Briefing | Skills and industrial strategy: Recent changes and future direction

At the heart of Labour’s strategy is a focus on eight key sectors, identified as engines for sustainable growth and high-quality employment. However, these industries collectively account for only around a quarter of UK jobs, raising concerns about whether concentrating efforts in these areas alone will be sufficient to boost productivity and living standards nationwide.

Setting up ‘Skills England’ and apprenticeship reforms

Skills England

Recognising the need for a highly skilled workforce, the Labour Government has launched Skills England, a new body tasked with aligning workforce capabilities with future economic demands. Replacing the Institute for Apprenticeships and Technical Education (IfATE), Skills England will take on a broader role — identifying skills gaps, collaborating with the Industrial Strategy Council and Migration Advisory Committee, and overseeing training programmes funded through a new Growth and Skills Levy.

Alongside this, the government has pledged to introduce a comprehensive post-16 education strategy aimed at removing barriers to opportunity, strengthening vocational training, and ensuring the skills system supports industrial growth. While these reforms mark a positive step forward, their success will depend on strong collaboration between employers, training providers, local authorities, and trade unions to ensure policies reflect real-world workforce needs.

Apprenticeship reforms

The government has also recently announced several changes to apprenticeship policy. It plans to shorten the current 12-month minimum duration to eight months starting in August, pending the legislative schedule. This will initially be ‘trailblazed’ in key shortage occupation areas. Alongside this, it has removed the requirement for apprentices aged 19 and over to pass English and maths functional skills qualifications with immediate effect.

While these reforms might help boost uptake and completions, they could pose risks to the apprenticeship brand and long-term credibility. England is already an outlier internationally, offering shorter apprenticeships compared to most other countries, where two-year programmes are the norm. In addition, the OECD has highlighted that we are also towards the lower end of the spectrum in the level of general education provided, including literacy and numeracy, compared to most other countries.

Challenges and how they could be mitigated

Instead of potentially damaging the quality of the apprenticeship pathway the government should focus on making progress towards opening apprenticeship levy funds for other accredited training and development programmes that better meet business needs. This would provide businesses with greater flexibility to invest in skills while ensuring that apprenticeships maintain their rigour and reputation.

The government has acknowledged significant challenges facing young people in entering the labour market. In response, it has introduced several targeted reforms, including:

• The Youth Guarantee, ensuring that all 18–21-year-olds have access to employment support, apprenticeships or training.
• A rebalancing of the apprenticeship system, removing funding from some higher-level apprenticeships and introducing foundation apprenticeships aimed at younger individuals.

While these measures are welcome, bolder action is needed to unlock apprenticeship opportunities for young people and reverse the decline in apprenticeship starts. The government should introduce an Apprenticeship Guarantee for all young people aged 16–24, ensuring that every young person has access to high-quality, employer-backed apprenticeships. Additionally, enhanced financial incentives for SMEs and stronger pre-apprenticeship training would help bridge the gap between education and employment. Our 2024 research found substantial support from employers for such a guarantee with the majority backing such an approach (89%) and 60% reporting that they would be able to provide an opportunity for a young person if this is brought in.

A step in the right direction, but challenges remain

Labour’s industrial strategy and skills reforms mark a significant step toward shaping a more dynamic and future-ready workforce. But ensuring long-term success will require an approach that extends beyond the eight priority sectors and provides meaningful opportunities for all workers. If broader workforce needs are not adequately addressed, there is a risk of deepening economic disparity.

To ensure that economic growth is truly inclusive, the government must complement its sectoral focus with a comprehensive workforce strategy that supports job creation and skills development across the entire economy. Engaging employers, educators, and regional stakeholders will be crucial in making Skills England, and the new Growth and Skills Levy, an effective driver of change. Additionally, while apprenticeship reforms may increase uptake and improve achievement rates, safeguarding their quality and credibility should remain a priority. We are debating these important issues with MPs, people professionals, and wider stakeholders at the CIPD Skills Forum at the end of March 2025.