On 1 June 2026, Skills England published its first annual skills report, a national picture of where the country’s skills sit, who is being left behind, and what the next few years need to look like.

We read it through one lens: who is currently locked out of the digital economy, and whether this report brings them any closer in. The diagnosis is sharp and, in places, genuinely encouraging. The harder question, the one the report leaves open, is who actually gets reached.

The short version: Youth unemployment is at its highest in a decade, and almost a million young people are out of education, employment and training. The report is blunt about the causes: a labour market squeezing its entry points, an education system that does not always build the skills work demands, and a recruitment culture that cannot see the skills young people already have. The fixes it proposes are sensible. The open question is whether they reach the young people furthest from work, or the ones already closest to it.

The scale of it

Almost a million young people, and a problem that compounds with time.

Youth unemployment rose to 16.2% in the three months to March 2026, the highest rate since the start of 2015 and over three times the national average. There are now 957,000 people aged 16 to 24 who are not in education, employment or training, of whom 411,000 are unemployed and 547,000 are economically inactive.

The distinction matters. Unemployment means actively looking for work and not finding it. Inactivity means having stepped away from the search altogether, and the report is clear that much of the recent rise sits here, often driven by poor health, including mental health. This is not a story of young people who lack ambition. It is a story of young people who have, in many cases, run out of road.

Nearly one in five unemployed 16 to 24 year olds had been out of work for more than a year. The report cites research showing that time spent out of work early on can have lasting effects on physical and mental health, and raise the likelihood of unemployment, low pay or insecure work later in life.

The report is clear that this risk is not spread evenly. Young people from underserved communities, and those with fewer formal qualifications, are more than twice as likely to end up in this position. These are precisely the communities Breakthrough exists to work alongside. The report confirms the scale of what we are dealing with, and why the work matters.

“People are not behind. Systems are.” Now in a government report

The skills already exist. The system fails to recognise them.

Earlier this year, Skills England brought together young people, employers and local leaders at a series of Youth Employability Summits, alongside employers including IBM, PwC, Severn Trent and Enterprise Rent-a-Car. What emerged is, to us, the most important thing in the whole report.

Young people are developing real, valuable skills through everyday life: weekend work, caring for family members, navigating circumstances most adults would struggle with. Communication, resilience, teamwork, problem solving. The trouble is that recruiters overlook almost all of it, because they screen for formal qualifications and paid experience. There is no shared language for describing skills built outside a payslip, so young people cannot translate what they can genuinely do into the terms employers recognise. The skills exist. The system has no way of reading them.

The talent already exists. What is missing is the infrastructure to recognise it.

Skills England’s proposed response is to build a shared language for employability skills, so that the things people learn through lived experience become visible to employers. We welcome this, because it moves the conversation away from deficit and towards recognition. It treats lived experience as something worth reading, rather than a gap to be apologised for.

The gap between the classroom and the workplace

Two worlds that do not prepare young people for each other.

The summits surfaced a second gap, one many young people will recognise immediately. Education and the workplace operate by different rules. Classrooms give clear instructions and frequent feedback. Workplaces expect people to navigate ambiguity and to manage with far less guidance. No one warns young people about the jump, and many of the skills that bridge it, financial literacy, teamwork, networking, interview preparation, are simply left for them to pick up alone, if they can.

Employers at the summits added a newer item to that list: the ability to use AI tools with critical judgement. Knowing not just how to prompt a tool, but when to trust its answer and when not to. That is fast becoming part of what it means to be ready for work, and it is rarely taught.

The report is also clear about what actually closes this gap. Work experience was named, repeatedly, as the single most effective way for young people to build and prove employability skills, but only when placements involve real responsibility rather than making the tea. Quality matters more than quantity. A genuine placement teaches more than a dozen hollow ones.

For a long time, AI skills were framed as a niche for technologists. This report puts that to rest. It states plainly that most workers will need practical AI literacy: the ability to use AI tools, check their output, and integrate them safely into work. It names responsible and ethical AI use as a foundation skill in its own right, alongside the technical ones.

AI, and the disappearing first rung

Entry-level routes are narrowing as young people try to use them.

Then there is the question hanging over every young person entering the labour market right now: is AI taking the jobs they would have started in?

The warning signs are real. Graduate job adverts were 45% lower in 2025 than the year before, and entry-level adverts fell by a quarter. One study found firms more exposed to AI cut junior positions faster than senior ones, and were markedly less likely to post vacancies at all, which hits young people hardest because they depend on open postings to get in. Meanwhile apprenticeship starts among young people have fallen by 40% over the past decade.

But the report resists the easy headline. Other analysis it cites finds no clear evidence that AI is behind the slowdown, noting that graduate vacancies have been drifting down since 2022 and that pulling apart the effects of AI, the post-Covid adjustment and the ordinary economic cycle is genuinely difficult. Its conclusion is measured: it is too early to say. What is not in doubt is the lived reality. For a young person trying to enter work today, the bottom rungs of the ladder feel further away than they did, whatever the ultimate cause.

957,000
young people not in education, employment or training
16.2%
youth unemployment, the highest since 2015
10 million
workers the government aims to AI-upskill by 2030

What is on offer

The diagnosis is national. The reach is the hard part.

The report sits alongside a substantial package of support, and it is worth being fair about the scale. Over the next three years, the Youth Guarantee and the Growth and Skills Levy will carry £2.5 billion of investment, aimed at supporting almost a million young people and creating up to 500,000 chances to earn and learn. There will be more than 360 Youth Hubs offering local employment and skills support, fully funded apprenticeships for small businesses taking on young trainees, and from spring 2026 a Jobs Guarantee offering six months of paid work to long-term unemployed 18 to 24 year olds.

New routes are opening too. Foundation apprenticeships designed specifically for young people launched in 2025, with new ones in hospitality and retail from April 2026, sectors that traditionally employ large numbers of young people and offer clear progression. From 2027, V Levels arrive in subjects including digital and accounting and finance, alongside new Occupational Certificates, giving 16 to 19 year olds more ways to combine academic and vocational learning before they specialise.

Free training and new programmes only help the young people who can find them, trust them, reach them, and afford the time to take part. The risk, named in the report, is that without sustained investment the gaps by region, qualification level and background widen rather than close. Access is the whole game. A door is only an opportunity for the people who can get to it.

What good would actually look like

Recognition, real responsibility, and pathways that hold.

Pulled together, the report points towards a few things that would make a real difference to young people, and they are worth exploring.

Recognition before qualification. Build a shared language so that the skills young people develop through work experience, volunteering and lived experience are visible and valued, not invisible because they did not come with a certificate.

Work experience that means something. Placements with real responsibility, not box-ticking, because that is what the evidence says actually builds and proves capability.

Pathways that do not let people fall through. The report is clear that young people most at risk tend to drop through the gaps at points of transition: leaving school, finishing a course, moving between schemes. Clearer, joined-up routes matter most exactly where the system currently hands people off and loses them.

AI literacy as being work-ready.  Not as a specialism for the few, but as a basic capability for everyone entering work, with the critical judgement to use these tools well.

We work every day with young people the skills system too often reaches last.  If you are a commissioner, employer, funder or partner who sees the digital skills gap and structural exclusion as one problem rather than two, we would welcome the conversation.
Get in touch at hello@wearebreakthrough.org

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