The UK’s employability system enters its next phase of reform at a moment of both continuity and change. One year on from submitting our consultation response to the Pathways to Work Green Paper consultation, there is growing evidence that the original diagnosis of a fragmented and underperforming system was well founded.
At the same time, a transition in political leadership brings renewed focus and a window of opportunity. A new Prime Minister and Cabinet will inherit not only the scale of the challenge, but also the early foundations of reform. The question is no longer whether change is needed, but whether this moment will be used to move beyond incremental adjustment and deliver a more fundamental redesign of how the UK enables participation in work.
The diagnosis has only become more urgent
Over the past twelve months, the underlying challenges facing the system have not materially diminished. If anything, the data reinforces the urgency of reform.
Economic inactivity driven by ill-health remains persistently high, with around 2.8 million people now outside the labour market due to long-term health conditions. The number of individuals receiving health-related benefits has continued to rise, increasing by 800,000 (45%) since 2019/20.
Against this backdrop, it is important to recognise that the government has acted. There has been a clear shift towards a more active, work-focused model, supported by a reported £1 billion investment in employment support and reforms such as a “right to try” work, aimed at reducing barriers to participation.
Structural progress is also evident in the closer alignment of skills and employment policy. The creation of Skills England and integration of skills provision within the Department for Work & Pensions (DWP) ecosystem represent a significant step towards linking training pipelines to labour market demand.
But in a labour market where unemployment levels are not changing, yet vacancies appear to be falling, it is difficult to see how significant progress will be made.
Alongside this, there is growing recognition of the role of data, technology and future skills in shaping the labour market. Commitments such as equipping 10 million workers with AI capabilities by 2030 signal a shift toward a more data-informed, future-ready system.
Encouragingly, there is also stronger acknowledgement that employers must play a central role. Reviews such as Keep Britain Working emphasise that economic inactivity cannot be addressed by government alone, and require coordinated action across employers and delivery partners.
A system that has been adjusted but not redefined
At its core, the system remains a predominantly supply-led model.
Fragmentation persists:
- Despite policy integration, the system continues to operate as a complex landscape of programmes and providers
- There is recognised lack of coordination or a coherent framework for change.
- For employers, this often translates into a system that is difficult to navigate and inconsistent in delivery.
- A continuing gap between policy ambition and practical action, compounds the problem.
While employers remain broadly aligned, many are still unclear on what intervention looks like in practice and how to implement change at scale. Similarly, while the ambition to pivot to prevention is well established, it has not yet been realised in system design.
Alongside these structural issues sits a broader question of leadership. The policy intent is increasingly well defined, but without strong and sustained leadership, there is a risk that reform continues to evolve incrementally rather than deliver the systemic change required.
Conclusion
One year on from our Pathways To Work Green Paper consultation respsonse, the direction of travel is clear, but the system has not fundamentally changed. An incoming Prime Minister and Cabinet have a critical opportunity; to move beyond adjustment and deliver a fully integrated, employer-led and outcome-focused employability system. Without a more decisive shift in system design, towards prevention, data-driven matching and genuine employer integration, the risk is that progress remains partial, and outcomes remain constrained.
The opportunity is there. What follows will depend on how boldly it is seized...
Footnotes
- DWP, Keep Britain Working review – March 2026 update
- DWP, Spring Statement 2025 health and disability benefit reforms – impacts
- DWP, Pathways to Work: reforming benefits and support to get Britain working, 2025
- Skills England, Annual Skills Report 2026
- Department for Work and Pensions / DSIT, AI Skills initiatives and training commitments, 2025–2026