Skills England has published its 2026 map. UK employers now have an official, sector-by-sector view of where the skills gaps are.
The Annual Skills Report 2026 landed on 1 June, together with ten Sectoral Skills Needs Assessments. It names five system-level challenges, ranks AI as the third (and arguably the most urgent), and points at the AI & Automation Practitioner Level 4 apprenticeship as one of the flagship training products designed to meet the new demand. If you run an L&D, HR or operations function in any of the ten priority sectors, this report is the policy backdrop for your next three quarters of workforce planning.
This guide walks the report sector by sector, pulls out the numbers that matter for buyers, and maps each sector to the funded routes that already exist. By the end you should know which lever to pull this quarter for your business.
The numbers on one page
10 priority sectors covered by the 2026 SNAs.
~25%, projected growth in priority occupations across all sectors over the next decade.
70% of UK workers are in occupations with tasks AI could perform or enhance (IMF).
66% faster, the pace AI-related employer requirements are evolving versus other roles (PwC).
52% of UK tech leaders reported an AI skills gap in 2025, up from 20% in 2024 (Harvey Nash).
45% lower, the number of graduate online job adverts in 2025 versus the prior year (Adzuna).
16.1% youth unemployment in December 2025, the highest rate since 2015.
40% decline in youth apprenticeship starts over the past decade.
Source: Skills England, Annual Skills Report 2026 and Sectoral Skills Needs Assessments, 1 June 2026.
What is a Sectoral Skills Needs Assessment? Each SNA is a 20 to 28 page document that identifies the sector’s priority occupations, projects employment demand to 2035, lists the qualifications and skills those roles require, examines how AI is reshaping the work, and audits the current training supply against that demand. They are designed for employer use and policy making. They are now the authoritative reference point for any conversation about workforce planning in these ten sectors.
The five system-level challenges Skills England named
The report opens with five challenges. Each one frames the rest of the document and tells you what Skills England, working with the Department for Work and Pensions, is going to push for over the next 12 months.
- Addressing skills shortages. Employers report more than a quarter of vacancies are hard to fill. Demand for priority occupations is set to rise by nearly a quarter over the next decade, and most require Level 4 qualifications or above. The pipeline alone will not close the gap, reskilling the existing workforce is essential.
- Maximising employer investment in skills. Business investment in training has been declining for years. The report points at apprenticeship levy reform, new shorter apprenticeship units, and a dedicated SME programme as the responses.
- Accelerating AI adoption. Skills England explicitly calls out the Level 4 AI & Automation Practitioner apprenticeship as a rapid-development training product designed to meet the new AI skills demand. The challenge is broader than producing more AI specialists, it is enabling the entire workforce to adapt.
- Supporting young people’s employability. Youth unemployment at 16.1% (Dec 2025) is the highest since 2015. Skills England will review occupational standards and develop a shared language for employability skills, particularly for young people at risk of becoming NEET.
- Building a locally responsive system. One-size-fits-all national policy will not work given regional differences. Skills England will champion place-based working and align with Local Skills Improvement Plans.
The ten priority sectors, mapped to the routes
Here is the sector-by-sector summary, with the headline workforce numbers Skills England published, the named skills priorities, and the funded TESS routes that line up against those priorities.
| Sector | 2025–2035 demand | Named priorities | Funded TESS routes |
|---|---|---|---|
| Digital & Technologies | +239k growth (+27%) + 249k replacement = ~488k total | AI literacy, low/no-code automation, oversight & assurance, agentic AI orchestration | AI & Automation L4 · AU0009/10/11 leadership units |
| Professional & Business Services | +116k growth (+9%) + 419k replacement = ~535k total; 92% need Level 4+ | Numeracy, writing, digital literacy, AI for contract analysis & recruitment, governance | AI & Automation L4 · AU0010 Governance |
| Financial Services | +130k growth (+22.5%) + 185k replacement = ~315k total; 99% need Level 4+ | High numeracy, digital literacy, AI pattern detection & analytical insight, adaptability | AI & Automation L4 · AI for Finance |
| Health (priority occupations) | ~1.5m current; 95% of new employment needs Level 4+; 63% in critical/elevated demand | Listening, problem solving, decision making, AI literacy for non-clinical staff | AI & Automation L4 for non-clinical functions · AU0010 Governance |
| Adult Social Care | +281k growth (+28%) + 404k replacement = ~685k total; 79% at Level 2/3 | Care fundamentals, leadership, regulatory compliance, AI literacy for managers | AU0010 Governance for leaders · Operations Manager L5 with AI Skills Boost |
| Advanced Manufacturing | +47k growth (+13%) + 101k replacement = ~148k total; 84% need Level 4+ | Numeracy, digital literacy, problem solving, AI for process & quality assurance | AI & Automation L4 for ops teams · AU0010 Governance |
| Construction | +493k growth (+26%) + 595k replacement = ~1m total; 59% at Level 2/3 | Problem solving, decision making, creating, numeracy; AI for project & safety management | AU0010 Governance for leaders · AI & Automation L4 for back-office |
| Clean Energy | Strong cross-sector growth; engineering and digital priorities | Engineering fundamentals, digital fluency, AI for asset and grid management | AU0010 Governance · AI & Automation L4 for operations |
| Life Sciences | Specialist roles, cross-sector tech overlap with Health | Specialist scientific skills, digital fluency, AI literacy for data analysis | AI & Automation L4 for ops/data functions |
| Defence & Creative | Defence: engineering and digital uplift. Creative: digital fluency and AI literacy. | Digital fluency, AI literacy, prompt and tool competence | AI & Automation L4 for cross-functional teams |
Numbers above are taken directly from the relevant Sectoral Skills Needs Assessments published 1 June 2026. Replacement demand projections are 2025–2035.
