Skills Minister Jacqui Smith Sets Out Vision for Skills Reform

Skills Minister Jacqui Smith Spoke at AELP’s Autumn conference, outlining the government’s vision for skills reform in England. She highlighted the creation of Skills England, a new organisation launching in early 2025 to coordinate and streamline the national skills system. Smith announced plans for a Growth and Skills Levy and the introduction of new foundation apprenticeships and shorter duration apprenticeships to improve access to training. She acknowledged current challenges, including that 26% of the UK workforce is underqualified and employer investment in training lags behind EU averages. The minister also highlighted £300 million in funding for further education and £40 million for developing new apprenticeship programs from the recent Autumn Budget.

INTRODUCTION 

Good morning and thank you very much for that warm welcome. 

It is wonderful to be here and thank you to AELP for the kind invitation. 

It is now just over four months since I was appointed Minister for Skills, my third incarnation at DfE. In that time I have seen and heard firsthand the difference that training providers are making for learners up and down the country. 

When the Prime Minister asked me to take on this role – proving, by the way, the importance of second chances and lifelong learning – he was clear that skills had to sit at the heart of government and would be fundamental to delivering our mission led approach. 

Meeting the skills needs of the next decade is central to delivering all of the Government’s five missions; economic growth, opportunity for all, a stronger NHS, safer streets, and clean energy.  

Because in order for us to succeed in fulfilling these missions, we need to harness the talents of our people. We’re not doing that well enough at the moment. 

The OECD states that 26% of the UK workforce is underqualified for their job, compared to an OECD average of 18%. This is a limit on growth, productivity and individual opportunity. And we’re determined to address it as a government. 

A skills system fit for the future will enable people to gain the skills they need to seize opportunity, providing training for young people that gives them a sense of purpose and belonging in their community. 

A rigorous and responsive skills system will support employers to access the skills in the workforce they need to grow. 

And a flexible skills system will encourage forward thinking and innovation as we rise to meet the opportunities and challenges of tomorrow.  

Now, we know that the skills landscape is ever changing, with new technologies, new businesses, new approaches all bringing new skills needs, but that our skills offer and employer investment in training their workforce has not kept up with that need. 

The current system is incoherent and too many people are unable to benefit from it. 

Skills policy has too often been made in isolation, leading to a confusing system, with widespread skills shortages increasing our reliance on migration and hindering economic growth. 

And falling employer investment is limiting our ability to meet our skills needs domestically. 

We can see that in the fact that around 7.5 million working age adults do not have even basic digital skills, despite most employers saying these are vital for their businesses.    

And as recently as two years ago, UK employers said over one third of their vacancies down to skills shortages. 

Level 4 and 5

Add in the fact that in England, only 4% of people have Level 4 and 5 qualifications as their highest qualification, compared to around 20% in Germany and 34% in Canada. 

We will create a clear, flexible, high-quality skills system, with a culture of businesses valuing and investing in training, that supports people of all ages, breaks down the barriers to opportunity and drives economic growth.  

As a government we will target our funding towards the skills and learners that need it most and we will encourage, and expect, employers to step up and play their part to build the highly trained workforces of the future. 

We will take seriously the need for us to join up government. This work will include Skills England working with the Migration Advisory Committee and the Industrial Strategy Council, to identify our long-term skills needs and bring together partners in the system to address those needs.  

Reducing our reliance on international migration to fill skills gaps, by instead training our domestic workforce. 

We have made a strong start, with a lot more on the horizon. 

SKILLS ENGLAND 

We know that right now the skills system in England is complex, and there is no shared national ambition on skills development. 

There is a need to bring together a range of functions, currently scattered across different organisations, into one place to better support the delivery of the skills the economy needs and further our Industrial Strategy and growth and opportunity missions. 

That is why we are setting up Skills England to address these problems by bringing coherence and efficiency to the system for the benefit of learners, business and local areas. 

And one of the things that Skills England will do is to make sure that we know where our skills gaps are, and the training needed to fill them, now and in the future. 

For too long we have had fragmented decision making and people pulling in different directions rather than towards shared goals. 

Skills England will combine the best available statistical data with insights generated from employers and other key stakeholders. 

And it will ensure that there is a comprehensive suite of apprenticeships, training and technical qualifications, which are aligned with skills gaps and the needs of employers. 

Skills England will work closely with employers, providers, trade unions, government departments, local organisations and other agencies. 

All of which will help us to deliver on our mission to drive economic growth and open up a world of opportunity for young people and adults alike. 

Skills England will have an open and collaborative approach, and they have already held a number of roundtables to test our assessment of skills needs and give an opportunity for stakeholders to help shape the development of the Skills England. 

I know Skills England have found this initial engagement incredibly valuable and I hope you are able to feed into future discussions as this work progresses. 

Because as providers you will be essential partners in the work to deliver our government missions. 

Skills England will be a clear focal point and work with you to maximise the value of your training and make it easier for you to see how your work contributes to meeting our nation’s skills needs. 

As well as highlight where there are opportunities for you to go further and expand your offers, so that you can all do more of what you do best – delivering high-quality training. 

