Skills England must deliver the change UK employers need

A report published by Skills England (64-page / 1.80MB PDF) towards the end of last year provides an insight into these challenges and the first clues on how they might be tackled.

The role envisaged for Skills England

Skills England was established in ‘shadow’ form within the Department for Education (DfE) in July 2024. However, the new Labour government plans to legislate to formally establish the body when parliamentary time allows in the months ahead.

The King’s Speech in July provided an insight into the purpose and likely contents of the Skills England Bill. The Bill aims to formally establish Skills England and transfer functions currently performed by the Institute for Apprenticeships and Technical Education (IfATE) to the new organisation.

Under the proposals, Skills England will be expected to work with employers, unions and education and training providers, as well as local and national policymakers, to deliver the highly trained workforce that the country needs. This will involve identifying existing skills gaps and future skills needs, aligning training opportunities and provision to those needs, and helping employers access financial support for providing relevant training via the operation of a new ‘growth and skills levy’, which is to replace the current apprenticeships levy.

The challenges with the skills system in England

Reporting in September, Skills England laid bare the challenges it sees with how the current skills system in England operates. It said the system is fragmented, and that there is a need for improved data sharing across the government, regional bodies and local providers, to help pinpoint why skills gaps occur and the extent to which existing education and training provision can address them.

Skills England pointed out that the higher education and further education systems also operate too far apart and need to be brought closer together. It also said government-funded training products must be developed and made available “in a more flexible and responsive way” and that new training products need to be developed quickly to reflect when needs change, such as the emergence of new technology.

The complexity of the system also needs to be addressed, it said, highlighting the challenges employers often face in understanding the skills programmes available and how different programmes fit together. This issue risks employer disengagement with skills and training initiatives, potentially affecting their investment in schemes to enable staff to upskill or retrain.

The growth and skills levy

The government plans to replace the current apprenticeship levy with a new growth and skills levy. This is designed to operate more flexibly and to help deliver “new foundation and shorter apprenticeships in key sectors”, as outlined in the Autumn 2024 Budget paper.

Rami Labib, higher education expert at Pinsent Masons said: "The new growth and skills levy must be designed to be less bureaucratic than its predecessor, the apprenticeship levy, to ensure maximum engagement and uptake by employers. By streamlining processes and reducing administrative burdens, the hope is the new levy can better support employers in developing the skills needed for the economy."

In the Budget paper, the government said that Skills England will be tasked with consulting with “a wide range of partners to ensure that levy-funded training meets the needs of employers, providers, and learners, and secures good value for money”. In its September report, Skills England confirmed that it “will play a crucial role in determining which training will be eligible for the expanded levy, in line with its assessment of skills needs and future demand, and through extensive engagement with its partners in the skills system”.

The Education and Skills Funding Agency (EFSA), which currently funds a wide range of further education and apprenticeships provision, is set to be abolished and will close on 31 March 2025. Its functions will be transferred to the DfE and continued by Skills England. 

The government’s plans for an overhaul of the existing apprenticeship levy system comes at a time of growing scrutiny of the current levy. A recent article by the Financial Times cited government data that shows how the number of people starting apprenticeships has nearly halved over the past decade.

Getting the new levy model right will be vital to drive investment by employers in training opportunities, which should sit neatly alongside the existing system of support that exists for degree apprenticeships. The Office for Students (OfS) confirmed £14 million worth of support for 146 ‘Level 6’ degree apprenticeship programmes at 33 universities and colleges in October 2024.

A more integrated and coherent skills system that can identify current and future potential skills needs, match them with training products, skills programmes and financial support schemes, and align economic and industrial policy behind it, promises to be a powerful enabler of increased productivity and innovation within UK business. This is why employers will want to see the plans for Skills England implemented quickly.

Co-written by Andrew Church of Pinsent Masons.