Work Local: Unlocking talent to level up report

The Government is right to put skills, retraining and job creation front and centre of its levelling up agenda, recognising that talent is everywhere, but opportunity is not. Investment and interventions to achieve this must connect up at a local level and for all places if they are to support people of all ages – learners, unemployed people, career changers – as well as businesses and other employers of all sizes – progress. A joined up and locally responsive employment and skills offer is critical to this.  

This is not happening for all areas; we believe it should. That’s why the LGA is delighted to present Work Local: Unlocking talent to level up.  

Our timely proposals build on the Government’s Levelling up White Paper. We make clear recommendations to Whitehall on ways it can improve its approach to employment and skills for all places right now, and what is needed for a coherent framework for employment and skills devolution. This is essential reading for policy makers and shapers, and everyone else interested in why change is needed and how we can do it. We set out: 

• New research that beneath headline national figures, every area has a unique labour market – based on employment growth, qualification levels, unemployment, inactivity, vacancy rates – and so despite best intentions, a one-size, or even a five-sizes fits all national approach to employment and skills provision will fall short of our shared aims to ensure greater equality of opportunity.
• The complicated system by which Government invests around £20 billion on 49 national employment and skills-related schemes or services across England, managed by multiple Whitehall departments and agencies, and delivered over different boundaries by various providers. While well-intended, they are disconnected from one another and too short-term. No single organisation coordinates the system nationally or locally, making it hard to join up and target provision. Local government can help make this investment greater than the sum of its parts.
• Evidence of local government’s leadership, knowledge and innovation bringing together partners and national schemes to improve outcomes for residents, businesses and other employers. This was vital through the pandemic, but equally important now as we move to recovery and beyond. With the right powers and resources, we can do more. 
• Analysis that a Work Local approach enabling local government to coordinate partners and bring together employment and skills provision across a place could each year unlock talent and result in a 15 per cent increase in the number of people improving their skills or finding work. This would deliver benefits to residents, businesses, the health and wellbeing of local communities while reducing costs to the public purse.
• What areas interested in a devolution deal could be asking from Government on employment and skills, and how to deepen Government’s devolution framework. 

To make all this happen, we urge Government to work in partnership with us to:

• get the basics right everywhere so all places can join up the offer more effectively 
• empower local leaders and agree a framework for employment and skills devolution
• implement Work Local and roll out more place partnerships sooner than 2030.   

Our prospectus for change sets out how this can be done. We have a huge opportunity to get this right in coming months and look forward to working with Government and stakeholders to make it happen.

Cllr Kevin Bentley, Chairman, LGA People and Places Board & Mayor Marvin Rees, Chair, LGA City Regions Board

Every area in England has a distinct mix of labour market and skills challenges. New analysis from the Institute of Employment Studies (IES) shows that a one-size, or even a five-sizes fits all national approach is unable to target employment and skills provision to local need. Local government leaders want to work with their partners to lead local efforts to address these challenges and capitalise on opportunities created by the transition to greener growth, automation, emerging technologies and new global markets. But for too long, they have had limited routes to discuss employment and skills issues with Government, most funding is time-limited, fragmented and held centrally, and powers to affect change are too remote.

The employment and skills system is also complicated for businesses and other employers such as councils, the NHS and universities, who are encouraged to engage with boot camps, apprenticeships, T levels, traineeships and more. All are time-limited and have their own eligibility and incentives, which can dissuade businesses, especially smaller ones with no or limited HR functions, from engaging. In our employment and skills provision survey, 93 per cent of councils felt that employers would value a one-stop shop service for local skills and employment.

Despite the best efforts of local government – councils and combined authorities – to knit together provision to make it more than the sum of its parts, far more can be done to create pathways to help people get on in life and grow the local economy. The sector is united in its view that the status quo in designing, commissioning, and delivering employment and skills activity needs to change. Changes are needed across the whole system, and those in, or aspiring to, devolution deals will want to go further and faster to delivering on their ambitions for their places.

