UK employers are pouring record sums into workforce training as persistent skills shortages force a shift from hiring to upskilling, according to the latest corporate learning data. Spending on staff development is expected to exceed £9 billion this year, the highest level on record and up 14 percent on 2025.
The figures, compiled from a survey of 1,400 firms by the learning technology provider HowNow, show that three in five companies now run formal reskilling programmes, compared with fewer than two in five in 2023. Employers say the change reflects a labour market in which qualified candidates remain scarce despite an overall cooling in recruitment.
“The era of buying talent is over for many businesses. You simply cannot hire your way out of a skills shortage that has persisted for four consecutive years,” said Rachel Okonkwo, director of workforce strategy at the training firm. “Companies that invested early in internal academies are now outperforming competitors who stayed reliant on external hiring.”
Digital skills dominate the agenda. More than half of all training hours recorded this year relate to data analysis, AI literacy and cybersecurity, up from a third in 2024. The shift is particularly pronounced in professional services, manufacturing and logistics, where automation is changing the shape of entry-level roles faster than education providers can respond.
The data also reveals a sharp divide by company size. Organisations with more than 500 employees spend an average of £1,380 per worker per year on training, while firms with fewer than 50 employees spend just £240. Small business groups argue the gap explains widening productivity differences across the economy.
“Small firms want to invest in their people, but the cost of releasing staff for training is often prohibitive,” said Martin Hayes, policy director at the Federation of Small Businesses. “The government’s growth and skills levy is a step forward, but flexibility around how funds are used will be critical for smaller employers.”
Returns on the investment appear to be material. Firms in the survey with structured reskilling programmes reported 22 percent lower voluntary turnover and were twice as likely to promote internally into senior technical roles. HR leaders say retention benefits alone justify the outlay, given that replacing a specialist employee typically costs six to nine months of salary.
Looking ahead, analysts expect training budgets to keep rising even if hiring picks up. The Chartered Institute of Personnel and Development forecasts that skills development will become the largest single category of people spending by 2028, overtaking recruitment for the first time. For employers, the message from this year’s figures is clear: the workforce you have is the workforce you grow.