Our Insights team have highlighted the most relevant details below, for further information on skills support available to your business contact [email protected]. For more information regarding apprenticeship assessment reforms please reserve a place at our upcoming webinar.

1. Skills, Workforce, Post-16, Higher Education and Migration

Youth Guarantee and Growth and Skills Levy

• Over £1.5 billion of additional funding allocated across the Spending Review period for employment and skills: £820 million for a Youth Guarantee and £725 million for the Growth and Skills Levy.
• The Youth Guarantee will provide a guaranteed six-month paid work placement for eligible 18 to 21-year-olds on Universal Credit for 18 months, covering 100% of wage costs for 25 hours per week, with additional wraparound support.

Growth and Skills Levy

• Fully funds SME apprenticeships for under-25s and introduces short, modular courses (“apprenticeship units”) from April 2026 in areas such as AI, digital and engineering.
• System reforms from the next academic year: removal of the 10% top-up; levy funds to expire after 12 months; and co-investment for levy payers reduced to 75% (currently 95%) once funds are exhausted.
• Government will work with employers to streamline the suite of apprenticeship standards and develop the next phase of reforms.

Targeted Skills for Priority Sectors

• Multi-year investment packages: £182 million for engineering, £182 million to strengthen defence skills pipelines, and £187 million for the Techfirst digital skills programme.
• Establishment of Technical Excellence Colleges in advanced manufacturing, clean energy, digital technologies and defence, aligned to the modern Industrial Strategy.

Post-16 and Lifelong Learning

• The Post-16 Education and Skills White Paper (October 2025) sets out a “world-leading skills system” aimed at meeting employer demand, widening access and supporting innovation and R&D.
• The Lifelong Learning Entitlement remains on track for launch on 1 January 2027, with a new means-tested maintenance grant for students on certain priority courses from 2028/29.

Higher Education and International Students

• From 2028/29, providers will pay a new International Student Levy (£925 per student per year), with the first 220 students exempt. Revenues will be reinvested into HE and skills, including maintenance support for disadvantaged learners.

Wages, Employment Regulation and Labour Market Enforcement

• National Minimum Wage increases from April 2026:
  • National Living Wage: +4.1% to £12.71.
  • 18 to 20 rate: +8.5% to £10.85.
  • 16 to 17 and apprentice rate: +6.0% to £8.00.
• A new single enforcement body (Fair Work Agency) for employment rights from April 2026. Government will clear the backlog of cases by summer 2026 and will begin naming employers who break employment law within one year of cases closing.

Migration, Global Talent and International Education

• Reforms to High Potential Individual, Innovator Founder and Global Talent routes to better align migration with the Industrial Strategy. Key changes include:
  • Expansion of the High Potential route to top 100 global universities.
  • A pathway from study to entrepreneurship under Innovator Founder.
  • Simplified Global Talent rules for leading science and design professionals.
• New Global Talent Taskforce established to coordinate attraction and relocation of highly skilled talent in priority sectors.

2. Science, R&D, Innovation, Industrial Strategy and Regional Growth

Public R&D and UKRI

• Public R&D investment rising to £22.6 billion per year by 2029–30.
• UKRI to direct £9 billion over four years to the Industrial Strategy’s eight growth sectors (IS-8), including £4.5 billion for innovative companies.
• New UKRI programmes:
  • Enterprise Fellowships (£4m/year, enabling 100 researchers to move into business annually).
  • Up to £25m for entrepreneurship-focused doctoral training.
  • A new Women in Innovation Awards round (£4.5m).

Innovation and Digital Adoption

• Innovate UK Growth Catalyst: £130 million for “frontier firms” with existing investment.
• Expansion of BRIDGE AI and updated timelines for the Techfirst digital adoption programme.
• New AI for Science Strategy (launched November 2025), supported by £137 million over four years, plus expanded metascience investment and faster AI-enabled research funding processes.

University Knowledge Exchange

• Core quality-related research block grant and Higher Education Innovation Funding protected in real terms over the Spending Review period, a cumulative increase of over £425 million.

Modern Industrial Strategy and IS-8 Sectors

• The modern Industrial Strategy remains the central framework for long-term growth, prioritising sectors including life sciences, clean energy, advanced manufacturing, AI and semiconductors.
• Government reports £250 billion of investment commitments in IS-8 sectors over the last quarter (July–September 2025), supporting around 45,000 jobs.

