UK must make training the ‘go-to’ response to skills needs, or risk holding back growth, new report warns

The Government’s plans to get the economy growing risk falling short unless it takes action to reverse sharp falls in the training employees get at work, new analysis warns.

A projected 2.5 million more jobs will need higher-level skills by 2035, according to a new report, ‘Understanding employer investment in skills’, published today by researchers at Learning and Work Institute (L&W). Artificial intelligence and the transition to net zero are already reshaping what skills businesses need. Investing in training is one of the clearest ways for firms to raise productivity and adapt to that change, and for people to move into better-paid, higher-skilled work.

Yet UK employers are moving in the opposite direction. The research, funded by the Nuffield Foundation, finds that employer investment in training has fallen 29% per employee since 2011, and what training remains has got shorter: down from 7.8 days per trainee in 2011 to 5.7 days in 2024. The UK has the highest proportion of training sessions lasting under a day of any comparator country, and health and safety remains the most common reason employees give for their training.

It is longer, more productivity-enhancing training that has been cut. Instead, the default response of employers to skills needs is more likely to be trying to hire workers with ‘ready-made’ skills or find workarounds. This has been worsened by prolonged economic stagnation, leaving employers with little bandwidth to consider upskilling beyond their immediate needs. Coupled with a £1 billion cut in Government skills funding in England since 2010, skills progress has stalled.

Without a shift towards longer, more developmental training, L&W warns this pattern risks holding back growth and leaving both people and businesses less able to adapt. The picture varies by sector, but the direction of travel needs to change everywhere. Some sectors, such as construction, have seen little change, while others like retail, hospitality and the arts have seen training intensity fall even as more employees take part.

The report calls on governments across the UK, employers and training providers to act together so that training becomes the ‘go-to’ response more often when a business identifies a skills need. It recommends:

• Grow skills demand. The UK Government should follow through on its commitment to building skills commitments into capital investment and industrial strategy, with regular progress reports and support to deliver.
• Drive collective employer action. Employers need to be encouraged and supported to invest together where the benefits of training are shared across a sector or local economy, and so firms are less likely to invest on their own. This should include new employer-agreed skills levies, building on the UK’s Business Improvement District model, in return for greater public skills funding for those employers.
• Introduce a Skills Tax Credit. Better incentives for firms to invest in essential and accredited training, building on the R&D tax credit model, so training is a better investment than the alternatives like recruitment or outsourcing.
• Create ‘no wrong doors’ skills support. Local leaders should join up the skills system with business support, making it easier for employers to get help and make the most of their workers’ skills, ending the current fragmented system
• Build a high-quality, long-term public skills system. We need longer-term public skills funding focused on high-qualitytraining, moving away from small and short-term funding pots which limit impact.

Delivering these changes, the report argues, would help make training a natural response to skills needs across the economy – rather than something that happens only when compliance requires it.

This report is the culmination of a multi-year programme exploring employer investment in skills. L&W worked with the Universities of Strathclyde and Ulster to explore how UK employers make decisions about training, and how employees are responding to the need to upskill and retrain in a changing economy. Case studies published in November 2025 highlighted international practice that could help UK firms boost their skills and development offer, building on L&W’s earlier report on the UK’s ‘tick-box’ training culture.

Stephen Evans, Chief Executive of Learning and Work Institute, said:

“The best firms know that investing in their people is what separates those who adapt from those who get left behind. That needs to be the norm. But across the economy, training is getting shorter just as AI, net zero and higher-skilled jobs are changing what businesses need. Governments should build skills into growth plans, encourage employers to invest together where it’s hardest to do alone, and introduce a Skills Tax Credit so tax and funding systems reward training rather than making it a cost to be cut.”

Emily Tanner, Programme Head – Post-14 Education and Skills at the Nuffield Foundation, said:

“More high-quality training is essential for workers to thrive in the changing labour market, as well as for business growth and economic prosperity. This timely report recommends practical ways for policy to incentivise employers to invest in training based on a detailed analysis of employer decision-making and approaches taken in other countries.”