Chancellor Rachel Reeves’ Autumn Budget set out the government’s plans to “fix the foundations of the economy and begin a decade of national renewal”.
Reforming public services like the NHS was the core focus of the Budget, with Reeves announcing £22.6 billion of spending for the Department of Health and Social Care. Schools will also benefit as part of this reform, with:
£1.4 billion to help rebuild schools
Support for the recruitment of 6,500 new teachers
A £2.3 billion increase to the core schools budget. Up to £1 billion of this funding will go towards supporting the special educational needs and disabilities (SEND) system
For further education, £300 million has been earmarked to “ensure young people are developing the skills they need to succeed” and £40 million allocated to “transform the Apprenticeship Levy into a Growth and Skills Levy”.
The other major headline was employer National Insurance contributions, which are set to increase by 1.2% in April 2025. While schools and colleges are expected to be compensated to cover the increase in contributions, there’s a question mark over how other providers will be impacted.
The remaining Budget highlights at a glance:
£6.7 billion of capital funding has been provided in 2025-26 for education, with £950 million allocated for skills capital
The minimum wage for apprentices is set to increase to £7.55 an hour
The Lifelong Learning Entitlement (LLE) has been delayed, with a revised launch date of January 2027
While the additional £300 million funding for further education is welcome news, there’s a lack of clarity over how it will be allocated across providers and what it can be spent on. Besides emphasising the government’s commitment to skills, the Budget offered no other details.
A follow-up blog post on the Department for Education’s (DfE) Education Hub said the government will “set out in due course how the funds are to be distributed”. This was a correction from an earlier DfE post, which had announced that the £300 million would be allocated to colleges who would have “freedom to use the funding in the way that best suits their needs”.
For apprenticeships, the Budget contained just a handful of sentences. The main headline was the investment of £40 million as part of a more flexible Growth and Skills Levy, to fund new foundation apprenticeships in critical sectors as well as shorter apprenticeships.
The Budget was light on specifics here, but foundation apprenticeships were first announced by the Prime Minister at the Labour Party Conference back in September. The new apprenticeships aim to “rebalance funding in the training system” and “give businesses more flexibility to adapt to real training needs”.
For shorter apprenticeships, a recent press release stated that the funding would give learners and employers “greater flexibility over their training than under the existing system”, where apprenticeships must run for at least 12 months.
The training eligible for funding under the Growth and Skills Levy will develop over time and be informed by Skills England’s ongoing assessment of priority skills needs.
However, Skills England’s first report highlighted the following jobs as being in critical demand:
Care workers and senior care workers
Nursing professionals
Physiotherapists
Sales accounts and business development managers
Metal working production and maintenance fitters
IT user support technicians
The DfE has stated that it will “set out further details on the scope of the offer and how it will be accessed in due course”.
The general response to the Autumn Budget can be described as cautiously optimistic. The funding boost for further education and foundation apprenticeships has been widely welcomed, but as Julia Harnden from the Association of School and College Leaders put it in one article, “the devil always tends to be in the detail”.
The AELP's Ben Rowland issued a Budget response where he described “glimmers of hope on skills”. However, he raised concerns about the change in National Insurance contributions:
“Perhaps the biggest area of concern is the impact changes in employers’ National Insurance contributions will have on smaller employers. We are currently modelling this so we can work out how different sized providers will be impacted – and will be in contact with our members about this as soon as possible, as well as on the details of the plans announced today such as the investment in foundation apprenticeship and skills capital.”
David Hughes, Chief Executive of the Association of Colleges echoed concerns about the National Insurance increase in his response, which he estimated would cost colleges around £50 million.
He emphasised the need to understand the implications of the rise, but otherwise saw the Budget as a positive starting point:
“It was good to hear the Chancellor talk about the vital role further education has in the government's ambitions and aims. It was even better that in a very tight Budget she has announced £300 million for further education, £40 million from the Growth and Skills Levy, and £950 million for skills capital funding.
“These are a good start to turning around 14 years of severe cuts and under-investment in colleges and they show that the Treasury recognises the need to invest more in FE colleges in order to deliver on the government’s missions.”
Carl Cullinane, Director of Research and Policy at educational charity The Sutton Trust, welcomed the real-terms increase in the education budget, but saw a “missed chance” to break down barriers to opportunity.
“Today’s funding for further education and foundation apprenticeships is welcome, but represents a drop in the ocean in terms of drastically increasing the number of apprenticeships available, particularly those targeted at young people. The government needs to kickstart supply, by re-introducing employer incentives for creating new apprenticeship opportunities for young people, and ringfencing at least 50% of big companies’ levy funds for apprentices under 25.
“If today’s Budget was about setting the scene for the rest of this parliament, it was a missed opportunity to create significantly more opportunities for young people. The new Skills England must take up this baton in the coming years.”
What’s your view on the Autumn Budget? How will it impact your organisation, and what questions do you want to see answered over the coming months? Let us know by tagging us on LinkedIn at @BudSystems.