Apprenticeships & Functional Skills Reform: Will There Be Real Change?

Since 2017, the Apprenticeship Levy has required large UK employers to contribute 0.5% of their total pay bill to fund apprenticeship training. This money is then used to support the hiring and training of apprentices, providing more opportunities for professional development.

The skills system, which includes both apprenticeships and technical education, is undergoing significant reform to better align with workforce and economic needs. In February 2025, the government announced the most significant change to apprenticeship requirements, including the removal of mandatory functional skills exit requirements for adult apprentices.

Apprenticeship funding rules set out the regulatory framework for how funding is allocated and managed for employers and training providers, with updates for the 2024-2025 funding year.

This change took effect immediately and changes how employers can approach apprenticeship training. The following sections will explain what these changes encompass and how they can affect businesses in the UK.

The Functional Skills Barrier

For years, one of the biggest obstacles to apprenticeship completion has been the mandatory functional skills requirement. Under the previous system, all apprentices aged 19 and over had to achieve Level 2 English and Maths qualifications (equivalent to GCSE grade 4-9) to complete their apprenticeship, regardless of their job role or career aspirations.

This requirement created significant barriers for a lot of apprentices.

Functional skills pass rates are around 75%, down from 84% before the pandemic, and the exit requirement was a common reason for programme dropouts.

Many capable workers performed well in practical roles but were unable to complete their apprenticeships due to difficulties with formal academic assessments.

For employers, particularly in sectors like construction, healthcare, and manufacturing, the functional skills requirement often deters potential apprentices from even starting programmes, creating recruitment challenges in industries already facing critical skills shortages.

The February 2025 Reform

The government's reform represents a complete shift in approach. From 11 February 2025, apprentices who start their training aged 19 or over are no longer required to pass English and Maths functional skills to complete their apprenticeship. Instead, the decision to include functional skills training now rests entirely with employers and apprentices. Prior learning will be considered when deciding whether functional skills training is necessary. Significant prior learning may allow for a shorter apprenticeship duration.

Crucially, this change applies to both new apprentices and those already on the programme. Employers and training providers were given until 1 April 2025 to discuss with existing adult apprentices whether to continue or discontinue studying towards English and Maths qualifications. It is important that these decisions are clearly documented in the apprentice’s training plan for compliance and record-keeping.

However, the reform maintains mandatory functional skills requirements for 16-18 year olds, recognising that younger apprentices may still benefit from developing these foundational academic skills early in their careers.

Some industries, such as Healthcare or Early Years Education, still require specific functional skills qualifications for higher-level study or professional registration. Government funding for functional skills training remains available for all apprentices (including those 19+) who wish to voluntarily pursue these qualifications. Employers will have a crucial role in verifying that each behaviour statement has been sufficiently demonstrated by the apprentice over the course of the programme.

Real-World Impact

The government estimates this change will enable up to 10,000 more apprentices to complete their training each year by removing what many consider an artificial barrier to progression. The removal of mandatory functional skills requirements allows employers to focus on job-specific skills rather than academic barriers, making apprenticeships more accessible and relevant to workplace needs.

Early employer response has been overwhelmingly positive. Business leaders, including those at John Lewis Partnership, welcomed the change, stating: “We welcome the relaxation in functional skills requirements. It’s an important step towards the reform needed to help more people access apprenticeships. Gaining GCSE Maths and English qualifications can be a significant barrier to starting or completing one, and we believe it will help more disadvantaged people, including those who leave the care system or those with learning disabilities, make a career for themselves.”

The Federation of Small Businesses called it a “win for SMEs,” noting that “these flexibilities should help SME employers fill skills gaps faster.”

While the reforms remove certain academic requirements, the importance of lifelong skills such as communication, numeracy, and problem-solving remains. These skills are essential for long-term career success and adaptability beyond formal qualifications.

In industries facing severe skill shortages, such as construction (where the government has set an ambitious goal of building 1.5 million homes by the end of this parliamentary term), reforms could play a pivotal role in speeding up workforce development. The introduction of shorter training durations will enable quicker workforce integration in high-demand sectors, supporting faster progression and reduced disruption to business operations. By prioritising job-specific skills over academic barriers, these changes have the potential to significantly advance training and address critical labour gaps.

