Vocational education reform 2026: Funding and policy updates

What you need to know about the latest developments in post-16 qualification and apprenticeship reform

15 June 2026

In our latest City & Guilds policy and funding update webinar, we explored apprenticeship and post-16 changes and the developments shaping delivery, funding, and post 16 education.

Explore the key updates, alongside a recap of earlier announcements to help you see how policy is evolving and what it means for your provision.

Since our last webinar the government has shared its new post-16 implementation plan, read our explainer article to learn what it means for you: Post-16 pathways: What the new implementation plan means for providers

Latest updates from our recent webinar

Further detail has been shared on V Levels, which remain on track for introduction from September 2027, as an additional level 3 pathway alongside A Levels and T Levels.

They will:

• Be equivalent in size to A levels at 360 guided learning hours
• Focus on practical, applied learning
• Support progression into higher technical education
• Become the third pathway choice alongside A levels, and T Levels

Initial subject areas include digital, education and early year, and finance and accounting.

For providers, the key implication is the planned replacement of many applied general qualifications, which will significantly reshape level 3 provision.

Level 2 reform: clearer structure emerging

There is now greater clarity on how level 2 provision will be structured, with two main routes:

• Foundation certificates: typically, one year, offering broad sector-based learning and preparation for progression to further study
• Occupational certificates: typically, two years, focused on technical skills linked to occupational standards with progression into employment or an apprenticeship.

While this aims to bring clarity, there are still open questions around progression routes and funding. Ofqual has also opened a consultation for submissions, highlighting that aspects of reform are still being shaped.

Engaging with the consultation is important to ensure providers’ voices are heard and that the qualification offer reflects sector needs. You can read more about the consultation and what it means for the sector here.

New delivery model: apprenticeship units

A key new development is the introduction of apprenticeship units – shorter, more flexible training programmes aimed primarily at adult learners.

Key features include:

• 30-140 guided learning hours
• Delivery over 1-16 weeks
• Focus on specific skills (e.g. AI, construction, engineering)

While they provide flexibility, there are challenges:

• A 70% payment on completion, creating financial risk for providers
• Greater employer involvement in assessment decisions
• Limited rollout to selected providers initially

This makes them a potentially valuable – but still evolving – part of the skills offer.

Funding changes confirmed

Further detail has now been confirmed on funding changes coming into effect from August 2026.

Levy and co-investment changes:

• Levy funds will expire after 12 months, reduced from 24
• Co-investment for levy employers will decrease from 90 per cent to 75 per cent
• Apprenticeships for under 25s with non levy employers will be fully funded

Additional incentives:

• Employer payments for recruiting younger apprentices
• Increased support for SMEs
• Expansion of youth employment schemes

These changes are intended to encourage employer investment while supporting access for younger learners, although discussions highlighted that employers may need broader support beyond financial incentives.

Changes to apprenticeship standards

Funding will be withdrawn from a number of apprenticeship standards from September 2026, including some leadership and management routes.

This reflects a shift towards:

• NEET-focused provision, with a greater emphasis on supporting younger learners into apprenticeships
• Priority sector skills

Existing learners will be able to complete their programmes, but providers will need to review future curriculum planning and consider alternative offers.

Policy changes are pushing for more apprenticeship funding to be available for young people. For example, the new level 2 administration assistant apprenticeships will only be available for learners aged 24 and under.

Employer involvement

Employers are increasingly involved as active partners in delivery, working alongside providers and learners to shape and support the programme. This includes:

• Working with providers to agree assessment approaches
• Training plan sign off
• Learner progress monitoring and validating behaviours

In case you missed it: previous updates

Investment in priority sectors

Technical Excellence Colleges are being developed to support key industries such as:

• Construction
• Digital and technology
• Clean energy
• Advanced manufacturing
• Defence

These colleges will act as regional hubs, with investment in facilities and staffing to support local employer needs.

Clearer pathways into work

A central aim across reforms is improving progression into employment by:

• Strengthening entry routes for young people
• Linking training more directly to job outcomes
• Expanding programmes that support transitions into work

Greater emphasis on consultation

With large-scale reform underway, providers are being encouraged to engage with consultations on qualification design and delivery.

These consultations represent an important opportunity to:

• Influence how new qualifications are structured
• Ensure content reflects real delivery needs
• Address challenges seen in previous reforms

Given the pace of change – and past issues with deliverability – provider input will be critical in shaping workable solutions.

You can find a summary of the current consultation landscape and what it covers in our previous update:

What this means for providers

Across both the latest and earlier updates, the direction is clear. The system is becoming:

• More focused on younger learners
• More closely aligned with employer demand
• Simpler in structure, but still evolving in delivery

To respond effectively, providers should:

• Stay informed as policy develops
• Engage with consultations
• Review curriculum and funding strategies
• Strengthen employer partnerships

This article highlights the main themes from the session, but the full webinar includes deeper insight, provider questions and practical discussion.

Catch up on our funding and policy webinar

Watch the full recording to understand how these changes could impact your provision and planning.