The skills crisis facing the UK has reached a concerning level. Most, if not all, businesses and sectors are facing a dearth of core skills, particularly within STEM remits. In fact, the recent CIPD Labour Market Outlook report revealed that 37% of employers have hard-to-fill vacancies, with this figure increasing to 52% for the public sector.
Tackling this issue isn’t going to be an easy task and as of yet, there hasn’t been a concrete solution that has created a sustainable pool of talent. However, there are a number of steps that APSCo believes policymakers need to take to help employers tackle this issue, as we outlined in our 2024 Manifesto.
While our recommendations have centred on the actions that the Government needs to take, it is critical that every stakeholder impacted by the shortage of talent is pushing for the same solutions in order to drive real change. Here’s what leadership and learning and development teams in-house should be aware of.
Broadening the scope of the Apprenticeship Levy
Training and development will play a critical role in not only filling skills gaps that we see today but also building talent for the future. Technical attributes for most professions are changing rapidly and workers need to be equipped with the latest knowledge and education to be able to adapt accordingly.
While there are routes to skills development available, one area that we believe is under-utilised and requires reform is the Apprenticeship Levy. In its current form, the Levy is being used by too few employers and is still seen as an option for school leavers.
The result is that a significant amount of funds are going unused by businesses while workers who could benefit from training are missing out. That includes ‘lane changers’ (those who are moving careers), agency workers and independent contractors.
There are a vast number of apprenticeship standards from Level 2 to Level 7, intended for all ages with increased levy transfer potential for SMEs, up to 50%.
for talent and development teams there is one core action that can deliver results: moving to skills-based hiring.
However, the scope of Levy spend is far too narrow, and APSCo has recommended that the Levy be reformed to allow it to be used for shorter, more flexible modular training for everyone. But with a particular focus on maximising accessibility for 18–24-year-olds, ‘lane changers’ and older workers who currently occupy the inactive workforce list.
The Lifelong Learning Entitlement loan for individuals is due to launch in September 2025, but when we speak to employers they tell us that funded training supported by their manager is most impactful on individuals.
The non-permanent workforce in particular has a core role to play in filling resourcing gaps for firms, yet they are left to manage and invest in their own training with little to no help.
We’ve recommended a range of reforms to address this. It includes widening the scope of the Levy to enable agency workers, independent professionals and the self-employed to fund their training through this resource.
Supporting skills-based recruitment
While growing skills is certainly a core focus given the lack of specialist talent noted across the country, being able to bring in resources is also key.
Of course, if there aren’t enough candidates available, alternative methods to acquire these experts need to be considered. While we do believe that immigration reforms are required to help address this, for talent and development teams there is one core action that can deliver results: moving to skills-based hiring.
Current recruitment strategies are largely centred on set qualifications or certain previous experience. However, if, as already mentioned, skills needs are changing so quickly, this approach will have limited success on a longer-term basis.
Businesses must modernise their approach to instead support talent acquisition that focuses on skills – including softer attributes – that are an absolute necessity.
we all have to be pushing in the same direction
There are technological AI-driven solutions which enable employers to assess their current skills profile across their business and their skills gaps. This then enables them to write far more succinct targeted job specifications when looking to hire. Such a move to skills-based hiring will require more robust training and development programmes internally, as well as a step-change in mindsets and regulations.
Core strengths such as resilience, adaptability, and curiosity are increasingly seen as critical to the future workforce. Being ahead of the game in looking for these characteristics in hiring will help address the talent crisis that we are all experiencing.
Boosting retention
For in-house talent teams, retaining top talent is without doubt crucial, particularly in the current climate. While firms may be focusing on more attractive benefits packages and career development programmes as a means of encouraging workers to stay with the business, there are still some demographics leaving the workforce at a significant rate, particularly older workers and parents.
In order to support the creation of a common culture in workplaces where individuals can fulfil their potential regardless of their protected characteristics (and subsequently remain in work for longer) a number of reforms are needed in our view.
That includes changing childcare financial support that recognises the high costs that care providers face. Employers can, of course, supplement this support through childcare vouchers and other benefits to support working parents, but policymakers must first set the right foundations.
APSCo also believes that legislation should encourage people to stay in the workplace, including through greater tax incentives on occupational health, mental health and health screening budgets.
Tackling the skills crisis
The above are just a few of the recommendations that we believe will help drive positive change across the UK workforce.
Although there is an onus on the Government to be the catalyst for change, business leaders, talent managers, training and development professionals and recruitment teams all need to be part of the solution.
Perhaps more importantly, we all have to be pushing in the same direction and working together if we are to tackle the issue head-on.