I know that there have also been worries that Skills England will not have the independence or authority it needs, and I would like to address those concerns today. 

Skills England will have an independent Board which will provide leadership and direction, as well as scrutiny to ensure that it is operating effectively and within the agreed framework. 

But it will be close enough to government to be the authoritative and driving voice to inform policy development and to ensure that the whole of government is bought into the priorities it identifies. 

Skills England will be formed over the first half of 2025

I am really excited about the potential of Skills England, which will continue to be formed over the first half of 2025. 

I would encourage all of you here to think about how you can support its aims as well as how Skills England can support you to continue to deliver impactful and high-quality training. 

Because we will not be able to fulfil our ambitions without the efforts of independent training providers, like you all here today, who know what works for learners, employers and local areas. 

GROWTH AND SKILLS LEVY 

And as Skills England identifies, and helps to develop, the skills and training needed to boost economic growth and deliver our missions, we are introducing the Growth and Skills Levy to enable learners and employers to access that training. 

Our new Growth and Skills offer will introduce greater flexibility to employers and learners, creating routes into good, skilled jobs in growing industries, aligned with our industrial strategy.   

Foundation Apprenticeships

It was brilliant to see the Prime Minister announce new foundation apprenticeships and shorter duration apprenticeships as a key first step. 

Too many young people, who have the most to gain from apprenticeships, have been locked out of accessing these opportunities. 

While too many employers, who want to build the skilled workforces they need for long-term success, have not been able to find the right training options. 

And again we know the benefits for employers that do proper workforce planning and invest in skills. 

Our new work-based foundation apprenticeships will give more young people a foot in the door, supporting clear pathways into work-based training and employment and supporting the pipeline of new talent that employers will need to deliver sustained economic growth.  

Shorter Duration Apprenticeships

While shorter duration apprenticeships will allow learners and employers to benefit from high-quality apprenticeship training for valuable, in-demand roles that need less than twelve months training to be fully occupationally competent. 

I know this flexibility is something many of you have called for. We’ve responded and we will continue to value and listen to your views. 

Including taking the time to work closely with you and employers to design these new training offers, welcoming your feedback and constructive challenge, and ensuring you all have an opportunity to develop your infrastructure before any training is expected to start. 

I hope you are as excited as I am about the benefits that this training will offer for learners and employers, as well as the opportunities it will offer for you to expand your provision. 

And we will reach out to you through AELP to gather your insights as we develop these new products. 

There will be challenges along the way for all of us, but I look forward to working with you collaboratively and constructively to make sure we get this right. 

I also know that to really seize these opportunities, we need to work together to tackle other barriers that exist in the system.  

AELP and many others here have raised with us their concerns that the English and maths apprenticeship exit requirements can act as a barrier to accessing or completing an apprenticeship.  

Whilst there are significant benefits to upskilling in English and maths, I am clear that we need to make sure it is delivered in a way that supports people to achieve. 

I would like to reassure you that I have heard your concerns and am carefully considering how we can improve the position. 

A lot of you here will have fed into AELP’s sector wide survey on functional skills, and I look forward to seeing the published results and recommendations as part of this work.   

Now, in order to open up the Growth and Skills offer to deliver new training where it is needed most, you will be aware that that we will be asking more employers to step forward and fund level 7 apprenticeships outside of the levy funded provision. 

We know that for too long employers have not invested enough in skills and that is something which needs to change and change quickly. 

Indeed, as Skills England have highlighted, UK employers invest half as much per employee in vocational training as the EU average. 

The new parameters of the Growth and Skills offer will enable employers to invest in training that both meets the needs of their business and will support growth in the wider economy, on which we all depend. 

We are clear, however, that levy funded training is only one element of the investment from employers in the skills needs of their workforce. 

We will encourage and support employers to go further in investing in these training needs as we build towards a responsive and collaborative skills system.  

With a continued focus on driving up apprenticeship quality and achievements in order to maximise the benefits of that training. 

And I know Kate will be speaking to you more about this later. 

AUTUMN BUDGET 

Finally, I know many of you will have watched last week’s Budget with interest. 

Although the difficult economic situation we inherited means that tough financial choices have had to be made, I was pleased that we were able to secure £300 million for further education and £40 million to support the development of foundation and shorter duration apprenticeships. 

I know there is concern about the challenges facing independent training providers, but I want to assure you that a belief in the importance of what you are doing here goes right to the heart of government. 

And I will continue to push for this government to do all that it can to support you as we work together to fill this country’s skills needs. 

Minister for Skills

Now, I know you will have lots of questions for me on all of this, and so to give us plenty of time to cover those I will wrap up now by saying again how grateful I am for all that you do.  

The reforms to our skills system that I have spoken about today will give us a real opportunity to make a real difference for learners and employers. 

Reforms which will sit at the heart of this government’s missions to drive economic growth and spread opportunity across all parts of this country. 

I look forward to working with you all to achieve this. 

Thank you. 

By Rt Hon Jacqui Smith, Minister for Skills at the Department of Education