- Dr Ismini Vasileiou is Associate Professor at De Montfort University, Director of the East Midlands Cyber Security Cluster and Director and Co-Chair of UKC3.
Higher education has always played a critical role in skills development, from professional fields like Medicine, Dentistry, and Engineering to more recent models such as degree apprenticeships. However, as the UK’s digital economy evolves at an unprecedented pace, there is a growing need to rebalance provision, ensuring that universities continue to equip graduates with both theoretical expertise and industry-ready capabilities in areas such as AI, cybersecurity, and automation.
The government’s strategic focus on workforce development underscores the importance of these changes, with higher education well-placed to lead the transformation. As industries adapt, the need for a highly skilled workforce has never been greater. The UK Government’s Plan for Jobs outlines a strategic vision for workforce development, placing skills at the heart of economic growth, national security, and regional resilience.
With the new higher education reform expected in Summer 2025, the sector faces a pivotal moment. The Department for Education has announced that the upcoming changes will focus on improving student outcomes, employment pathways, and financial sustainability in HE. While universities are autonomous institutions, government policy and funding mechanisms are key drivers influencing institutional priorities. The increasing emphasis on workforce development – particularly in cybersecurity, AI, and other high-demand sectors- suggests that universities will likely need to adapt, particularly as new regulatory and funding structures emerge under the forthcoming HE reform.
The National Skills Agenda: Why Higher Education Matters
The skills gap is no longer an abstract policy concern; it is a pressing challenge with economic and security implications. The introduction of Degree Apprenticeships in 2015 was a landmark shift towards integrating academic learning with industry needs. Subsequent initiatives, including MSc conversion courses in AI and Data Science, Level 6 apprenticeships, and the Lifelong Learning Entitlement (LLE) serve as policy levers designed to encourage and facilitate a more skills-oriented higher education landscape, rather than evidence of an inherent need for change. Through mechanisms such as Degree Apprenticeships, AI conversion courses, and the Lifelong Learning Entitlement, the government is actively shaping pathways that incentivise greater emphasis on employability and applied learning within universities.
The Plan for Change accelerates this momentum, funding over 30 regional projects designed to enhance cyber resilience and workforce readiness. One example is the CyberLocal programme, a government-backed initiative (Department for Science, Innovation and Technology) focused on upskilling local authorities, SMEs, and community organisations in cybersecurity. CyberLocal connects universities, businesses, and local governments to deliver tailored cyber resilience training, addressing the increasing threats to national digital security. More information can be found through CyberLocal’s page.
Financial Pressures and the Case for Skills-Based Education
At the same time, the financial landscape of HE is shifting. Declining student enrolments in traditional subjects, increasing operational costs, and a competitive global market have left many institutions reassessing their sustainability strategies. The upcoming higher education reform will shape policy from 2025 onwards, and universities must determine how best to adapt to new funding models and student expectations.
While skills-based education is often positioned as a solution, it is not an immediate financial fix. Many Degree Apprenticeships are run at a loss due to administrative complexities, employer engagement challenges, and high operational costs. Several articles, including those previously published at HEPI, highlight that while demand is growing, institutions face significant challenges in delivering these programmes at scale.
Government-backed funding in AI training and cybersecurity resilience offers targeted opportunities, but these remain limited in scope. Some universities have found success in co-designed upskilling and reskilling initiatives, particularly where regional economic growth strategies align with HE capabilities. The Institute of Coding, a national collaboration between universities and employers funded by the Office for Students, has developed industry-focused digital skills training, particularly in software development and cybersecurity. Additionally, the Office for Students Short Course trial has enabled universities to develop flexible, modular programmes that respond directly to employer demand in areas such as AI, digital transformation, and cybersecurity. Other examples include the National Centre for AI in Tertiary Education, which supports universities in embedding AI skills into their curricula to meet the growing demand for AI literacy across multiple sectors. However, a broader financial model that enables sustainable, scalable skills education is still required.
Regional Collaboration and Workforce Development
Since 2018, the Department for Education (DfE) has supported the creation of Institutes of Technology (IoTs), with 19 now operational across England and Wales. These institutions prioritise digital and cyber education, aligning with local skills needs and economic strategies. Strengthening collaboration between HE and IoTs could enable universities to support regionally tailored workforce development.
Examples such as the East Midlands Freeport, the Leicester and Leicestershire Local Skills Observatory, and CyberLocal illustrate the power of localised approaches. The Collective Skills Observatory, a joint initiative between De Montfort University and the East Midlands Chamber, is leveraging real-time workforce data to ensure that training provision matches employer demand. These initiatives could provide a blueprint for future HE collaboration with regional skills networks, particularly as the UK government reviews post-2025 skills policy.
Cyber Resilience, AI, and the Challenge of Adaptive Curricula
The government’s focus on cyber resilience and AI-driven industries underscores the urgent need for skills development in these areas. With AI poised to reshape global industries, universities must ensure graduates are prepared for rapidly evolving job roles. However, one of the biggest challenges is the slow pace of curriculum development in higher education.
Traditional course approval processes mean new degrees can take two to three years to develop. In fields like AI, where breakthroughs happen on a monthly rather than yearly basis, this presents a serious risk of curricula becoming outdated before they are even launched. Universities must explore faster, more flexible course design models, such as shorter accreditation cycles, modular learning pathways, and micro-credentials.
Government-backed initiatives, such as the Institute of Coding, have demonstrated alternative models for responsive skills training. As the HE reform unfolds, universities will need to consider how existing governance structures can adapt to the demands of an AI-driven economy.
A New Skills Ecosystem: HE’s Role in the Post-2025 Landscape
The forthcoming higher education reform is expected to introduce significant policy changes, including revised funding structures, greater emphasis on employability and skills-based education, and stronger incentives for industry partnerships, particularly in STEM and digital sectors.
Higher education must position itself as a leader in skills development. The recent Universities UK (UUK) blueprint, calls for deeper collaboration between the further and higher education sectors, recognising their complementary strengths. Further education offers agility and vocational expertise, while higher education provides advanced research and higher-level skills training – together, they can create a seamless learner journey.
At the same time, national initiatives such as Skills England, the Digital Skills Partnerships, and Degree Apprenticeships present opportunities for universities to engage in long-term skills planning. The integration of Lifelong Learning Entitlement (LLE) loans will further support continuous upskilling and career transitions, reinforcing the role of HE in lifelong workforce development.
Conclusion: Shaping the Future of HE Through Skills and Collaboration
With the HE reform announcement expected in Summer 2025, universities must act now to align with the government’s long-term skills agenda. The future of HE is being written now, and skills must be at the heart of it.