The Department for Education has confirmed that Level 7 apprenticeship funding will be restricted to those aged 16-21 from 1 January 2026. ICAEW has repeatedly warned that such a move would have significant consequences not only for those seeking a professional qualification but for organisations wanting access to skilled workers and the government’s plans for growth.

Reacting to the announcement, Chief Executive, Alan Vallance, described the decision as a “major blow to the thousands who rely on this route into highly skilled roles that support the broader economy”.

He said: “These changes, coupled with uncertainty over the implications for employers of the Employment Rights Bill, increasing costs to employers, and future UK visa constraints, mean that we have significant concerns about this decision restricting UK economic growth. Not only will this impact the attractiveness of recruitment into the professional services, it runs the risk of UK businesses choosing to offshore work.

“It also flies in the face of the government’s commitment to its growth agenda, especially after it included professional and business services as a key growth-driving sector in the new industrial strategy. Skills are critical to the growth prospects of businesses and economic growth, and apprenticeships help to close that skills gap – so they must be protected and enhanced at all costs.”

Broader age restriction needed

The announcement is a row back on initial proposals to remove public funding from all Level 7 apprenticeships. But the service sector remains concerned over the potential impact at a time when skilled workers are in short supply in the UK.

The Department for Education has suggested that Level 7 apprenticeships – which are the equivalent of a Masters’ degree – were “often” accessed by older or well-qualified individuals, who fell outside of the intended recipients for apprenticeship levy funding.

ICAEW rejects this suggestion with the number of school leavers entering accountancy having doubled since the introduction of the levy in 2017. The average starting age of a Level 7 ICAEW apprentice is 22, and ICAEW believes that stripping funding from this cohort would have unintended and profound consequences for firms, the skills pipeline and the health of the wider economy.

Vallance has repeated ICAEW’s recommendation to the Department for Education that Level 7 funding should not be stopped at 21, but an age-restriction of 18 to 25-year-olds would be a more effective compromise.

“While we understand and support the idea of an age concession, the likely effect of a 16-21 exemption is a skew in recruitment towards school leavers, who typically follow a longer pathway to qualification as a chartered accountant,” said Vallance. “We would urge the government to closely monitor these changes through the lens of economic growth and reconsider if they have been effective in a year's time.”

ICAEW is working closely with firms, apprentices and training providers to help them navigate this period of change, but remains committed to an open dialogue with Skills England and employers to ensure access to talent is protected.