levy-fundable from 2026–27. AI skills qualifications that achieve this status will become accessible to the full employer levy market, which represents a major commercial opportunity for providers who move quickly to develop and accredit eligible AI content.

Level 7 Removal: The Immediate Market Impact

The most immediate and disruptive change in the Growth and Skills Levy transition is the removal of Level 7 apprenticeships from levy funding for learners aged 22 and over, effective January 2026. Level 7 standards include senior management, executive MBA equivalents, and chartered professional qualifications — programmes that were heavily used by large employers as a subsidised route for senior executive development.

The removal has created significant demand displacement. Employers who were running Level 7 management development programmes using levy funds are now facing the full cost of those programmes without levy subsidy — and many are looking for alternatives. For AI skills specifically, the Level 7 removal is relevant because programmes like Corndel’s Working Smarter with AI (delivered at Level 7 with an Imperial College component) have lost their levy funding route for most learners. Providers offering Level 4 and Level 5 AI leadership and management programmes are seeing increased inbound from employers whose Level 7 options have become unfunded.

What Stays the Same

Not everything changes. Full apprenticeship standards at Levels 2–6 remain levy-fundable under the same general framework as before, with the same co-investment obligations for non-levy employers (5% employer, 95% government). The ESFA audit and compliance requirements for apprenticeship delivery remain unchanged. The AI and Automation Practitioner standard (ST1512) and other digital and data apprenticeship standards remain levy-funded at their published funding band rates.

Provider registration requirements are also largely unchanged — providers must be on the Register of Apprenticeship Training Providers (RoATP) to deliver levy-funded programmes, and the quality assurance requirements (Ofsted inspection, ESFA monitoring) continue to apply. The addition of units and Bootcamps as levy-fundable products does not remove these requirements; it extends the range of products that registered providers can offer within the same quality framework.

Provider Strategy for the New Landscape

The Growth and Skills Levy creates a substantially different strategic environment for training providers. The providers best positioned to benefit are those who can offer a coherent, graduated AI skills pathway across multiple funding routes: an AI foundation short course (potentially levy-fundable as a qualifying short course), an AI apprenticeship unit for specific leadership or technical competencies, and a full Level 4 AI apprenticeship standard for learners who need the complete qualification pathway. Employers who are now managing a more complex levy spending picture prefer providers who can advise across the full range of options rather than advocating for a single product.

Providers whose entire business model is built around a single product type — particularly those heavily weighted to Level 7 standards that are now defunded — face the most significant strategic risk. Diversification into AI skills provision across multiple levy-fundable product types is both a defensive and an offensive move: defensive because it reduces dependence on any single funding category, offensive because the AI skills market is growing faster than almost any other skills category in the UK.