The AI thread runs through every sector
One of the strongest patterns in the report is how consistently AI literacy and AI-augmented workflows appear as a priority across all ten sectors. Skills England’s analysis lands on three skill domains that recur:
- Technical skills. Using machine-learning-assisted development tools, low/no-code automation, code comprehension, agent QA, data and metadata literacy, API orchestration, applied analytics.
- Non-technical skills. Communicating AI-generated outputs across technical and non-technical teams, managing change, commercial awareness, continuous learning.
- Responsible and ethical skills. Governing and assuring, creating audit trails, bias testing, transparency and explainability, data protection and IP awareness, inclusive design.
This three-domain frame is the same one we use when designing the AI & Automation Practitioner Level 4 apprenticeship. The technical domain is covered in M01 AI Foundations through M05 AI Integration & Assurance. The non-technical domain runs through M09 Leading AI Adoption and the workplace projects. The responsible and ethical domain is the spine of M07 Designing Responsible AI plus the audit trail work in M05. Skills England has, in effect, validated the curriculum design.
What this means for L&D leads, this quarter
What TESS Group brings to this
The funded routes that line up with Skills England’s priorities
• AI & Automation Practitioner Level 4, the apprenticeship Skills England explicitly cited as a flagship AI training product. 11 modules, 13–18 months, 100% levy.
• AU0009 / AU0010 / AU0011 leadership units, the new shorter apprenticeship units. Particularly AU0010 (AI Adoption & Governance) for the responsible and ethical domain.
• Open, closed and hybrid cohort delivery, so the model fits your operation. Closed cohorts for 8+ learners; hybrid for 3–7; open for 1–5.
• Levy mechanics support, including the one-page brief for finance, the sponsor playbook, and full enrolment paperwork handled.
• Sector context. Coaches and content draw on real deployments across digital, professional services, financial services, health and manufacturing, the sectors Skills England named.
If you want help mapping your team against your sector’s SNA, talk to us. First conversation is free and we will steer to whichever route fits, even when it is not Level 4.
Map your team against the Skills England 2026 priorities
30-minute call. Tell us your sector and team. We will walk you through which priority occupations and skill gaps apply, and which funded routes will move the needle this quarter.
Wider context
This report sits alongside other 2026 policy work. The Growth and Skills Levy reform has introduced shorter apprenticeship units (AU0009/10/11 are examples). The Young People and Work Interim Report (May 2026) addresses the youth employability piece. The NHS 10 Year Workforce Plan is forthcoming and will define future Health sector demand more precisely. The forthcoming “What Works for AI Upskilling in the UK” publication, referenced in the report, will give SMEs and employers practical guidance.
For TESS, the report validates a direction of travel we have been describing for two years. The flagship response to AI is a Level 4 apprenticeship that builds practical AI capability across functions, not a niche specialism. The flagship response to leadership upskilling is a short, levy-funded unit. The flagship cohort model is whatever fits your business, open for cross-sector momentum, closed for internal coherence, hybrid for both.
Sources & further reading
- Skills England, Annual Skills Report 2026 and Sectoral Skills Needs Assessments (1 June 2026), the source document for all numbers and named priorities.
- The complete guide to the AI & Automation Practitioner Level 4, the apprenticeship Skills England cites.
- Open vs Closed vs Hybrid cohort models, choose the right delivery for your team.
- AU0009 / AU0010 / AU0011 leadership units, the shorter apprenticeship units for leaders.
- Levy mechanics explainer, how to fund all of this.
- 725m apprenticeship reform package, the wider funding context.
Frequently asked questions
What is the Skills England Annual Skills Report 2026?
It is the official UK skills system diagnosis for 2026, published 1 June by Skills England (within DWP). The 56-page main report names five system-level challenges and the response. It is accompanied by 10 Sectoral Skills Needs Assessments that detail the priority occupations, demand and supply, and training provision for each of the industrial strategy priority sectors.
Does the report actually mention TESS Group’s programmes?
It does not name providers (it is policy, not procurement). What it does is explicitly mention the “new Level 4 AI and Automation Practitioner apprenticeship in 2025” as a flagship rapid-response training product. TESS Group is one of the UK providers delivering that apprenticeship. The mapping in this post is our reading of how our funded routes align to the named priorities, not an endorsement by Skills England.
Which sectors are the easiest fit for TESS funded routes?
Digital & Technologies, Professional & Business Services, Financial Services, and the non-clinical functions of Health are the strongest fits for the AI & Automation Practitioner Level 4 and the AU0009/10/11 leadership units. Advanced Manufacturing operations and Construction back-office also map well. Adult Social Care leadership maps to the AU0010 unit specifically.
The report says Level 4+ is required for most priority occupations. What about junior roles?
Skills England flags that 70 to 99 percent of projected new employment in priority occupations (depending on sector) needs a Level 4 qualification or above. For junior roles, the Adult Social Care and Construction sectors continue to need Level 2 to 3 routes. The new Foundation Apprenticeships in retail and hospitality (announced separately) address the very-entry-level gap.
What is the AI chapter actually telling employers to do?
Three things. Build cross-cutting skills (communication, critical thinking, analytical reasoning) so the whole workforce can access AI. Use the new training products specifically built for AI demand (the Level 4 apprenticeship and the AU0009/10/11 units are named). Build resilience through ongoing upskilling, treating AI capability as a career-long competency, not a one-off course.
What should we do this week?
Read your sector’s SNA (linked from the main report). Compare the priority occupations against your roles. Pick the route that maps to the largest named gap inside your business. For most employers, that is the AI & Automation Practitioner Level 4 plus AU0010. The 90-day plan in this post is a defensible default.