The UK’s skills challenge requires a reset between universities and industry

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This blog was kindly authored by Professor Katie Normington, Vice Chancellor at De Montfort University.

There continues to be a strong consensus that the UK faces a skills challenge. Employers regularly report shortages in digital capability and technical expertise, while policymakers are increasingly focused on levels of productivity and workforce readiness.

Research found that in 2024, 7.3 million people in the UK lacked the essential digital skills needed for the workplace, while the Department for Science, Innovation and Technology suggested more recently that AI could contribute up to £400 billion to the UK economy by 2030, though capability and skills shortages remain a significant barrier to adoption.

Much of the debate around skills has focused on how universities and other higher education providers can produce more graduates with higher-level capabilities. Yet there is a missing part of this conversation: the relationship between universities and businesses, and whether it is currently strong enough to prepare students for a labour market which is changing at an extraordinary speed.

For a long time, universities and employers have primarily operated in silos. Universities developed academic knowledge and businesses focused on practical workplace training and application. This divide is becoming increasingly harder to sustain as industries navigate developments in AI and automation, as well as sustainability pressures.

Graduates increasingly need both academic understanding and applied technical capability. Employers are not simply looking for qualifications, but for people who can apply their knowledge in working environments and navigate complex challenges. Bridging the gap between universities and businesses will therefore be critical to ensuring students leave higher education prepared not only for their first job, but for long-term careers in a rapidly changing economy.

Importantly, this is not about turning universities into training providers or reducing education to short-term labour market demands. Universities should continue to develop critical thinking and intellectual independence – those qualities matter even more during periods of evolution and change. But there is a difference between preserving academic independence and maintaining unnecessary distance from industry.

At its best, closer collaboration benefits both sides. Students gain exposure to real-world problem solving, while employers help shape emerging talent and universities better understand how workforce needs are changing. This is something which we continue to see first-hand at our institution.

At DMU London, students work on industry-led projects with key employers, including IBM, focused on AI and sustainability, with an aim to explore how technologies can be applied responsibly within real-world industry contexts. Students are therefore exposed to both technical learning and the kinds of collaboration and adaptability that are increasingly expected within industry.

There is also a broader structural issue around how higher education is delivered.

Many students now balance study alongside work or caring responsibilities, while employers increasingly need opportunities for existing staff to upskill throughout their careers. That is contributing to growing interest in more flexible models of delivery, including block teaching and continuing professional development provision.

These changes should not be viewed purely through the lens of accessibility. They are also about ensuring higher education reflects how people now live and work. Importantly, there is no single model of higher education which will work for every student, and maintaining choice across the sector will remain essential. Different learners will benefit from different approaches depending on their circumstances, ambitions and preferred ways of studying.

At DMU London, we have implemented block teaching to allow our students the opportunity to focus on one subject at a time, with teaching delivered across two days of timetabled classes each week. We have found that this approach better supports students who are balancing study with work and other responsibilities, while reflecting this growing demand for more flexible routes into higher-level skills development.

The UK’s economic and workforce challenges are unlikely to be solved through isolated interventions. As industries continue to evolve through AI and sustainability pressures, stronger collaboration between universities and employers – and policymakers – will become increasingly important.

That means moving beyond transactional relationships focused solely on graduate recruitment and towards longer-term partnerships which support talent development and workforce resilience over time.

Universities cannot operate at a distance from the labour markets and industries they inherently support, particularly in economies and cities changing as quickly as those in the UK. The challenge now is whether higher education and industry are prepared to rethink relationships that were designed for a very different economy.