Level 7 apprenticeships

On 27 May the government confirmed that Level 7 apprenticeship funding will be scrapped for those aged over 21 from the start of January 2026. 

At the start of the month ICAEW, ACCA and CIPFA issued an open letter raising concerns about government plans and agreeing that the government should explore the option of restricting Level 7 levy funding to under-25s. Such an approach could have addressed the government’s concerns over levy funding, while retaining an important route for school leavers to enter key professions. 

Following the letter, ICAEW engaged with MPs throughout May, including Secretary of State for Education Bridget Phillipson and Shadow Secretary of State Laura Trott, outlining our recommendation that the age restriction should be broader. ICAEW’s Chief Executive, Alan Vallance, also raised the issue when he met with Shadow Secretary of State for Business and Trade, Andrew Griffith. 

In a parliamentary debate on apprenticeships, Shadow Education Minister Neil O’Brien referenced ICAEW’s concerns that removing the funding will lead to work leaving the UK.

Following the announcement, ICAEW expressed disappointment with the decision – highlighting that the average age of students starting Level 7 apprenticeships in this priority sector is 22. ICAEW has maintained communication with member firms throughout and has urged the government to review the impact of its decision on growth after 12 months.

Challenges in local audit market

ICAEW’s Director of Public Sector and Taxation Alison Ring led a round table at Portcullis House with Florence Eshalomi, the Chair of the Housing, Communities and Local Government (HCLG) Select Committee.

Attendees from ICAEW member firms working in the local audit market told Eshalomi about the challenges facing the market, and the consequences for local government finance. Attendees agreed that the Ministry of HCLG needs to set out a long-term plan for reforming local audit, rather than focusing on short-term, piecemeal changes. This, they said, would help to attract more firms into the market.

Following the round table, ICAEW sent recommendations to HCLG Committee members, with Ring sharing them directly with Jim McMahon, the Minister for Local Government.

Employment Rights Bill

This month saw further debates in the House of Lords on the Employment Rights Bill. As part of ICAEW’s ongoing engagement on the Bill, briefings were shared ahead of the debate recommending that peers support specific amendments that would secure exemptions for small and microbusinesses, ensure a clear and fair approach to probation and reduce the administrative burden of flexible working arrangements.

ICAEW research and member insights were referenced during debates by ICAEW member Lord Leigh of Hurley, who noted that the Bill could inhibit business decision-making, and crossbench peer Lord Londesborough, who called for a full business impact assessment.

Lord Leigh also penned an op-ed in CityAM, in which he referenced ICAEW’s efforts warning about the additional risks and costs created by the Bill, and its capacity to deter businesses from making decisions that could lead to growth.

In a meeting with Shadow Chancellor of the Exchequer, Sir Mel Stride, to discuss the latest results of the Business Confidence Monitor, ICAEW Chief Policy and Communications Officer Iain Wright explained that the Employment Rights Bill and NICs increases are current challenges for businesses.

Inheritance tax relief changes

ICAEW has shared its concerns around the proposed changes to inheritance tax (IHT) relief with parliamentarians, including:

• Treasury Committee members; 
• the shadow Treasury team; and 
• members of the All-Party Parliamentary Group on Farming.

ICAEW asserts that capping IHT relief at £1m will unfairly target elderly business owners and farmers, particularly those in poor health or terminally ill, and risks the break-up of multi-generational businesses.

Ultimately, these changes risk undermining succession planning, hindering economic growth in rural communities and stripping away policy certainty that allowed owners to plan ahead.

ICAEW has suggested several policy adjustments, including:

• a taper or transitional relief for business owners and farmers aged over 65; and
• indexing the £1m cap annually for inflation.

UK-EU Summit

Ahead of this month’s long-anticipated UK-EU Summit, Chief Policy and Communications Officer Iain Wright wrote a letter to the Minister of State for Trade Policy and Economic Security, Douglas Alexander.

In the letter, ICAEW recommended that the government focus on cutting red tape to help facilitate open and frictionless trade with the EU by signing a VAT agreement and reinstating automatic recognition of professional qualifications.

The package of agreements announced at the summit, included the creation of dedicated dialogues on short-term business mobility and the recognition of professional qualifications. 

Commenting on the agreement, Wright said: “The commitments made at this breakthrough summit to reinvigorate the recognition of professional qualifications is a strong success, which will help promote growth, and we’re delighted the government has listened to our repeated calls on this.”

Mansion House Accords

ICAEW briefed senior political stakeholders, including opposition ministers and select committee chairs, on our response to the Chancellor’s Mansion House Accords.

These proposals suggest that the government intends to reserve powers to mandate a minimum level of investment by pension funds in British companies. ICAEW cautioned policymakers on the importance of preserving fund managers’ ability to manage risk and make investment decisions that prioritise value for pension holders.