The Growth and Skills Levy has been talked up as the thing that finally fixes the mess the old Apprenticeship Levy left behind, and I want to believe it. I have spent years watching small tech businesses lose good people to bigger firms who can afford proper training budgets, and a scheme that actually helped fix that would be worth celebrating. Having looked at what it actually offers a business like the ones I run and advise, I am not celebrating yet.
The problem was never really about the name of the levy. It was about who the whole system was designed for, and that has not changed nearly as much as the rebrand suggests.
Why the Apprenticeship Levy Never Worked for Small Firms
The old system charged large employers a payroll tax and let them spend it on approved training, mostly apprenticeships. Small businesses under the threshold did not pay in directly, but here is the part that got lost in every government press release about it: the money still came from somewhere, and the system was still built around the needs of organisations big enough to run a dedicated learning and development team.
A ten person software company does not have an L&D team. It has a founder trying to keep the lights on, a couple of senior developers who are already stretched thin, and no spare capacity to build an apprenticeship programme from scratch. The funding rules, the paperwork, and the approved provider lists were all written with a completely different kind of employer in mind, and small tech businesses were left to either ignore the system entirely or waste weeks trying to make it fit.
What the Growth and Skills Levy Actually Offers
The headline change is flexibility. Instead of funding being locked almost entirely to full apprenticeship standards, a portion can now go towards shorter, more focused training, including some of the digital and technical skills modules that small software businesses actually need. On paper, that is a genuine improvement, and I do not want to pretend otherwise.
Short Courses and Modular Training
Being able to fund a focused course on cloud architecture, cyber security fundamentals, or a specific development framework, rather than committing someone to a multi year apprenticeship, is a sensible change. Software skills move fast, and a rigid twelve to eighteen month programme was always a poor fit for a field that reinvents its own tooling every couple of years.
Still a Payroll Tax With the Same Threshold Problem
Here is where the optimism runs out. The levy is still collected through payroll above a set threshold, which means the vast majority of small software businesses, the ones with five, ten, or twenty staff, are still not paying in and still cannot draw down funding directly. The flexibility applies mostly to the large employers who were already able to work the old system, just with a wider menu of approved training to pick from.
The Bit Nobody Tells You
Government skills funding, under whatever name it carries this decade, has always been easiest to access for organisations with the administrative capacity to chase it. Filling in funding applications, finding approved training providers, and reporting on outcomes is itself a job, and small businesses do not have anyone whose job that is. So the money flows towards the employers who can afford to employ someone to go and get it, which tends to be the same large employers the scheme was meant to stop favouring.
I wrote about a related version of this problem in why the UK cannot produce enough software developers, where the shortage of junior talent is partly a training funding problem and partly a willingness problem. Small businesses would love to train juniors properly. Most of us simply cannot absorb the cost of someone unproductive for six months while a scheme designed for a 500 person employer decides whether our training counts.
What Small Tech Businesses Should Actually Do
Waiting for a levy reform to solve your hiring and training problem is not a plan, it is a hope, and hope is not a strategy I would advise any founder to run a business on. If you need to grow a team, the practical options that have always worked still work. Bring in a strong mid level developer and pair them deliberately with someone more junior rather than trying to build a formal apprenticeship. Budget for a handful of short, focused courses a year rather than one big scheme. I covered the mechanics of getting this right the first time in hiring your first developer, and most of that advice holds regardless of what any levy does next.
It is also worth checking whether R&D tax relief covers any of the technical training tied directly to a qualifying project, because that route has helped several clients I work with more than any skills levy ever has. I went through the detail of that in R&D tax credits for software companies, and it is a far more reliable source of funding for a small technical team than chasing levy eligibility.
My Honest Take
The Growth and Skills Levy is a better piece of policy than what it replaced, and I would rather see incremental improvement than none at all. But renaming a scheme and widening the list of approved courses does not fix the underlying design flaw, which is that skills funding in this country is still built around employers big enough to have someone whose job is claiming it. Small tech businesses are the ones actually creating the junior roles the industry claims to be short of, and they are still the ones locked out of the system meant to fund them.
If you are trying to build a technical team without the luxury of a corporate training budget, that is exactly the kind of practical problem I help founders work through, whether that is structuring a first few hires or working out what growth actually costs before you commit to it. It is also the sort of unglamorous groundwork I cover in The 28 Day Startup, because the businesses that build strong teams are rarely the ones with the best access to government schemes, they are the ones who worked out how to grow without waiting for one.
