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.

In February 2025, the government announced the most significant change to apprenticeship requirements in years: the removal of mandatory functional skills exit requirements for adult apprentices. This reform, which took effect immediately, fundamentally changes how employers can approach apprenticeship training. So, what exactly do these changes mean? And will they deliver real change for UK businesses?

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. Functional skills pass rates currently sit at around 75%, down from 84% before the pandemic, and these exit requirements were consistently flagged as one of the biggest reasons apprentices dropped out of programmes. Many capable workers who excelled in their practical roles found themselves unable to complete their apprenticeships due to struggles 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.

Crucially, this change applies to both new apprentices and those already on 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.

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.

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 considered an artificial barrier to progression.

Early employer response has been overwhelmingly positive. 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."

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. 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 unprecedented flexibility in designing apprenticeship programmes that truly 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 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

Whilst the functional skills reform offers significant benefits for employers and apprentices, it presents a complex challenge for training providers and colleges. With the potential for a substantial reduction in functional skills enrolments (particularly among adult apprentices who represent the majority of current learners) many providers face difficult decisions about maintaining dedicated functional skills teams and resources.

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:

• 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. 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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