The UK skills landscape is undergoing its most significant structural shift in a decade. With the establishment of Skills England and the transition from the Apprenticeship Levy to the Growth and Skills Levy, HR and Learning and Development (L&D) directors face a new set of strategic imperatives for 2026.
At the centre of this shift is a stark reality: despite technological advancements, the most critical capability gaps in the UK workforce are distinctly human. Skills England’s inaugural report found that management and leadership skills are difficult to find for 44% of skill-shortage vacancies [1]. At the same time, the Department for Education’s Employer Skills Survey 2024 revealed that while the immediate skills crisis is easing, employers cut training investment by £6 billion, with spend per employee falling 29.5% since 2011 [2].
For HR leaders, doing more with less is no longer sustainable without fundamentally changing how capability is measured and developed. This guide outlines what Skills England’s 2025-2026 priorities mean for your L&D strategy, and how focusing on measurable capability development can demonstrate genuine ROI to your board.
The Skills England Mandate: Moving from Participation to Outcomes
Established as an executive agency of the Department for Education, Skills England’s mandate is to unify the fragmented skills system and align training with the actual needs of the economy. In her June 2025 priority letter, Secretary of State Bridget Phillipson, reinforced by Work and Pensions Secretary Pat McFadden in October 2025, emphasised a “pro-employer approach” aimed at driving economic growth and reducing reliance on migration to meet skills shortages [3].
What does this mean in practice? The era of measuring L&D success by course completion rates is ending. Skills England is focused on addressing genuine capability development, particularly in priority sectors such as construction, digital, engineering, and defence, where bespoke sector skills packages are being rolled out [4].
However, the most pervasive gap crosses all sectors. The finding that 44% of skill-shortage vacancies lack management and leadership capabilities validates what many HR directors already know: technical skills can be hired or trained relatively quickly, but the human capabilities required to lead teams, make complex decisions, and adapt to change are severely lacking.
This aligns with global data. The World Economic Forum’s Future of Jobs Report 2025 highlighted that while AI and big data are the fastest-growing technical skills, four of the top five fastest-growing skills overall are distinctly human, including creative thinking, resilience, and leadership. Notably, the importance of leadership and social influence surged by 22 percentage points since 2023 [5].
The Growth and Skills Levy: Flexibility Demands Strategy
The transition to the Growth and Skills Levy, fully effective by mid-2026, represents a significant opportunity for HR leaders. By allowing up to 50% of levy funds to be spent on non-apprenticeship training, including shorter, targeted courses, the government is acknowledging that traditional, lengthy apprenticeships are not always the right tool for closing specific capability gaps [6].
But with greater flexibility comes greater accountability. When you have the freedom to invest in shorter interventions, your CFO and board will expect clear evidence that those interventions are working.
Currently, the data paints a concerning picture of L&D investment. The Employer Skills Survey 2024 shows that total employer expenditure on training fell to £53 billion, down 18.5% in real terms since 2011. More worryingly, 1.26 million UK workers still lack full proficiency in their current roles [2].
If L&D budgets are shrinking while capability gaps remain high, the traditional model of providing access to vast e-learning content libraries is clearly failing. HR directors must shift from tracking content consumption to measuring demonstrated capability.
The Measurement Problem: Why Self-Reporting Fails
A core challenge for HR directors is that internal data on skills gaps is often vague or based on self-assessment. Asking an employee to rate their own leadership or problem-solving skills on a scale of 1 to 10 yields subjective data that cannot reliably inform strategic investment or demonstrate ROI.
Furthermore, the British Chambers of Commerce Business Barometer 2024 found that 94% of UK firms report skills gaps, and 68% say these shortages lead to increased workload on existing staff [7]. You cannot solve a problem you cannot accurately measure.
To align with Skills England’s focus on genuine capability development, organisations need a baseline measurement of what their people can actually do, not what they think they can do.