The pandemic created new skills and employment needs and exacerbated ones we already faced. Prior to the COVID-19 pandemic one in ten workers were in insecure work, two million people were in work but wanted more hours, those furthest from the labour market struggled to get back to work, and the disability gap reached more than 30 per cent. Unemployment in England had fallen to its lowest since the 1970s, though challenges remained nationally and locally.

Now, employers in many sectors are struggling to recruit, and councils face their own capacity issues. At the same time as digital and green jobs offer new opportunities, the nation lacks the right mix of skills to meet future demand. Skills gap predictions for the LGA revealed that by 2030, there would be an oversupply of three million people with low and intermediate qualifications and 2.5 million too few higher skilled workers compared to jobs generated. These gaps were starker within places than between them, emphasising that ‘place’ really does need to be factored in when designing and targeting provision, as our analysis of the current challenges and opportunities in the labour market shows.

The Levelling Up White Paper represents a historic, once-in-a-generation opportunity to transform the employment and skills system. The Government has committed to embed ‘place’ in its thinking and give local government a greater role in steering growth funding. It has also revived devolution by negotiating new deals comprising a menu of devolved powers including devolved adult education budget, contracted employment support, and influence over Local Skills Improvement Plans (LSIP), strengthening existing deals, with the potential for all areas to be devolved by 2030. Three new employment and skills pathfinders are also in development. This is all welcome, but the current menu is limited, and 2030 is some way off.

This report sets out both how we can build on the White Paper to draw together a coherent framework for employment and skills devolution, and our recommendations to Whitehall of how to improve the current system for all places.

Local government is uniquely placed to work shoulder-to-shoulder with Government to unlock talent by spreading opportunity to all parts of the country and support Government ambitions, including those set out in the levelling up mission statements, and reforms to the education and further education systems. A joint local and national government endeavour with strategic focus, shared resources and expertise can support more people into work, improve skills, match people with jobs, and secure the recovery that our residents, communities and businesses deserve, at less cost than the current system.

While councils outside of devolution areas have no formal coordination role, they use their convening power, leadership, wide-ranging knowledge and governance mechanisms such as employment and skills boards to encourage collaboration, and provide intelligence to national agencies and delivery partners. As our employment and skills recovery hub shows, when the pandemic hit, councils from Hounslow to Halton and Gateshead to Essex stepped up and used their knowledge, links and leadership, to swiftly co-ordinate a suite of schemes for their local area to join up employment, skills, and growth around place.

MCAs and the GLA work in cooperation with constituent councils, and have approached devolution with innovation to foster improved local relationships, join up provision through systems leadership and be accountable for its devolved functions.

The major challenges and opportunities in the national economy are affecting local areas acutely. New analysis from the IES illustrates the urgency of this task, with local needs and priorities varying significantly across local areas given differing economies, labour markets, demography and histories. The analysis shows that:

• areas are facing distinctly different challenges and opportunities around labour force participation and employment demand
• these differences are reflected in very different experiences between areas around jobs growth, workforce skills and productivity
• While nationally falling unemployment and record vacancy levels has made the labour market tighter, there are nearly as many areas with high unemployment relative to vacancies as there are places with low unemployment and high vacancies
• looking ahead, people in areas with lower participation and demand are far less likely to work in sectors with strong growth prospects and far more likely to work in industries at risk of decline – which would further exacerbate inequalities and undermine opportunities to ‘level up’.

To illustrate these differences between places, IES has taken at a local level the twin challenges of labour force participation and recruitment demand, in terms of places:

• Economic activity rates, which measure the proportion of the population who are either in work or actively seeking work (with the remainder being those who are not seeking and/ or available for work, and so economically ‘inactive); and
• Vacancy rates, which measure the number of job vacancies per one hundred people of working age.