Nuclear and Clean Energy

• Wylfa confirmed as the first UK SMR site, supporting up to 3,000 jobs.
• Programme builds on Sizewell C (now at financial close), fusion research and a two-year Nuclear Regulatory Taskforce programme to implement reforms.
• Nuclear power generation added to the Green Financing Framework (eligible for green gilts and Green Savings Bonds).
• The Clean Energy Jobs Plan outlines how clean power expansion will generate new employment opportunities.

Hydrogen, Industrial Energy Costs and Decarbonisation

• Electricity used for electrolysis in hydrogen production and natural gas used for CO₂ in sodium bicarbonate production to be exempt from the Climate Change Levy by Spring 2026, subject to approval.
• Increased generosity of the British Industry Supercharger from April 2026 and a new British Industrial Competitiveness Scheme from April 2027, together reducing electricity costs for energy-intensive sectors such as chemicals.
• Carbon Border Adjustment Mechanism (CBAM) legislation in Finance Bill 2025–26:
  • Goes live 1 January 2027.
  • Indirect emissions excluded until at least 2029.
  • Commitment to consider inclusion of refined products.
• UK Emissions Trading System expanded to cover international maritime routes from 2028.

Life Sciences, Critical Materials and Sector Clusters

• £30 million for a new RNA therapies acceleration centre in Darlington.
• The National Wealth Fund has committed £3.8 billion across 28 projects, mobilising £5.3 billion in private investment and supporting 20,300 jobs, including investment in critical minerals through the reopening of the South Crofty tin mine in Cornwall and associated cluster development.
• Three new AI Growth Zones in the North East, North Wales and South Wales, with investment in AI adoption, skills and compute infrastructure.
• £10 million for semiconductor technologies in South Wales, aligned to AI and data centre supply chains and associated skills.
• Support for advanced manufacturing and automotive in Wales (including DRIVE35).
• Up to £14.5 million for industrial projects at Grangemouth, complementing the £200 million National Wealth Fund investment and the existing £100 million Growth Deal, including a Skills Transition Centre.

3. Business Tax, Capital Investment and Operating Costs

Pension Salary Sacrifice Cap

• From April 2029, a £2,000 annual cap will apply to National Insurance relief on salary-sacrifice pension contributions. The first £2,000 of salary sacrificed into a pension will remain exempt from employer and employee NI, but any amount above that will be subject to normal NI charges for both parties. This change does not increase NI rates generally; instead, it targets organisations and employees using high-value salary-sacrifice arrangements. Standard employer pension contributions outside salary sacrifice will continue to be fully exempt from NI.

Capital Allowances and Investment Incentives

• From 1 January 2026, businesses will be able to claim a new 40% First Year Allowance on most main-rate plant and machinery, with the main writing-down allowance on the remaining balance falling from 18% to 14% from April 2026. This front-loads tax relief on investment in equipment, improving near-term cash flow for capital spending while reducing the annual tax write-off in later years.

Business Rates

• New revaluation from 1 April 2026 with lower multipliers and a £4.3 billion three-year support package. A redesigned £3.2 billion transitional relief scheme will cap and phase in bill increases, shifting more burden towards larger high-value properties.

Automotive and Advanced Manufacturing

• Long-term support for EV transition:
  • Electric Car Grant and EV charging infrastructure funding extended to 2029–30.
  • 100% first-year allowances for zero-emission cars and charge points retained until 2027.
  • Expensive Car Supplement threshold for zero-emission vehicles increased to £50,000 from April 2026.
  • DRIVE35 extended to 2035 with £4 billion total funding.
• This locks in long-term financial and tax incentives for the EV transition, encouraging greater investment in zero-emission vehicle manufacturing, batteries, associated supply chains and fleet electrification.

Energy Profits Regime

• The temporary Energy Profits Levy to be replaced by a permanent Oil and Gas Profits Mechanism (OGPM) by 2030 at the latest, adding 35 percentage points to the tax rate only when prices exceed set thresholds. This shifts windfall taxation onto a clearer, rules-based footing, maintaining higher tax receipts in periods of exceptional prices while giving the upstream energy sector more certainty over the long-term tax regime that underpins investment decisions.

If you’d like further support, contact our Industry Skills team today [email protected]. For more information regarding apprenticeship assessment reforms please reserve a place at our upcoming webinar.