Policy vs. Practice: How The Government, Skills England And The L&D Industry Can Rebalance UK Training Needs

The government’s new Industrial Strategy is a powerful look at how the economy of tomorrow can be built by the workforce of today. It’s a sentiment echoed in Skills England’s Growth & Skills report, which calls for a skills system that’s more deliberate, coordinated and better matched to the capabilities UK sectors actually need.

After comparing both reports with the current landscape of learning and development (L&D), an urgent need surfaces: to restore a balanced, long-term approach to workforce development that translates policy into practice. 

Skills at the centre of industrial renewal

Per the Skills England report, key priority sectors are projected to grow by an average of 8.2% by 2035. Filling those roles will require a fully-stocked skills engine; not just digital or AI literacy, but the entire spectrum of capabilities that keep industries running. 

Skills England highlights persistent, sector-specific shortages that threaten productivity across the board. Suppose we want the skills system to power a modern industrial strategy. In that case, we must rethink how we fund and deliver workforce development, because we can’t talk seriously about industrial renewal without examining whether our current investment model is enough to meet the moment.

Is the funding offered via the Growth and Skills Levy enough?

Under the current system, large UK employers ringfence 0.5% of their payroll into the government’s Growth and Skills Levy. It’s a mechanism that has made workforce development more accessible and structured. But over time, it has skewed how organisations view their role in skills investment.

From 5% to 0.5%: The funding lens has narrowed

Back in the day, most businesses allocated an informal benchmark of 3-5% of payroll to L&D. That wasn’t considered generous, it was simply what was needed to future-proof capability. Investment was serious, strategic and driven by pedagogy: the right learning, at the right time, for the right outcome.

Today, the conversation has shrunk, not just in budget, but in imagination. The centre of interest has become: what’s immediately claimable within that 0.5%? not, how can that 0.5% support a broader L&D strategy and long-term capability?

Forced by economic pressures, this decline in skills commitment is most evident in the latest Employer Skills Survey: employer training investment has dropped by £6bn since 2022, while average spend per employee is down 30% since 2011. It’s a clear pattern: steady contraction of employer-led investment, offset in part by the Levy, but not fixed by it.

While the Levy remains an indispensable business asset, organisations are struggling to leverage its potential to complement existing L&D strategies, enable deeper investment and rebuild cultures of capability.

Rebalancing investment culture

One idea that should be explored seriously is matched funding, where government support scales in line with employer investment. This model could reignite L&D and eventually restore the level of strategic investment we used to see.

It would also pull the conversation back to organisational ownership of skills development, the groundwork of which is already being laid. The Industrial Strategy outlines the government’s intent to “build partnerships” with industry, involving employers not as recipients of policy but as active partners in shaping and delivering skills priorities. 

Meanwhile, the Skills England report captures employer voices demanding more practical, modular and business-aligned training, a strong indicator that organisations want to own more of the development agenda.

Fit for purpose, fit for business

If we want businesses to re-engage their L&D budgets, the system must also meet them halfway on delivery. That means simpler processes and more adaptable models. Truth be told, the apprenticeship format can be a blunt, unwieldy tool that is often too rigid for the realities of role-based upskilling.

When rethinking how skills policy and employer practice can interact, we need to expand the definition of what meaningful, funded learning can look like. This is already happening with the rise of shorter, modular training courses, and proposed reforms that would allow 50% of Levy contributions to be spent on non-apprenticeship training opportunities. 

Skills England’s suggestion to introduce ‘bolt-on’ training could similarly help bridge the gap between rigidity and relevance. Likewise, their recommendation to continue evolving apprenticeship standards so they respond faster to technological change is a welcome step.

The Industrial Strategy also commits to Local Growth Plans, regional innovation funds and Industrial Strategy Zones. These are high-potential levers that, if aligned with skills funding, could build truly place-based skills pipelines that not only reflect local labour markets and economic ambitions, but create the kind of fit-for-purpose system where L&D thrives.

Addressing the UK skills gap

As one of the government’s recommended L&D providers, we work with employers to maximise the value of their Levy funding while connecting it to the larger conversation: alignment. What are the real capability gaps in your business? What’s changing in your sector? What kind of workforce do you need in two years?

That’s where we’re focused: designing training that’s fit for purpose and attuned to the three key areas growing in demand right now:

• Shorter, skills-specific programmes that slot into the rhythm of business
• Development pathways for middle and senior leaders, not just entry-level talent
• Consultative support in navigating the Levy and the wider funding landscape, ensuring training decisions are linked to outcomes

By turning skills policy into practical action, we’re helping businesses build the capability pipeline that Skills England and the Industrial Strategy call for.

Policy with promise, if practice can catch up

The Industrial Strategy and Skills England reports set a strong direction: sector-specific focus, regional levers, and a shared ambition to involve employers more directly in shaping the workforce of the future.

But real transformation will come when policy and practice start pulling in sync. When funding models are co-owned, when the Levy serves as a catalyst for deeper investment, and when apprenticeship delivery evolves into something more flexible, modular and fit for purpose.

That’s the thread running through this conversation: restoring balance.

By Al Bird, CEO at Instep