For those in the skills world, last week's Spending Review was generally viewed as a better than expected outcome. Two key announcements were eagerly anticipated – the long-term funding picture for adult skills and more detail on how the Apprenticeship Levy would operate in practice.

On adult skills expectations were low in the run-up to the Spending Review. The week before the Skills Minister was reported to have said that FE and adult skills would not be "insulated from further cuts." So it was a welcome surprise when the Chancellor announced that the £1.5 billion adult skills budget would be protected in cash terms.

However, the "small print" indicated that there will still be some cuts so that adult skills can make a contribution to the overall 17% reduction in the budget of the Department for Business, Innovation and Skills. "Efficiency savings" totalling £360M by 2019-20 will come from supporting budgets (e.g. the Spending Review document makes direct reference to the funding of the UK Commission for Employment and Skills).

The Association of Colleges expressed "huge relief" at the outcome of the Spending Review, saying that it shows that "the Government recognises the key role of colleges in driving the country's economic prospects, closing skills gaps and raising productivity."

Many other commentators, including the TUC, have been pressing this very same point in recent months. The campaign coordinated by UCU – #loveFE – involving unions and other stakeholders has also played a key role in making the case for safeguarding the adult skills budget from further cuts.

It was also notable that Professor Alison Wolf, who advised the Coalition government on reforms to vocational education in the last Parliament, published a report – Heading for the Precipice (pdf) – in June warning against further cuts to colleges and adult skills.

The Spending Review also confirmed plans to develop 5 National Colleges covering the following key priority areas: Digital Skills (London); High Speed Rail (Birmingham and Doncaster); Nuclear (Somerset and Cumbria); Onshore Oil and Gas (Blackpool); and Creative and Cultural Industries (Essex). The Chancellor also rubber-stamped another previously announced plan to support a network of Institutes of Technology to provide more opportunities for individuals to develop high-level technical and professional skills.

Reforms were also announced to extend the role of tuition fee loans for post-19 learners in colleges and other skills institutions. In effect, this means that the existing 24+ Advanced Learning Loans are to be widened out (they currently only apply to those aged 24 years+ taking up Level 3 and 4 courses). In future, they will be open to 19-23 year-olds taking up Level 3 and 4 courses and also to anyone aged over 19 taking up a course at Level 5 and 6.

The loan system for the FE and skills sector is also likely to be expanded further by the announcement that the government will consult on introducing maintenance loans for "people who attend specialist, higher level providers, including National Colleges."

There have been various reactions to these moves to develop the loan system for students in the FE and skills world, ranging from outright opposition to the idea of extending student debt to more citizens to a positive welcome for giving FE students greater access to the financial support arrangements enjoyed by all university students.

The other big skills news story in the Spending Review was the further detail made available on the Apprenticeship Levy that was originally announced in the July Budget and welcomed by the TUC. In addition to increasing revenue, the levy should prove a powerful catalyst for driving behavioural change by incentivising much greater investment in apprenticeships and skills by employers that currently rely largely on recruiting skilled labour.

The Government consulted on the mechanics of how the levy would operate over the summer and the TUC submission emphasised the need for the levy to underpin high quality apprenticeships and for employers and unions to agree these apprenticeship standards as is the case in much of the rest of Europe. The Government published its response to this consultation on the day of the Spending Review.

The Spending Review itself confirmed some important operational aspects of the levy, including which employers will have to make levy payments when the new system comes into place in April 2017. It will be payable by employers in the UK at 0.5% of the total payroll costs of all employees, but each employer will receive an allowance of £15,000 to offset against their levy payment.

This allowance means that only employers with a total payroll greater than £3 million will have to pay the 0.5% levy via the PAYE system. For example, an employer with a total payroll of £5 million would have to pay £10,000 a year, calculated as follows: £25,000 (0.5% of £5 million) – £15,000 (levy allowance) = £10,000. The government estimates that 2% of employers will have to pay the levy and it will apply to all employers including those in the public sector.

The levy will be raising more revenue for the government than commentators were predicting in recent months (£2 billion had been a widely quoted figure). The figures in the Spending Review indicate that it will raise £2.7 billion in the first year (2017-18) rising to £3.1 billion by 2020-21.

An important commitment spelled out in the Spending Review document (pdf) (paragraph 1.172) is that "by 2019-20 government spending on apprenticeships, including income from the new apprenticeship levy, will be double the level of spending in 2010-11 in cash terms."

What is not clear at this stage is to what degree the government will be topping up this levy revenue with direct government spend on apprenticeships. There are also a range of other unanswered questions that are highlighted in a more detailed unionlearn news story about the levy.

The Chancellor also confirmed that there will be a new "employer-led body" to oversee the levy (e.g. setting the level of levy funding for individual apprenticeship frameworks) and to set apprenticeship standards. The TUC has said that that this presents a real opportunity to adopt the principles of social partnership that govern similar bodies in other European countries where employers and unions come together to agree apprenticeship standards and funding arrangements.