Skills England Report: Critical Skill Shortages Threaten Economic Growth

Britain faces a critical workforce emergency that could derail economic growth and leave the government’s flagship missions in tatters, groundbreaking new research warns today. Skills England launched their second report called; Skills England: Sector evidence on the growth and skills offer

A comprehensive Skills England study of 743 employers reveals that Critical skills shortages are leaving huge numbers of jobs unfilled across key sectors, with some industries facing a complete breakdown in their ability to recruit the workers Britain desperately needs.

Ten Critical Sectors in Crisis

The research examined ten priority sectors that form the backbone of Britain’s economic future, and found alarming skills gaps across all of them:

The 8 Industrial Strategy Growth-Driving Sectors:

• Advanced Manufacturing
• Clean Energy Industries
• Creative Industries
• Defence
• Digital and Technologies
• Financial Services
• Life Sciences
• Professional and Business Services

Plus 2 Additional Critical Sectors:

• Construction (essential for 1.5 million homes target)
• Health and Adult Social Care (facing demographic pressures)

The Scale of the Crisis

The research paints a stark picture of an economy grinding to a halt. Construction faces 52% of jobs unfilled, up from 36% in 2017, directly threatening the government’s promise to build 1.5 million new homes. Manufacturing shows a 42% skills shortage vacancy rate that puts defence capabilities and clean energy targets at risk. Healthcare struggles with 40% of positions vacant as an ageing population demands more care. The tech sector has 43% of roles empty as Britain races to become an AI superpower.

AI Revolution Amplifies the Emergency

The crisis is being supercharged by rapid technological change. In creative industries, 69% of employers say their staff need urgent retraining due to new technologies, while life sciences demands workers who can blend advanced AI capabilities with traditional scientific expertise.

The Human Cost

Behind the statistics lie real consequences for families and communities. Homebuyers face longer waits and higher prices as construction projects stall. Patients endure treatment delays as healthcare struggles with chronic understaffing. Small businesses cannot grow because they can’t access the skilled workers they need. Young people find themselves locked out of careers due to outdated training systems.

Revolutionary Government Response

Recognising the scale of the challenge, the government is launching the most radical overhaul of Britain’s skills system in decades through the new Growth and Skills Levy.

• 8-Month Fast-Track Apprenticeships represent a revolutionary new minimum duration (down from 12 months) to rapidly fill critical gaps, perfect for careers like smart meter installation and cyber security roles.
• Foundation Apprenticeships offer breakthrough entry-level programmes combining essential workplace skills with hands-on experience, designed to attract young people into sectors they’ve never considered.
• ‘Bolt-On’ AI Training provides cutting-edge modules to upgrade existing workers with artificial intelligence and digital skills, allowing rapid response to technological change without lengthy retraining.
• Accelerated Skills Bootcamps deliver intensive 16-week programmes with guaranteed job interviews.

Cross-Sector Skills Competition

The research reveals how sectors are now competing fiercely for the same talent pools. Digital skills professionals are sought after across financial services, defence, creative industries and life sciences. Meanwhile, skilled trades like welding are desperately needed in advanced manufacturing, construction, and clean energy sectors.

The Inequality Challenge

The research exposes shocking workforce inequalities that limit talent pools. Women remain substantially underrepresented in over half the priority sectors. Only 26% of creative workers come from lower socio-economic backgrounds compared with 38% economy-wide. Just 9% of tech employees are from disadvantaged backgrounds.

“We’re sitting on a goldmine of untapped talent,” explains Fawcett. “Foundation apprenticeships will actively target underrepresented groups, turning our diversity deficit into a competitive advantage.”

Racing Against Time

The urgency is underscored by competing government missions. The 1.5 million homes target requires massive construction workforce expansion. Clean Power 2030 needs up to 725,000 new clean energy workers. NHS recovery demands both highly qualified professionals and level 2-3 care workers. The economic growth mission depends on 48% of workers having degree-level skills by 2035.