The Human Skills Index: Measuring What AI Cannot Replicate
This is where the Human Skills Index provides a strategic advantage. Rather than relying on self-assessment, the Human Skills Index measures demonstrated behaviour through simulation.
Users make decisions in realistic, 15-30 minute business scenarios. The choices they make, the trade-offs they consider, and the outcomes they achieve reveal their true capability levels across eight employer-validated capabilities, including Leadership, Commercial Awareness, Problem Solving, and Adaptability.
For HR and L&D Directors, this approach solves three critical challenges:
- Establishing an Objective Baseline: You gain a 0-100 score across the eight capabilities that matter most, providing department-level analytics that show exactly where your gaps are.
- Proving L&D ROI: By measuring capability before and after targeted interventions, you can provide the board with concrete data showing that your L&D spend is changing behaviour and improving organisational readiness.
- Future-Proofing the Workforce: As AI automates routine tasks, the human capabilities we measure become the primary differentiators for your organisation.
“The Human Skills Index measures the human capabilities that differentiate your people in an AI-augmented workplace.”
Strategic Imperatives for HR Leaders in 2026
As you finalise your workforce strategies for 2026, consider the following imperatives:
1. Audit Your Measurement Mechanisms
Are you measuring training participation, or are you measuring capability development? If your primary metrics are login rates and course completions, you will struggle to justify your budget in an environment demanding proven outcomes. Explore solutions designed specifically for HR & L&D Directors that provide board-ready analytics.
2. Focus on the 44% Leadership Gap
Skills England has clearly identified management and leadership as a national vulnerability. This is not just about senior executives; it is about equipping team managers with the capabilities to guide others, make sound decisions under pressure, and drive operational success. Ensure your development programmes are actively building and measuring these skills.
3. Partner for Impact
The new skills landscape requires collaboration. Whether you are working directly with educational institutions or engaging training providers to deliver your levy-funded programmes, demand that they provide measurable capability data as part of their service. Consider exploring different partnership models to find the right fit, and ensure your provision aligns with government funding requirements.
Targeted and Measurable Capability Development
Skills England’s priorities for 2026 make one thing clear: the UK economy needs targeted, measurable capability development, particularly in human skills like leadership and problem-solving. For HR leaders, the mandate is to stop guessing where the gaps are and start measuring them objectively.
By adopting simulation-based measurement tools like the Human Skills Index, you can transition your L&D function from a cost centre that tracks participation to a strategic driver of organisational capability, equipped with the data to prove its impact. Read our implementation guide to learn how to roll this out across your organisation.
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References
[1] Skills England. (2024). Skills England Report: Driving Growth and Widening Opportunities. Department for Education. https://www.gov.uk/government/publications/skills-england-report-driving-growth-and-widening-opportunities
[2] Department for Education. (2025). Employer Skills Survey 2024. https://www.gov.uk/government/statistics/employer-skills-survey-2024
[3] Department for Work and Pensions. (2025). Skills England priorities for 2025 to 2026. FE News. https://www.fenews.co.uk/skills/skills-england-priorities-for-2025-to-2026/
[4] Smith, P. (2026). Driving outcomes through place and sector: Phil Smith explores Skills England’s 2025-2026 delivery plan. Skills England Blog. https://skillsengland.blog.gov.uk/2026/01/12/driving-outcomes-through-place-and-sector-phil-smith-explores-skills-englands-2025-2026-delivery-plan/
[5] World Economic Forum. (2025). Future of Jobs Report 2025. https://www.weforum.org/publications/the-future-of-jobs-report-2025/
[6] Grant Thornton. (2025). Apprenticeship Levy reforms: What employers need to know for 2026. https://www.grantthornton.co.uk/insights/apprenticeship-levy-reforms-what-employers-need-to-know-for-2026/
[7] Open University & British Chambers of Commerce. (2024). Business Barometer 2024. https://business.open.ac.uk/business-barometer-2024
