The Scottish Budget 2026-27 offers no cheer for training providers, colleges and employers who deliver Modern Apprenticeships.
The funding rates for Modern Apprenticeships have been frozen again this year. In fact, they have been frozen for more than a decade.
Their value has been eroded by inflation, NMW, energy price rises etc and simply do not reflect the cost of delivery.
Since 2015, the cost of living has increased by 37%. To retain its value, a £10,000 funding rate in 2015 should now be £13,700. It isn’t. It’s still £10,000.
The business case for organisations to deliver Modern Apprenticeships has been severely eroded. The chronic underfunding of colleges has been well documented. The situation that private training providers find themselves in is less well known.
Many private training providers are running on empty. Margins have been cut to the bone and many small companies are hanging on by a thread.
Some people have claimed – without any evidence – that training providers siphon-off 40% of the funding as profit. Complete nonsense. Anyone who takes the time to look at the accounts of training providers who deliver Modern Apprenticeships on Companies House will be staggered at how tiny the profit margin is.
In 2025, more than a dozen training providers pulled out of delivering Modern Apprenticeships. Several STF members went out of business. The reason is simple – the funding model is unsustainable.
The Scottish Government has agreed to review the funding rates for Modern Apprenticeships. That’s great. But the timeline is vague.
And some training providers simply do not have a lot of time before they need to shut up shop.
The Modern Apprenticeship programme celebrated its 30th birthday in 2025. It has been hugely successful and has changed the lives of young and old apprentices. And it’s been great for growing the economy.
But the funding freeze – for more than a decade – means the programme is now withering on the vine.
The draft budget provided more positive news for colleges and and universities:
- An increase of £70 million in college funding, equivalent to a 10% increase on last year’s budget
- For universities, a total rise of more than £55 million, up 5% on last year
- Up to £20 million for the University of Dundee to support its recovery plan.
Once again, training providers are being short-changed and let down by the Scottish Government.
STF is lobbying the Scottish Government to do two things:
Firstly, as a matter of urgency, undertake a review of Modern Apprenticeship funding rates.
Secondly, bring an end to the apprenticeship funding freeze by increasing the funding available for Modern Apprenticeships, utilising the funds it receives from the UK Apprenticeship Levy.
Stuart McKenna
STF Chief Executive
