Sarah Beale, CEO, AAT, sets out why flexibility is only the first step, why simple and accessible funding routes matter most for small firms, and how a well-designed levy could help plug critical talent gaps, support growth and open doors for the next generation of talent.

When you run a small business, you’re already spinning many plates. Developing new products and services, adapting to technology, finding new customers, chasing invoices, managing cashflow – the list is endless. Add to that the challenge of finding the right people, and it’s no surprise that skills shortages are one of the biggest headaches for entrepreneurs and small business owners across the UK.

That’s why the Government’s plans to replace the Apprenticeship Levy with the new Growth and Skills Levy could be a real turning point. But only if it’s designed with all businesses in mind – not just the big players.

Navigating the Apprenticeship Levy  

The Apprenticeship Levy was supposed to boost training across the economy. In practice, SMEs across sectors have often shared with our members that it’s confusing and restrictive. Larger firms – the ones paying the levy – have the resources and expertise to make it work. But for small and medium-sized businesses – which make up 99% of the total business population – the system is almost a maze; difficult to access, with funding rules that didn’t match what smaller firms actually needed.

That matters, because small businesses are the lifeblood of the UK economy. Employing a total of 16.6 million people , they keep local and indeed overall national communities thriving. Many want to grow and are prepared to put in the hard work training the next generation but, need simple and easy access to funding to take on apprentices or upskill staff.

Small businesses need to agile and respond quickly

The Growth and Skills Levy is a chance to reset the system. The idea is to make the rules more flexible so that businesses can use levy funding for a wider range of training, including shorter apprenticeships and the introduction of new, shorter courses to address urgent skills needs.

This is good news. Small businesses rarely have the luxury of long lead times. They need to be agile, spot challenges and act on them quickly – whether that’s keeping up with new regulations, adopting digital tools, or responding to customer demand. Waiting months for staff to complete lengthy training just isn’t practical. The option of shorter, more targeted courses under the Growth and Skills Levy means SMEs can upskill people as and when the need arises, keeping their teams sharp and their businesses competitive.

Having access to funding is essential

Flexibility is a start – but there needs to be more changes. If the Growth and Skills Levy is going to succeed where the Apprenticeship Levy stumbled, the Government needs to make sure SMEs can actually access the funding, without onerous burdens.

The funding process needs to be simple, fast, and jargon-free. They need clear advice and practical help to navigate the system. Think step-by-step guidance, not pages of policy documents.

The Government also need to clarify what types of short courses in accounting and finance will be eligible via the new Growth and Skills Levy and when. Employers can’t plan ahead without this.

It must be a level-playing field. Smaller firms should be able to get a fair share of the funding pot, without feeling like they’re competing with larger corporates. Small and large firms operate completely differently and have completely different needs – it makes no sense to have them competing side-by-side.

Plugging the skills gap

The timing couldn’t be more crucial. Across the economy, we’re seeing talent shortages – in digital skills, in finance, in trades, in hospitality – you name it. For small businesses, this isn’t just an inconvenience; it’s a barrier to growth.

Investing in skills is the way forward. Training doesn’t just benefit the individual employee; it boosts productivity, improves staff loyalty, and helps businesses evolve and thrive. For many people of all backgrounds, apprenticeships and skills programmes can be the gateway into a career they might never have considered.

Levelling the playing field

If small businesses have the right support to invest in their people, it helps to build more resilient businesses, creates more opportunities for people to build careers and will enhance the UK economy. With the Growth and Skills Levy, we’ve got a chance to build a system that works for every business, not just the big ones. Let’s not waste it.

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