What This Means for Employers

This reform gives employers more flexibility to design apprenticeship programmes that meet their business needs. Rather than allocating significant time and resources to functional skills training that may not directly relate to job performance, employers can now:

Focus on role-specific competencies

Direct all training towards the knowledge, skills, and required behaviours directly relevant to the apprentice’s job role.

Accelerate completion rates

Remove a major bottleneck that previously extended apprenticeship duration and increased dropout risk.

Widen recruitment pools

Attract candidates who may have been deterred by academic requirements but possess strong practical abilities.

Maintain quality where needed

Still choose to include functional skills training where it adds genuine value to the role or career progression.

Importantly, government funding remains available for employers who do choose to include English and Maths training, ensuring the decision is genuinely optional rather than financially driven.

The Training Provider Challenge

Impact on Training Providers

Whilst the functional skills reform offers significant benefits for employers and apprentices, it presents a complex challenge for training providers and colleges, particularly due to changes in apprenticeship assessment processes.

Reduced Functional Skills Enrolments

The potential removal of mandatory requirements can result in a reduction in functional skills enrolments. This decrease may also affect how providers comply with apprenticeship funding rules, as these regulations govern funding eligibility and administration for apprentice training and assessment.

Adult Apprentice Dependency

Adult learners, who make up the majority of current functional learners, are the primary group impacted by these changes, which increases the impact of such a change.

Resource Decisions

Consequently, many providers must decide how to maintain functional skills teams and resources, including the efficient development and use of assessment materials.

The reality is stark: if a significant proportion of 19+ apprentices opt out of functional skills training, providers could see their English and Maths departments become economically unviable overnight. This creates a paradox where providers may struggle to maintain quality functional skills provision for those who do choose to continue, potentially creating a two-tier system.

However, functional skills training isn't disappearing entirely. Many employers will still recognise the value of English and Maths qualifications for their apprentices' long-term career development, particularly in roles where progression requires strong literacy and numeracy skills. Additionally, 16-18-year-olds still require mandatory functional skills training, ensuring continued demand.

The key for training providers is adapting their delivery model to remain efficient and cost-effective whilst maintaining quality. This might involve the following:

Collaborative delivery models

Partnering with specialist providers to share resources and expertise

Flexible staffing arrangements

Moving away from full-time dedicated teams to more agile delivery models

Enhanced digital delivery

Leveraging technology to reduce delivery costs whilst maintaining learner engagement

Subcontracting partnerships

Working with specialist functional skills providers who can deliver training more efficiently at scale

For many providers, the solution lies in strategic partnerships that allow them to continue offering high-quality functional skills training without the overhead of maintaining full internal teams. By working together, organisations can ensure that apprenticeships functional skills reform meets industry standards and regulatory requirements, while also benefiting from shared best practices and expertise. This approach ensures learners still receive excellent support when they choose to pursue English and Maths qualifications, whilst providers can focus their resources on their core specialisms.

Looking Forward

The functional skills reform is part of a broader transformation of the UK's apprenticeship system under the new Skills England initiative. From August 2025, additional changes will take effect, including reducing the minimum apprenticeship duration from 12 to 8 months and introducing new foundation apprenticeships specifically designed for younger learners.

Three "trailblazer" apprenticeships in green energy, healthcare, and film/TV production will pioneer the new shorter apprenticeship approach, demonstrating how the system can become more responsive to immediate industry needs whilst maintaining quality outcomes.

This represents a fundamental shift towards an employer-led, industry-responsive apprenticeship system that prioritises practical competence and real-world skills over academic compliance. For businesses struggling to fill skills gaps in an increasingly competitive labour market, these changes could finally deliver the flexibility and efficiency the apprenticeship system has long promised.

The reform signals that the government is serious about making apprenticeships work for both employers and learners—removing barriers, increasing completion rates, and focusing on what really matters: developing the skilled workforce the UK economy needs to grow and thrive.

To learn more about how these apprenticeship reforms could benefit your business and help address your skills gaps, contact the team at Qualitrain today.

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