The UK’s AI Skills Gap is Exactly what the Growth & Skills Levy Should Address

Earlier this year, the Growth & Skills Levy was heralded as one of the Government’s most valuable investments in people and productivity. Arguably, it offers faster, flexible courses that empower businesses to respond to change and accelerate impact, while actively supporting social mobility through reforms like the Youth Guarantee. 

However, there is another dimension to this investment that has not often been discussed then, but feels very timely now: the Levy stands to become the country’s strongest tool in turning an AI skills gap into an AI skills edge. 

Concern about the UK’s readiness for AI is mounting. A recent study from BusinessLDN on London’s AI skills gap gives this issue a sense of scale. Employers believe only half of their current workforce has the skills their organisation needs, and more than three quarters expect demand for AI and advanced digital capability to rise significantly over the next five years. 

With the Levy now officially in force (as of 1st August 2026), employers have a practical route to respond to that crunch. But its value will depend on how seriously organisations connect funding decisions to the work people will actually be doing as AI becomes part of everyday operations. 

AI capability is a workforce issue

A company can buy advanced technology with the click of a mouse. But building the judgement required to use it properly takes longer, especially when people have had little structured training around it. 

The common issue is that many employers continue treating AI as a specialist discipline, the onus of which sits with a team of tech heads. Such an approach misses where the real pressure is building. With AI changing ways of working throughout finance, operations, customer service and professional roles, AI capability needs to be democratised across the entire workforce.

The Levy can build AI capability where it is actually needed

The UK’s AI skills gap is unlikely to be solved through one type of training because different employees need very different levels of capability. 

The Growth & Skills Levy gives employers a way to respond to those different needs through the new Apprenticeship Units. These are shorter, modular, targeted training modules designed to address specific workforce gaps, with AI, machine learning, data analytics, cybersecurity and digital transformation among the areas expected to be prioritised.

These Apprenticeship Units mean that instead of requiring all AI skills training to sit inside a multi-year apprenticeship programme, employers can use Levy funding to build specific capabilities where the business genuinely needs them most.

That’s particularly valuable because AI affects roles very differently, even within the same organisation. A finance team may need stronger data capability, for example, while an operations team could be learning how to work with automated processes. For managers, the priority might be better technical understanding to judge where AI can improve workflows and how responsibilities should change around it, while senior leaders would need stronger AI literacy to assess investment decisions, challenge vendor claims and understand the risks attached to adoption.

The Levy creates scope to build those capabilities across the workforce rather than concentrating AI development among a small group of specialists. Its real strength, therefore, lies in matching the way AI is entering businesses. Adoption is happening role by role and process by process; workforce development needs to follow the same pattern if businesses are to keep up. 

The opportunity is bigger than a series of AI courses

Apprenticeship Units make targeted AI development possible, but the broader value of the Growth & Skills Levy comes from being able to combine different forms of development around the capability a business will need over time.

The original case for the Levy was that employers could move away from rigid training structures and make workforce development flex to real business needs. AI gives us perhaps the clearest example of why that change was necessary.

An organisation may use shorter Levy-funded units to address an immediate skills gap, while employees who need deeper technical capability can progress through longer apprenticeship programmes. Instead of treating AI training as a single intervention, the Levy can support different depths of learning across different parts of the workforce.

The skills challenge will keep changing as the technology does, which makes a fixed training response obsolete very quickly. A funding system that can support targeted development alongside deeper, longer-term learning gives employers the flexibility to keep workforce capability moving with the technology.

A national opportunity depends on employer action

The UK already has businesses investing heavily in AI. The harder task is making sure the people inside those businesses can actually turn that investment into better work. 

Our own research found that 27% of UK vacancies are linked to skills shortages – but employers cannot recruit their way out of the AI capability gap, especially when every other organisation is competing for the same scarce skills. 

The Growth & Skills Levy gives employers a mechanism for closing the gap from within their existing workforce, and the funding is already there to support that development. With unused balances now expiring after 12 months, employers have every incentive to turn that money into AI capability before it returns to the Treasury.

The UK’s long-term AI advantage will depend on how quickly capability spreads beyond the firms and specialists already ahead of the curve. The Growth & Skills Levy gives the country a rare chance to decentralise that capability, turning AI readiness from a competitive privilege into a broader national strength.

By Lauren Webb, Director of Client Solutions at Instep