Skills and Growth: What the Recent Government Changes Could Mean for Employer Engagement

The recent machinery of government changes have shifted responsibility for skills from the Department for Education (DfE) to the Department for Work and Pensions (DWP), as part of the creation of a new department focused on economic growth. While details are still emerging, at Skills Federation we’re already considering what this might mean, particularly for employer engagement in the skills system.

Employer involvement is fundamental to a well-functioning skills ecosystem. While direct engagement with individual employers remains valuable, we welcome the growing emphasis on working with sector skills bodies. These organisations are well-placed to represent employer interests across entire industries, helping to shape a more coherent and responsive skills system.

A UK-wide opportunity

One potential advantage of the move is that DWP operates across the whole of the UK, unlike DfE, which is England-specific. Our members frequently highlight the challenges faced by employers operating across national borders, particularly when navigating differing rules and systems for skills provision. The apprenticeship levy, for example, functions differently in each nation. This change could hopefully pave the way for a more unified, UK-wide approach to skills policy and funding.

Aligning skills and employment

Bringing skills and employment under one departmental roof offers real potential. A lack of relevant skills is a major barrier to employment, and this integration could help ensure that individuals in the benefits system are supported to access training that leads to meaningful work. More than that, it’s an opportunity to shift the culture of Jobcentre Plus from simply placing people in “any job” to supporting career progression.

This would be a win for individuals and employers alike. According to the Employer Skills Survey, 6% of employers report hard-to-fill vacancies due to applicants lacking the necessary skills, qualifications, or experience. A joined-up approach could help close that gap. However, it’s vital that the DWP’s current focus on job placement doesn’t overshadow the need for higher-level skills. These are closely linked to productivity and innovation and must remain a priority if we’re serious about long-term economic growth.

Skills have historically been a relatively small part of the education budget and arguably an area given less priority than education and childcare. And now, within the vast DWP budget (mostly spent on benefits and pensions), it will be an even smaller proportion. However, given how instrumental skills are to supporting people to get jobs, this could provide an opportunity to prioritise skills as a key route to achieving targets. 

Opportunity for cross government working

There will also be practical challenges in establishing effective cross-departmental working. It’s encouraging that Jacqui Smith retains the skills brief, providing continuity and the potential for joined-up policymaking. As she noted on LinkedIn, “That’ll all be keeping me properly busy.” If that busy-ness includes engaging with industry to build a robust skills system, it’s a positive sign. But if it means navigating conflicting priorities between two secretaries of state, progress could stall.

Skills as part of a Labour Market Strategy

This is a significant shift, and its implications will be far-reaching. While there are risks, there are also real opportunities. As the new department takes shape, we’ll be watching closely to see what the implications are for employers. The key question for us is whether this change helps to create a skills system which responds to employer demand where skills are a driver of growth, innovation and opportunity. 

By Alison Morris, Director of Policy, Skills Federation