Skills policy in England

Since July 2024, the government has launched Skills England, introduced foundation apprenticeships and announced changes to the funding of level 7 apprenticeships, and set out its intention to replace the apprenticeship levy with a growth and skills levy.

State of skills in the working-age population

Skills England, the government agency responsible for skills, has reported that there is “clear evidence” of a gap between the skills that are needed by UK employers and the skills that are held by the UK workforce.

It also reported that the UK workforce is more likely to be underqualified for their occupation than other countries, and less likely to be overqualified, according to that Organisation for Economic Co-operation and Development (OECD) data.

Qualifications

In 2023, 49% of 19 to 64 year olds in England had a level 4 qualification or higher (higher education or degree) as their highest qualification, while 19% had a level 3 qualification (A levels or equivalent) as their highest. A further 17% had a level 2 qualification (GCSEs or equivalent) as their highest while 15% did not have any qualifications or were qualified below level 2.

Further education learners

In academic year 2023/24 1.23 million adults aged 19 and older participated in some form of classroom-based education and training. Participation has increased by 17% since 2020/21, but is still 18% lower than in 2018/19.

Higher education entries and outcomes

The number of UK students at UK universities reached a record 2.18 million in academic year 2021/22, but student numbers fell slightly in the following two years to 2.17 million in 2023/24. These were the first falls since the mid-2010s.

Apprenticeships

In 2023/24, there were 736,500 people participating in an apprenticeship in England, with 339,600 apprenticeship starts and 178,200 apprenticeship achievements.

Employer Skills Survey

In 2024, 6% of employers in England reported that they had a skill-shortage vacancy. This is a vacancy that is difficult to fill due to a lack of the required skills, qualifications or experience among applicants.

In total, there were around 210,000 skill-shortage vacancies in 2024, which was 27% of all vacancies. Almost 200,000 employers reported that they had a skills gap, which was 12% of employers.

Departments responsible for skills

On 7 September 2025, the government announced a number of organisational and personnel changes, including moving part of the skills brief from the Department for Education (DfE) to the Department for Work and Pensions (DWP).

Responsibility for skills-related policy has moved from the DfE to the DWP, including apprenticeships, adult further education, skills, training and careers, and Skills England. Responsibility for higher education, and further education, skills, training and careers for those aged 19 years and under, will remain with the DfE.

Skills England

Skills England works to identify and address skills gaps in the economy, alongside the Industrial Strategy Council and the Migration Advisory Committee.

Skills England was fully established on the 2 June 2025 after the Institute for Apprenticeships and Technical Education (IfATE) was formally closed. Skills England has taken over most of the functions that were carried out by IfATE.

Apprenticeships Level 7 apprenticeships

In May 2025, the government announced that, from January 2026, funding for level 7 apprenticeships will only be available to new apprentices who are aged 16 to 21 when they start the apprenticeship, rather than to apprentices of any age. The government said that they intend to prioritise public funding to young people, rather than “those already in work with more prior learning and qualifications”.

Skills England said these skills can be met through other routes, and that “there was unlikely to be a significant or unavoidable fall in the supply of these skills in the long term” if eligibility was restricted to those aged 16 to 21.

Following the government’s initial announcement, a group of over 600 employers, training providers, industry professionals, and apprentices signed a letter expressing their concerns to the Chancellor of the Exchequer. The Education Committee also reported that most of the evidence they received for their Further Education and Skills inquiry was largely opposed to the removal of level 7 funding for those aged 22 or older.

Foundation apprenticeships

In the Autumn 2024 Budget, the government said it will invest £40 million to support the development and delivery of shorter-duration apprenticeships and foundation apprenticeships.

Foundation apprenticeships are intended to support young people to progress into further work-based learning and sustained employment, and to support young people who have previously been unable to start an apprenticeship. They are only available to young people aged 16 to 21, or people aged 22 to 24 who have an Education, Health and Care (EHC) plan, have previously been in care, or are a prisoner or prison leaver.

Seven foundation apprenticeships were available for starts from August 2025 and they all had a typical duration of eight months. Legislation came into force from 1 August 2025 which reduced the minimum duration of apprenticeships from twelve to eight months.

Growth and Skills Levy

The government intends to introduce a Growth and Skills Levy to replace the existing apprenticeship levy. It has said that the new levy is needed because the number of apprenticeships starts is falling and because there is an urgent need to invest in skills.

The apprenticeship levy only allows employers to spend their apprenticeship levy funding on apprenticeship training and assessment costs. The new Growth and Skills Levy will allow employers to access a wider range of training with their funding.

The government has said that the growth and skills levy will initially be used to fund “new short courses in areas such as digital, artificial intelligence and engineering” from April 2026. It has said it will work with Skills England to decide which courses will be prioritised.

Further and higher education

Skills policy also shapes classroom-based courses in further and higher education. In recent years, T Levels and Higher Technical Qualifications have been introduced, intended to improve skills education at levels 3 to 5.

The previous Conservative government established a network of Institutes of Technology, which specialise in level 4 and 5 technical skills in sectors such as engineering and manufacturing, digital, and construction. The Labour government has announced that 29 Technical Excellence Colleges will be established in England, specialising in construction, defence, and high-growth sectors such as advanced manufacturing, clean energy, and digital.

Most public funding for non-apprenticeship adult skills education in England is provided through the Adult Skills Fund (ASF), which is worth around £1.4 billion in the 2025/26 academic year. Much of this funding is devolved and managed by local authorities. Funding is targeted at learners with low skills, including young adults, unemployed people, and employed people receiving low wages. The ASF funds qualifications that all learners are entitled to, including essential digital skills, as well as the government’s ‘free courses for jobs’ offer.

Learners can also access publicly funded loans for eligible undergraduate and postgraduate courses, and Advanced Learner Loans for many courses not covered by higher education student finance. From the 2026/27 academic year, the Lifelong Learning Entitlement will replace these two systems. The government has also announced plans to reintroduce targeted maintenance grants for students from low-income households studying on priority courses.

Industrial strategy

In June 2025, the government published its industrial strategy, which set out a “10-year plan to significantly increase business investment in eight growth-driving sectors”. It launched three skills investment packages to support these growth sectors:

• “TechFirst” technology skills package: investment of £187 million to support secondary school pupils, undergraduates, PhD students, and entrepreneurs and businesses
• Engineering package: investment of over £100 million over three years to support engineering skills in England
• Defence package: investment of £182 million to increase the number of skilled workers in the defence sector. This will involve establishing five Defence Technical Excellence Colleges.