We need joined-up skills system supporting people from classroom to career

Almost one million young people in the UK, one in eight, are not in education, employment, or training (NEET). Alan Milburn’s review estimates this costs the nation £125 billion annually, while leaving a 24-year-old NEET facing up to £300,000 in lost lifetime earnings. At the same time, half of business leaders say the UK’s skills system is fundamentally unfit for purpose. If we want to solve both problems, we need a decisive strategy that tackles these twin challenges together.

Economic growth depends on having people with the right skills in the right jobs. That is why careers education, skills development, employment support, and lifelong learning must be seen as parts of the same connected system, rather than separate policy challenges. A productive economy relies on helping young people make the transition from classrooms to work, while supporting adults to retrain, upskill, and adapt throughout longer, less linear careers as technology transforms the workplace.

FE providers understand this challenge, as do businesses who are already doing their part by providing work experience, offering apprenticeships, and supporting mentoring programs. They want to do more. However, business investment does not happen in a vacuum. Employers need a stable policy environment, clear incentives, and a skills system that is easy to navigate. Too often, firms encounter complexity, fragmentation, and constant short-term policy changes that undermine confidence and stifle investment.

I see the difference a targeted, locally-led approach makes when I travel across the country meeting businesses of all sizes. Take the situation in Berkshire, where the local skills improvement plan (LSIP) led by Thames Valley Chamber identified screen industries as a priority sector. Windsor College used capital investment from the local skills improvement fund to establish cutting-edge film and podcast studios. Around 400 local students are now benefiting from the facilities, gaining employer-ready skills.

The lesson is clear – when the system is coherent and locally responsive, businesses invest and results follow. But across the wider economy, 58 per cent of businesses face active skills shortages, while two thirds say better access to training would unlock growth.

On top of this, the business cost stack has ballooned by 70 per cent in a decade, squeezing the very employers that colleges rely on for placements, apprenticeships and work experience. While the government’s focus on tackling economic inactivity and improving youth opportunities is welcome, the challenge extends across the whole workforce.

So what can the government do to ease this pressure and build a stronger lifelong learning system?

First, the Treasury should immediately cut the cost of hiring a young person. Bringing in an employer national insurance contribution holiday for under-25s would significantly lower entry barriers, giving businesses the financial room to invest in young talent.

Second, businesses need a seat at the table when the growth and skills levy is redesigned. Skills England must commit by 2027 to a formal co-design process with businesses so that levy training directly reflects real operational workforce needs.

The lifelong learning entitlement also needs fixing before it rolls out fully in January 2027. Without a clear employer co-investment model, it risks becoming just another loan product that neither employees nor employers trust enough to use.

The government should also adopt a single national framework for flexible work experience, along the lines of the Careers & Enterprise Company’s ‘equalex’ model. A consistent, straightforward process would make it far easier for businesses, particularly SMEs, to take part. We also need schools to be measured on delivering high-quality work readiness to their students.

Finally, every school and college should be connected to an employer-led mentoring network by September 2027, backed by long-term support for local skills brokerage through lsips. Embedding careers education early throughout schooling, aligned with local labour market needs, ensures more young people benefit from meaningful employer interactions before drifting out of the workforce.

The goal should not be to introduce more short-term initiatives, but to build a simpler, more coherent skills system that supports people from classroom to career, one that catches young people long before they become another NEET statistic. If policymakers in all parts of the UK can provide that framework, businesses stand ready to play their part.