SKILLS CRISIS
The skills challenge in numbers
• 58 % of businesses in the BCC’ s latest UK-wide workforce survey are facing skills shortages.
• 67 % say better access to skilled employees would support organisational growth.
• More than 70 %: the increase over a decade in domestic policy-driven costs for an average mid-sized firm, according to BCC analysis of 11 factors.
• 38 % of firms scaled back recruitment as a direct result of the April 2026 National Living Wage rise.
• 17 % reduced staff training budgets.
• 58 % say tax incentives would do most to encourage training or upskilling investment.
• 42 % would ideally offer mentoring or coaching, while 41 % selected apprenticeships.
• 64 % engage in careers activity and 46 % provide work experience.
• £ 300m: the estimated net fiscal value in 2024 / 25 from NEET reductions supported by school careers guidance.
Source: British Chambers of Commerce, From Classroom to Career: Delivering Growth Through Lifelong Learning in England, September 2026.
The BCC therefore recommends immediately extending the existing zero rate of employer National Insurance contributions to all 21 to 24-year-olds.
There are currently no employer NICs payable for people aged under 21 or apprentices under 25. The proposed extension is intended to reduce the cost of recruiting young people.
It also calls for a skills tax credit, or a similar fiscal incentive, to help firms invest in their existing workforce.
BCC research found that 58 % of employers viewed tax incentives, such as skills investment tax credits, as the measure most likely to encourage them to invest in training or upskilling. Administrative support was selected by 28 %, while 18 % wanted help to measure the return on training investment.
That last finding exposes a practical barrier. In a high-cost environment, businesses may regard training as a discretionary expense, especially if they fear that newly trained staff will leave before the investment delivers a return.
The report argues that better support to measure that return could help reposition workforce development as an investment in productivity.
The BCC also warns that constant changes to the skills system undermine confidence. Employers face a proliferation of qualifications, training products and funding arrangements, frequently described in language that makes more sense to policymakers and providers than to the businesses expected to use them.
Employers tend to think about roles, capabilities and operational requirements rather than qualification“ levels”. They also want different forms of training depending on their size and sector.
In earlier 2026 BCC research, 42 % of firms said they would ideally offer mentoring or coaching, 41 % selected apprenticeships, 37 % short non-accredited courses, 33 % industry accreditations and 32 % vocational qualifications. Only 11 % selected university degrees.
Manufacturers leaned more heavily towards apprenticeships and vocational qualifications, while business-tobusiness service firms showed a greater preference for mentoring and coaching. Larger employers were much more likely than smaller firms to want to offer a range of training opportunities.
The lesson is that employers do not need another isolated“ product”. They need stable pathways and the flexibility to choose the right development for the right person at the right time.
Preparing for an AI-shaped workplace
The case for lifelong learning is sharpened by artificial intelligence and automation.
The BCC argues that adults will increasingly need to adapt as technology reshapes roles, while businesses will have to develop new capabilities without relying entirely on external recruitment.
The report highlights insurer Aviva’ s response. Its Aviva Foundry programme was established after the business identified increasing demand for digital, data, technology and transformation skills, alongside the impact of automation and AI.
Rather than look solely outside the organisation, Aviva created routes for existing employees to reskill and move into areas of growing demand.
The programme has reskilled more than 210 colleagues, including people moving from customer telephony roles into digital positions.
It sits alongside Aviva University and capability academies covering AI, data, underwriting, claims and wealth, while all Aviva colleagues have access to Microsoft Copilot.
The example captures an important advantage of investing in existing staff: a business can build new capabilities while retaining employees’ experience and organisational knowledge.
But programmes of that scale are easier for large employers with dedicated resources to design and manage. For smaller firms, the clarity of the wider system and the availability of trusted local support become even more important.
A system shaped with business
The BCC wants employer demand placed at the centre of future provision.
It calls on Skills England to commit by 2027 to a formal process through which businesses and employer representative bodies co-design the future of the Growth and Skills Levy.
It is particularly concerned by the defunding of higher-level apprenticeships in England.
Both established apprenticeship pathways and shorter, modular options are valued by employers, the report says, and the system must allow progression from Level 2 to Level 7 across sectors.
The forthcoming Lifelong Learning Entitlement could become another important part of the infrastructure.
From January 2027, eligible learners will be able to access student finance for full courses and some modules at Levels 4 to 6, with a tuition loan entitlement equivalent to four years of post-18 study.
The BCC supports the principle of a flexible entitlement that can be used across a working life, but says awareness remains limited and the modular offer available at launch appears narrower than many employers expected.
It is calling for a clear employer coinvestment model before the full rollout in January.
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