To tackle the NEET crisis, FE and employer relations need investment, says AoC

The government needs to invest in the relationship between businesses and further education colleges if it is to reduce the number of young people not in education, employment or training (NEET), the Association of Colleges has said.

A new survey* published today by AoC found that while employer engagement is firmly embedded across FE colleges, growing demand, limited capacity and insufficient funding are threatening these relationships and preventing further growth.

The 2026 AoC Employer Engagement Survey highlighted the pivotal role colleges play in connecting education to employment. However, it warned that without coordinated reform and sustained investment, there is further risk to youth unemployment.  

The findings come a couple of weeks after Alan Milburn’s government-funded interim report on young people and work emphasising the importance of stronger employer involvement, clearer pathways into work, and joined-up local skills systems in tackling the NEET crisis.  

The survey found that employer engagement is a priority for colleges: 90% have a formal employer engagement strategy, and 84% provide dedicated online support for colleges. The vast majority (94%) said that they anticipated an increase in employer engagement over the next five years.

However, only 59% of colleges said they currently have capacity to meet this growth, and 30% reported insufficient resources to expand engagement. The survey highlighted many barriers to effective employer engagement including lack of funding, lack of interest from employers, employers being able to afford apprenticeship salaries, and a disconnect between curriculum and qualifications meeting employer needs. Others said that it was a combination of all the challenges listed above, and additional difficulties created by college staff recruitment and retention issues.  

Colleges also warned that securing industry placements, which are critical in supporting training and skills, is increasingly difficult. New placement flexibilities in T Level are welcomed as 57% of colleges have struggled to find digital, creative and design placements, and 45% have struggled with construction, engineering and manufacturing. In apprenticeships, 51% of colleges were concerned about digital placements, 47% about hair and beauty and 43% about protective services. Around 70% of colleges said that supported internships were especially difficult to secure in construction, and 58% reported issues in engineering.  

The survey found that, on average, 1,585 students per college require work experience each year, and 71% of colleges expected at least 80% of Level 3 learners to undertake placements. The scale of demand, therefore, is substantial.

David Hughes, Chief Executive, Association of Colleges, said:

“The relationships between colleges and employers are essential for tackling youth unemployment. We know that employers who do engage are positive about their work with the college and value the support they offer to create and develop their workforce plans. Many employers support curriculum development and skills delivery, for example, which has a positive impact on both students and business.  

“However, the funding, capacity and administrative barriers for both employers and colleges hamper these partnerships. This is a problem for any plans to tackle the NEET crisis. In his review, Alan Milburn called for clearer pathways, stronger employer partnerships and better local coordination to prevent young people becoming NEET. This survey reinforces that without targeted investment in both colleges and business, the system will continue struggle to support those most at risk of disengagement, particularly in regions with fewer employer opportunities.

“Employer engagement is not a ‘nice to have’ – it is fundamental to tackling skills shortages, supporting economic growth, and ensuring young people have a clear route into work.”

Recommendations for policy makers

1. A national employer engagement strategy 
A clear, overarching framework is needed to coordinate activity across the skills system, reduce fragmentation, and give employers consistent expectations.

2. Stronger incentives for employers 
Greater financial and practical support – particularly for SMEs and microbusinesses – is essential to increase participation in placements, apprenticeships and curriculum development.

3. More effective local coordination 
Enhanced local skills improvement plans (LSIPs) should play a central role in connecting education providers, employers and local authorities, helping to build robust pathways to employment and reduce NEET numbers.

4. Sustainable, long-term funding 
Colleges need stable investment to support dedicated employer engagement teams, build long-term partnerships, and scale activity in priority sectors such as clean energy, advanced manufacturing and the creative industries.

Read the full report here.  

* This report had 105 responses, reflecting 48% of the English college sector from all regions of England.