First Annual Skills Report from Skills England Published

Skills England has today published its Annual Skills Report, marking its first anniversary with an assessment of current and future skills needs.

The Annual Skills Report sets out actions to tackle key challenges and build a more responsive, high-quality skills system, Skills England says.

The analysis shows demand in priority sectors will grow by 24% over the next decade and up to 1.8 million additional workers will be needed to meet this demand.

The report follows Alan Milburn’s interim report into young people and work, which found that one million 16 to 24-year-olds are currently not in education, employment or training (NEET).

The Annual Skills Report examined 10 priority sectors critical for driving economic growth. It sets out priorities for strengthening the skills system, delivering the Industrial Strategy and meeting the needs of employers, including small and medium sized businesses (SMEs), and supports individuals into good jobs.

Top Five Challenges

The top five challenges identified in the report and action Skills England will take are:

• 1. Addressing skills shortages: Demand for key occupations will grow by nearly 25% in the next decade. Reskilling and upskilling workers will be essential. Skills England will review and reshape the mix of apprenticeships and technical education, so training is closely aligned to labour market priorities.
• 2. Maximising employer investment: The long-term decline in employer investment continues and SMEs struggle to engage in the skills system. Employers want training that is relevant, responsive and gives a clear return on investment. Skills England will deliver this by using data, AI-enabled insight and a new expert network to adapt training at pace, giving businesses the apprenticeships and short course they need to develop their workforce.
• 3. Responding to rapid adoption of AI: AI will affect almost every job and sector, but the pace of this change and the future skills requirements are uncertain. Skills England will define and embed core AI skills in technical education to equip the workforce to adopt new technologies at pace.
• 4. Supporting young people’s employability: The Milburn Review has warned that the number of young people not in education, employment or training could rise to 1.25 million over the next few years. At the same time, employers report gaps in work-readiness. Skills England will work with partners, including Youth Employment UK, to improve how employability skills are recognised and valued by employers, alongside supporting higher-quality work experience.
• 5. Building a responsive place-based skills system: The national skills framework needs to enhance local systems by aligning data and insight to shape provision in a local area. Skills England will work with Strategic Authorities and other local partners to better connect people to jobs. The Skills England Investment and Infrastructure Service provides major projects with expert advice and works with local partners to support businesses deliver a skilled workforce.

Annual Skills Report

The report emphasises that no single organisation can address these challenges alone, and highlights the need for stronger partnerships between employers, providers, local leaders and government.

Phil Smith, Chair of Skills England, said: “We’re expecting strong growth in priority jobs, which presents a huge opportunity for the UK. But to realise it, we must urgently address the skills gaps holding people and businesses back. The Milburn review findings made clear the scale of the challenge, particularly with so many young people currently not in education, employment, training. Employers – especially small and medium-sized businesses – also have a critical role to play in investing in apprenticeships, training and reskilling staff.”

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