Scottish ministers have been urged to rethink a decision to reshuffle responsibilities for skills among government quangos.

Business leaders are unhappy that provision of national training programmes, including apprenticeships, will move from Skills Development Scotland (SDS) to the Scottish Funding Council (SFC).

SFC’s responsibilities for funding further education student support will move to the Student Awards Agency Scotland (SAAS), bringing this together with SAAS’s existing responsibilities for higher education student support.

The decision follows consultation across the sector and legislation will be published in the coming weeks with the intention of applying changes from autumn 2026.

Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: “SDS is vital for designing and securing the future of jobs, yet it is being taken out of an organisation we highly respect.”

She said the Chambers, alongside other business organisations, including the SDS board, called for a reformed SDS to lead a response to Scotland’s workforce crisis.

“This would ensure we have the agility, flexibility and business focus required to unlock a potential £230 billion workforce investment over the coming decade across a range of sectors, including shipbuilding, energy & utilities, construction, advanced manufacturing, and onshore/offshore wind.

“Transferring this funding to Scottish Funding Council undermines the progress made in equipping Scotland’s workforce with essential skills and jeopardises the nation’s economic future. We are opposed to transferring what is the only remaining industry-focused fund that employers can access and customise to suit business needs.

“Business should be at the forefront of shaping the future workforce and in our view, we should be building up and expanding Skills Development Scotland, not breaking it down.

“We call upon the Scottish Government to reconsider this decision, engage more deeply with the business community, and ensure that the future of Scotland’s workforce development is driven by those who understand the needs of the market.”

Higher and Further Education Minister Graeme Dey said: “We want to ensure that Scotland has a world-class skills system to meet the demands of the changing economy and that our £3 billon of investment in the tertiary skills system delivers the greatest impact for learners.

“The need for this change is now clear, with consultation responses and other evidence supporting reform to arrangements for post-school funding. These changes will help to reduce complexities and provide greater clarity around the roles and responsibilities of each funding body.

“We will now look to press ahead with the next stage in taking forward these changes, through legislation and other preparations.  

“We also will work closely with SAAS, SDS and the SFC to reassure staff and ensure continuity of services.”

Dr Cameron added that the Scottish Government must “urgently review” the Apprenticeship Levy, saying it is failing to meet the needs of industry.

“We need a more flexible, responsive approach to apprenticeship and skills development to address shortages and remain competitive.

“The current labour shortages, particularly in construction, engineering, hospitality, and manufacturing, are a significant barrier to growth. But we must also acknowledge the critical role that migration plays in alleviating these labour shortages.”

A dedicated student visa for international graduates from Scottish universities or colleges who want to stay in Scotland after their studies has been proposed by First Minister John Swinney. This is backed by the Chambers.

Speaking at JP Morgan Chase & Co in Glasgow, Mr Swinney said a tailored visa route for students who have completed their studies could help to tackle population challenges in Scotland and grow the economy.

The ‘Scottish Graduate Visa’ would be linked to a Scottish tax code and be based on a requirement to live and work in Scotland.

It would be granted for up to two years and would act as a bridge between Study and Graduate visas and the Skilled Worker Visa, giving international students an additional two years to gain the professional experience required to qualify for roles on the Skilled Worker Visa route.

As migration is a reserved issue, developing and delivering the Scottish Graduate Visa would require the cooperation of the UK Government ahead of it coming into force. The UK government has so far resisted proposals to devolve immigration powers.

During his Glasgow speech the First Minister once again called for Scotland to rejoin the European Union, ensuring access to the Single Market and reinstating freedom of movement, to help tackle Scotland’s distinct demographic challenges which would benefit from inward migration. 

He said: “Committing ourselves once again to Europe and its single market is essential for the wellbeing of our society and the future success of our economy.

“I urge the UK Government to work with us – not dismiss this proposal out of hand – to ensure that we can attract and retain those students and graduates to Scotland, so that they can continue to contribute to our economy and society.”

* Oil and gas workers seeking to transition into careers in renewables and clean energy will be given additional support under a pilot scheme launched today.

Supported by £3.7 million of Scottish Government Just Transition funding, the Energy Skills Passport will initially support workers to identify routes into several roles in the offshore wind sector.