Following a review undertaken by the UK Commission for Employment and Skills (UKCES), the Department for Business Innovation and Skills announced that it would not be relicensing Lifelong Learning UK (LLUK), which focuses on ensuring the professional development of the UK workforce.

Although LLUK will remain in place until the end of March 2011, it will lose its status as a non-departmental body by 2012 and it is currently unclear with what it will be replaced. In a statement, the organisation said that Pat Bacon, its chair and chief executive, was "in talks to identify the best alternative arrangements for our work" and that details would be announced in due course.

While it was "disappointed" by the outcome, there was no doubt that lifelong learning was a "priority sector for promoting social inclusion, active citizenship and employability, all of which are vital to economic growth", the body added.

Charlie Mayfield, chair of the UKCES said: "The UK Commission will work with LLUK to help ensure a seamless transition of the core elements of its work to other partners next spring. I would like to thank the staff and management at LLUK for the professionalism they have shown throughout this difficult time."

The news came as the Learning and Skills Network published a report warning that in the wake of cuts to the skills and further education budget, the government needed to introduce a much wider strategy in order to both support skills development and ensure that employers took more responsibility for it.

The study entitled 'Fair shares: The role of employer contributions to skills development' pointed out that the UK was already falling behind other countries in terms of skills investment, with the average number of hours that workers spent on training amounting to only 315 – half the level of France and significantly behind other leading economies such as Germany and the US.

Moreover, real employer expenditure on skills development, excluding time spent out of the workplace, was a mere £250 per employee. The report pointed to countries such as China and India, where employers were expected to pay a levy if their investment in training fell below a pre-determined level.

As a result, it advised that the UK government set clear milestones for introducing a statutory system aimed at those sectors that had not voluntarily introduced training levies and/or new professional standards.

But levies were not enough in and of themselves, it said. Instead the government should also expand the number of industrial licences to practice and encourage employers to take ownership of skills issues within their own sectors, for example, by taking more responsibility for delivering national or local skills academies in specialised areas. Such activity could be undertaken in partnership with further and higher education establishments, independent training providers and local enterprise partnerships. Despite the government's enthusiasm for national skills academies, only 18 have been established to date.

To encourage employer participation, the government should also make contracts and grants conditional on getting involved in skills academies and provide tax relief on skills investment schemes that are jointly delivered with further and higher education bodies. It should likewise tackle the underinvestment in skills made by small-to-medium enterprises by encouraging large companies to bring them on board within their own supply chains.

Failure to take action in this way "could result in a long-term slump in skills investment, leading to stagnant growth and faltering social mobility", the report warned.