Bridging the UK Skills Gap in the Tech Sector

The recent King’s Speech highlighted Labour’s intention to address England’s fragmented skills landscape through the proposed Skills England Bill.

This legislation aims to establish Skills England in phases over the next 9 to 12 months to create a highly trained workforce. The initiative will unite businesses, educational providers, trade unions, Mayoral Combined Authorities, and the national government.

The transition from Conservative leadership to a new Labour government seemingly bodes well for the tech sector, with early indications that Labour is eager to invest in digitalisation and empower the industry. Technology leaders are also encouraging the new UK Prime Minister, Sir Kier Starmer, to update outdated technologies across the public sector and invest in tech solutions to build up the UK’s digital infrastructure.

The current skills gap in the UK tech sector

The UK has experienced a persistent shortage of IT skills over the last decade, posing significant challenges for the NHS and sectors such as manufacturing, retail, banking and finance. According to the IT Skills Gap Report 2023 by Forbes Advisor, an overwhelming 93% of UK businesses acknowledge the existence of an IT skills gap.

Out of these businesses, 35% identify competition in the job market as a significant challenge. The scarcity of skilled candidates, coupled with the abundance of opportunities in these sectors, makes recruiting and retaining staff a demanding task.

The surge in recruitment within the IT sector can undoubtedly be attributed to the emergence of new technologies, such as Artificial Intelligence (AI) and self-service Business Intelligence (BI). Upskilling, reskilling, and training new talent are now critical to an organisation’s growth and should be central to any credible people strategy.

Skills England Bill: An opportunity for transformation

As outlined in Labour’s manifesto, the new bill aims to create a highly trained workforce by establishing Skills England. It will simplify the skills system by transferring responsibilities from the Institute for Apprenticeships and Technical Education (IfATE) to the Skills England organisation. This initiative could alleviate the chronic shortage of skilled staff in the tech sector by jumpstarting young people’s careers and galvanising local economies to deliver Labour’s Industrial Strategy.

Skills England will collaborate with the Migration Advisory Committee to ensure that training in England aligns with the broader labour market needs. Additionally, the manifesto commits to devolving adult skills funding to Combined Authorities, giving local leaders greater control over skills development in their areas and enhancing their role in supporting employment. Through coordination among local areas, Skills England will work to ensure that everyone has access to available opportunities.

Reform of the apprenticeship levy

The Apprenticeship Levy, introduced in 2017, has frustrated many employers. Although it’s intended to boost the number of apprenticeships, businesses have often perceived it as more of an extra tax burden rather than a means for fostering skills development. In reality, most employers prefer to allocate Levy funds toward broader training initiatives, such as upskilling their existing staff, as opposed to focusing exclusively on apprenticeships for new workforce entrants.

To address this misalignment, the Labour government unveiled plans to reform the current apprenticeship levy system, granting businesses greater flexibility in utilising funds designated for apprenticeships. Under a rebranded scheme called the “Growth and Skills Levy,” Labour will allow eligible companies to use up to 50 per cent of the funds they receive for various types of training, such as engineering or retrofitting.

The role of Edtech in bridging the skills gap

Education and upskilling have a transformative impact on individuals and businesses alike. Labour’s manifesto pledges present new opportunities for collaboration and innovation in the Edtech sector. It also signals a potential boost to the sector’s growth and development – exactly what we need to compete on a global scale.

The government should support businesses by facilitating partnerships between educational institutions, tech companies, and training providers. Skills bootcamps, for example, are an integral policy mechanism that equips students with specific, industry-aligned skills required to secure roles in the high-demand tech sector.

With the right support, Labour’s policies can support scalability and adapt to rapid technological changes while fostering a culture of collaboration and innovation that will keep businesses competitive and innovative.

Effective policy implementation is crucial

It’s evident that technology forms a central component of the new government’s commitments. Spanning from the NHS to cybersecurity and the economy, the Labour manifesto mentions technology more frequently than any other. However, the practical execution and bureaucratic processes involved can often lead to delays. It will be crucial for Labour to ensure that their policies are visionary, practical, and quickly actionable to bring about positive change as swiftly as possible.

The emphasis on skills and education is a positive signal for both the Edtech industry and society at large since a skilled workforce is essential for economic growth and innovation. And to be globally competitive, a Labour government will need to work in partnership with the tech industry.

If it can effectively implement its skills development policies, there is significant potential for enhanced public-private partnerships, improved employment rates, and technological advancements.

Riaz Moola, Founder and CEO, HyperionDev.