Global Competition for Talent

Britain isn’t just competing domestically, it’s in a global race for skilled workers, as every major economy grapples with similar challenges.

What Happens Next

Skills England will now work with Strategic Authorities and Local Skills Improvement Plans to implement the changes at pace across all ten priority sectors. The first 8-month apprenticeships launch in August 2025, with foundation apprenticeships following shortly after.

The government has also committed to a £3 million expansion of the Creative Careers Programme, guaranteed two weeks’ work experience for every young person, enhanced careers guidance to tackle sector stereotypes, and equipment upgrades for colleges to support advanced technology training.

Priorities For Future Years

The Skills England report also highlighted that beyond foundation and shorter duration apprenticeships, employers identified a number of other opportunities to maximise the benefit of further flexibility in the levy:

• Increase the reactivity of the apprenticeships system to better keep pace with rapidly changing technologies and skill needs across sectors.
• Develop ‘bolt-on’ training to supplement prior learning and attainment particularly across AI and digital skill areas and in transferable skills such as management and leadership to drive growth across priority sectors.
• Build on the success of existing programmes such as Skills Bootcamps to provide accelerated training programmes in skill areas relevant to priority sectors, for example including AI and cloud-based development in the fintech industry.
• Further develop and expand portable apprenticeships to support occupations that often have shorter-term or less predictable working patterns.

Additional ‘bolt-on’ Training

The Skills England report highlighted: Across a number of sectors, our engagement highlighted the need for short learning which combines different types of skills with practical experience. Creative industries called for more flexible, lifelong learning models that support mid-level and senior roles as they advance in their careers. This was echoed by the digital and technologies sector, alongside the need for clear professional development pathways and occupational maps to support continuous development and upskilling of the workforce.

Interdisciplinary and Energy Skills Passport

In the Skills England report, many sectors mentioned the need for highly skilled interdisciplinary professionals, combining sector or technology specific skills and knowledge with transferable skills including management and leadership, communication and teamwork.

Employers flagged to Skills England that these transferable skills are not just complementary to technical expertise; they amplify its impact, making them vital for future leadership and workforce resilience. In the finance sector, there was a need for broader workforce training, including graduate upskilling, professional development, and internal leadership programmes. In clean energy, transitioning the workforce to green roles will be further supported by the energy skills passport which recognises existing skills and qualifications across sectors.

Sector Reaction:

Hayley Pells, Government Affairs Lead at the IMI said:

“We support the report’s focus on making the apprenticeship system more agile, responsive, and inclusive. The urgency couldn’t be clearer: our latest Labour Market and Vacancy Tracker shows over 17,000 unfilled roles in automotive, with technical and specialist jobs hardest to recruit. Technician postings jumped 4% last quarter, and salaries are up 13% in just two years, proof of a fast-moving sector battling a serious skills shortfall.

“However, the Skills England evidence base, while broad, under-represents the automotive aftermarket and technician workforce. Despite contributing significantly to employment, net zero ambitions, and clean growth, this sector is often overlooked in wider skills analysis. This risks policy decisions that ignore the downstream skills demands beyond manufacturing gates.”

“Skills England is right to call for a system that meets sector-specific skills demands from Level 2 to Level 6+”, added Hayley Pells. “In automotive, Level 3 remains foundational, especially for hands-on skilled trades. Yet our sector also needs Level 4/5 technical qualifications, reskilling pathways, and accelerated routes to competence. A single route or reform will not suffice.

“Finally, we urge Skills England to provide clearer visibility of how it will engage with sector-specific experts, including Professional Bodies like the IMI, in future LSIP development, employer evidence gathering, and the co-design of sector plans under the new Industrial Strategy. We are ready to support Skills England in building a responsive, inclusive, and future-ready skills system – but that system must recognise and reflect the entire automotive landscape, not just its most visible parts.”