The government has launched Skills England, the new skills body designed to unify the “fragmented and broken” skills system and give employers access to the skills they’ll need over the next decade.
Prime minister Keir Starmer and education secretary Bridget Phillipson unveiled the plans for the new body and said that work to set it up will take place in the next 9-12 months.
Richard Pennycook CBE, former chief executive of the Co-operative Group and lead non-executive director at the department for education, has been appointed interim chair.
Upskilling is key to the UK’s economic growth, a main pillar of government strategy, because a third of productivity improvements over the last two decades can be explained by improvements to skills levels, the government said.
Skills shortages
However, between 2017 and 2022 skills shortages in the UK doubled to more than half a million, and now account for 36 percent of job vacancies, the government said.
In response to this problem, the newly launched body will unite central and local government, businesses, training providers and unions to help meet employers’ skills needs for the next 10 years. It will also provide strategic oversight of the post-16 skills system, which will be aligned to the government’s industrial strategy.
Reliance on overseas workers
Local areas will be supported by central government to develop the skilled workforces they need with particular focus on construction and healthcare. The new skills body will work with the migration advisory committee to help reduce the country’s reliance on overseas workers.
Starmer said: “Our skills system is in a mess, which is why we are transforming our approach to meet skills needs over the coming decades.
“They will help to deliver our number one mission as a government, to kickstart economic growth, by opening up new opportunities for young people and enabling British businesses to recruit more home-grown talent.
“From construction to IT, healthcare to engineering, our success as a country depends on delivering highly skilled workforces for the long-term. Skills England will put in place the framework needed to achieve that goal while reducing our reliance on workers from overseas.”
Employers want to invest
Phillipson said: “Our first mission in government is to grow the economy, and for that we need to harness the talents of all our people to unlock growth and break down the barriers to opportunity.
“The skills system we inherited is fragmented and broken. Employers want to invest in their workers but for too long have been held back from accessing the training they need.”
She said the new body would “jumpstart young people’s careers and galvanise local economies” by bringing together the key organisations that can provide a complete picture of skills gaps nationwide.
Greater levy flexibility
A key job for Skills England will be to identify the training that will qualify for growth and skills levy funding. This important reform will give businesses more flexibility to spend levy funds on training for the skills they need, which employers have long been calling for.
As part of the change, the Institute for Apprenticeships and Technical Education (IfATE) will transfer its functions to the new body. Employers currently work with IfATE to shape skills training, so the institute will continue its important work until the transition to Skills England is complete.
This transition will happen alongside work to simplify and devolve adult education budgets to mayoral combined authorities. This change will enable the authorities to address their adult skills needs directly and support growth in their areas.
Future skills needs
Skills England will first be set up in shadow form within the DfE, where it will begin work on an assessment of future skills needs, while building strong relationships with employers.
The body will be responsible for maintaining a list of levy-eligible training to ensure value for money. This list will help ensure that the mix of government-funded training available to learners and employers aligns with skills needs.
The government will bring forward a comprehensive strategy for post-16 education in a bid to break down barriers to opportunity, support the development of a skilled workforce, and drive economic growth through its industrial strategy.
Long-term project
Lizzie Crowley, skills adviser for the CIPD, said: “The creation of Skills England will be key to understanding the UK’s skills priorities and setting an overall strategy. Ensuring that we have the right skills, in the right place, at the right time is essential to unlocking UK-wide productivity and growth.
“There’s a clear and urgent need to connect and simplify the UK’s fragmented and complex skills landscape. The new agency must also join up policy across the government’s industrial strategy, the migration advisory committee and local skills and growth priorities. This is no easy task. It’s a challenging road ahead but it’s vital that the government sees this as a long-term project that can finally bring stability and certainty to the skills agenda.”
Crowley said: “A key focus for Skills England must be on unlocking apprenticeship opportunities for young people and reversing the decline in take up among small businesses in recent years.
“When looking at the new growth and skills levy it will be vital to consider how this will work in practice. The new levy must encourage employers to invest more in training that will address workforce skills gaps and shortages and boost apprenticeship opportunities for young people. “
Getting this balance right will be essential to reversing the collapse in employer investment in apprenticeships and training in recent years.”
AI and fintech
Adeshola Cole, CEO of Tritek Consulting, said: “Skills play a crucial role in all organisations so the government’s focus on upskilling through Skills England is encouraging to see. As part of this launch, the government should work closely with educators and industry to bridge the gap between the curriculum and the skills that employers need in the workplace, better equipping young people to transition into their first role.
“Areas such as AI and fintech are moving quickly, requiring a new generation of digitally skilled people to oversee innovation and continue driving these sectors forward to fuel economic growth.”
Jane Gratton, deputy director of public policy at the British Chambers of Commerce, said: “The UK economy has a pervasive skills and productivity problem that stretches back long before the pandemic and Brexit.
“Skills shortages ramp up pressure on firms, damaging their ability to operate profitably and leading to unsustainable wage inflation.
“Alarmingly, our research shows that recruitment difficulties have increased in recent months across all sectors.”
Confidence to invest in skills
Gratton said that better planning for skills is crucial as is a coherent national skills strategy. This foundation will ensure institutions are delivering the training the economy needs, which gives businesses the confidence to invest for the long term.
She said: “The new government must work at pace to establish Skills England, reviewing and joining up skills initiatives across the departments, aligning with immigration policy, and working closely with the devolved administrations to drive impact for local communities.
“Employers and the economy’s skills needs must remain at the heart of the system. Building on local skills improvement plans will help develop strong partnerships between employers, training providers and others – to ensure people get the skills and support they need.
“But this will not happen overnight. As we transition to a better planned, high-skilled and high wage economy, we need to ensure firms can access global talent to fill urgent job vacancies.
“This requires a more efficient and effective visa system that can support sectors of the economy when they’ve tried everything they can to recruit and train locally.”
Upskill at every age and stage
Anthony Painter, policy director at the Chartered Management Institute, welcomed the plan to address the UK’s skills needs, boost the economy by creating opportunities for young people and provide increased support for British businesses to recruit more home-grown talent.
He said: “The UK skills gaps, including the significant shortage of skilled managers in our economy, will not be addressed without this concerted, longer term approach to upskilling our workforce at every age and stage of people’s working lives.
“Our research shows that quality standards-based training such as management apprenticeships deliver significant productivity gains and support social mobility. Seven out of 10 (71 percent) of management apprentices come from families where neither parent attended university and this level of upskilling is raising the performance of business and in our valued public services while driving economic growth and ensuring people have the skills they need in a changing workplace. We look forward to seeing Skills England established as the change agent that will significantly elevate the UK’s skills landscape.”
