On the first day of Colleges Week 2025 which is focused on a “kickstart to the economy”, we’re looking at how further education plays a vital role in driving economic growth, innovation, and skills development. In this thought piece, CBI Wales explores the crucial contribution of colleges in equipping businesses with a skilled workforce, supporting economic recovery, and fostering regional prosperity.
With employers facing skills shortages and evolving workforce demands, collaboration between colleges and industry has never been more important.
Here, Assistant Director for Policy, Leighton Jenkins, shares his thoughts on how FE can help power Wales' economy.
Apprenticeships represent one of the most effective investments in skills and workforce development, with a return on investment of up to £18 for every £1 spent. Apprenticeships are also a critical tool for the future, at the cutting edge of industries responding to data management and AI. However, the number of apprentices colleges are able to train is central to achieving these two critical goals.
The shift to Medr presents an opportunity to listen to the providers and learners to reshape the Welsh apprenticeship system in response to evolving employer needs. Against the backdrop of the UK Government’s Growth and Skills offer in England and the constraints of the Welsh Government’s 2025-2026 Budget, Wales faces two challenges, one on what and how we teach and what we collect in levy revenue and how it is spent. It’s clear the employer priorities should continue to be shaped by colleges and their incredibly close working with employers. So, it is vital to ensure that Wales’ system keeps what is good, remains effective, inclusive, and fit for purpose.
A Fragmented Apprenticeship Landscape
CBI members are large, mostly international businesses and they are present in all four nations of the UK. While the UK apprenticeship levy is a UK-wide tax, the administration of apprenticeships remains devolved, leading to four distinct systems in Wales, Scotland, Northern Ireland, and England. The Growth and Skills offer in England introduces reforms that will not automatically apply to Wales unless adopted by the Welsh Government. This difference (divergence from both systems by both governments) creates a space of uncertainty and complexity for businesses operating across borders and we recommend a joint approach is taken that minimises cross-border confusion by both sides working together.
The establishment of Medr, with its comprehensive responsibility for funding, oversight, and regulation of tertiary education and apprenticeships in Wales, marks a turning point. However, Medr has yet to finalise its preferred ways of working. To ensure Wales’ apprenticeship system meets employer needs, it is important that businesses continue to be actively engaged in shaping Medr's policies and decision-making processes.
The Role of Colleges in Apprenticeship Success
A key strength of the Welsh apprenticeship system lies in its strong college-employer relationships. Colleges play a critical role in bridging the gap between employer needs and learner aspirations, ensuring that training is relevant, high-quality, and responsive to labour market trends. However, to maintain this strength, further investment in college-led apprenticeships is required.
Colleges provide structured learning environments where apprentices gain both technical and soft skills essential for career success. Unlike employer-led models, which risk focusing too narrowly on immediate job-specific training, colleges ensure a holistic educational approach that prepares apprentices for long-term career progression.
Employers recognise that apprenticeship success depends on maintaining strong provider networks. This means ensuring that colleges receive sufficient funding to expand their capacity, update curriculum content in line with emerging industries, and foster deeper partnerships with businesses. Strengthening the role of colleges in shaping the future of apprenticeships will support Wales in delivering a more skilled, resilient workforce.
Employer Priorities for Reform
Following consultation with CBI Wales members across various sectors, several key opportunities have been identified to strengthen the Welsh apprenticeship system and employers’ relationships with colleges:
1. Greater Funding Certainty
- A balanced approach is needed to ensure that apprenticeships provide genuine skills development opportunities while respecting employment rights.
- Clearer guidelines on employer expectations and apprentice progression would support both parties in maximising apprenticeship benefits.
2. Recognition of Employer and Employee Rights and Responsibilities
- Employers advocate for expanded STEM and higher apprenticeships to meet sector-specific skills gaps.
- Greater alignment with industry needs would improve apprenticeship completion rates and long-term employability.
3. More Choice in Apprenticeship Pathways
- Many businesses find the current apprenticeship frameworks outdated and restrictive.
- A more responsive system should include pathways that accommodate part-time learners and those looking to transition between careers.
4. Modernised Apprenticeship Frameworks
- Clearer reporting on how levy funds are allocated and spent would increase employer trust and participation.
- A proportion of the levy should be ring-fenced for employer-directed training to address skills shortages.
5. Transparency in Levy Spending
- Businesses require greater flexibility to design and access apprenticeships that suit their specific needs, particularly in fast-evolving sectors such as AI, sustainability, and digital technology.
- Introducing more modular and short-term apprenticeships would enable businesses to up-skill their workforce efficiently.
6. Enhanced Flexibility for Employers
- Employers need a clearer long-term funding framework to plan workforce development effectively.
- The Welsh Government should consider multi-year funding commitments to provide stability.
Conclusion
The transition of apprenticeship administration to Medr presents a critical opportunity to modernise and refine Wales’ system. However, without greater employer involvement, increased funding certainty, and a shift towards more flexible and responsive frameworks, Wales risks falling behind in workforce development. Not through intent but through inertia. By adopting some lessons from England’s Growth and Skills offer, where appropriate, while maintaining our distinct approach suited to Wales’ economic landscape, policymakers can ensure that apprenticeships remain a powerful tool for business growth, innovation, and skills development.
For Wales to remain competitive in an evolving economy, policymakers must prioritise employer engagement, transparency, and flexibility in apprenticeship policy. The time to act is now - ensuring that Wales’ apprenticeship system meets the needs of both businesses and learners for years to come.
Leighton Jenkins, Assistant Director - Policy, CBI Wales
Further Information
CBI Wales
The leading voice of business in Wales.
