The government’s 2026 annual skills report identifies five key challenges in the skills system: addressing skills shortages, maximising investment in training, responding to accelerated AI adoption, supporting young people’s employability and the need to build a more responsive, locally integrated skills system.
The report warns that demand for priority jobs in digital, engineering, clean energy, construction and social care will continue to grow, with education pipelines alone unlikely to meet employers’ needs. It argues that significant upskilling and reskilling will be essential, while emphasising transferable skills such as communication, critical thinking, problem solving, digital literacy and adaptability.