Using Annual Population Survey data for labour force participation and real-time vacancy data supplied by Adzuna (the online job search engine) for current employer demand, it has mapped all 308 English local authority areas (borough and district level) into one of five groups:[3][2][1]

1. Areas with low participation and low vacancies – so areas that may be more disadvantaged and not sharing fully in the recovery 
2. Areas with low participation and high vacancies – so places that may be relatively more disadvantaged but with high employment growth
3. Areas with close to average participation and vacancies – and so not significantly different to national trends
4. Areas with high participation and low vacancies – meaning historically relatively more advantaged areas but without strong employment growth themselves (for example because people work outside the area, or because the area may be faring less well in the recovery)
5. Areas with high participation and high vacancies – that is areas with strong labour markets and faring well in the recovery

Figure 1: Local authority vacancy and economic activity rates (standardised)

The map (figure 2) below then illustrates how these different experiences of labour force participation and jobs demand vary across areas. This analysis reiterates how no one region fares consistently the same with areas with very different rates of participation and vacancies cheek by jowl. However, there are also some common themes and patterns, most notably:

• coastal and some ex-industrial areas in particular experiencing both low participation and relatively fewer vacancies, and so potentially struggling to narrow gaps with other areas (red)
• the southern half of the country, often less urban areas, more likely to have higher participation and high vacancies, so well placed to build on their pre-crisis strengths (green)
• many parts of London and the South East seeing high participation but also relatively low vacancies, reflecting the significant impacts of the crisis on London and its wider economic footprint in particular (orange)
• parts of the Midlands and North West in particular experiencing strong growth in vacancies but with relatively low rates of economic activity (purple)
• areas that are close to the national average in terms of participation and vacancy rate are fairly evenly spread across England’s regions (blue).

Figure 2: Mapping labour market participation and vacancies by area

Importantly however, this analysis also shows that virtually without exception, all five area types are represented across all eight of the ONS-classified statistically similar areas. So just as a ‘one-size-fits-all’ approach cannot be expected to meet these diverse needs, a ‘five-size-fits-all’ model is unlikely to fare any better. For example: 

• in the county of Essex, there are local areas in each of the five groups – with the county playing a key role in co-ordinating activity across boroughs to share prosperity and support residents in all areas to access good work
• in West Yorkshire Combined Authority there is a similar diversity, with boroughs with relatively low participation and weak demand neighbouring areas with strong growth and high vacancies – and the Mayoral Authority work to ensure that skills, transport and employer policy is aligned to support local growth.

Unemployment and vacancies by area

While nationally, falling unemployment and record vacancy levels has made the labour market tighter, underneath this is a far more complex picture. IES has estimated local unemployment:vacancy ratios using Adzuna vacancy data alongside a modelled estimate of the local unemployment rate. It reveals that:[4]

In England, the current skills and employment system consists of at least 49 national employment and skills related schemes or services managed by nine Whitehall departments and agencies spending around £20 billion (based on April 2021 analysis). No single organisation is responsible for coordinating this activity locally, with no accountability over how the totality is improving local outcomes. Local government is the only constant in a continually changing employment and skills landscape, has the capability to deliver, and with adequate resources, can deliver more. Our local government partners across the UK are already on a path to achieving this so there is no reason why it cannot happen across England too.

The Levelling Up White Paper aspires for all places to be devolved by 2030. Our Work Local model is a ready-made blueprint for making that happen even sooner across the country through strengthening devolution deals and improving the system for all places. Democratically elected leaders would have the powers and funding to work with partners to join up careers advice and guidance, employment, skills, apprenticeships, business support services and outreach in the community. Work Local will improve services and outcomes, reduce costs, complexity, and duplication, and respond to local needs.

The underpinning principles of Work Local are:

The L&W analysis outlines the following potential benefits of a Work Local approach:

• For a medium-sized combined authority, with a working age population of 960,000, more effective use of around £270 million investment per year – which represents 1.35 per cent of spend in England – could improve employment and skills outcomes by about 15 per cent, meaning an extra 2,260 people improving their skills each year and an extra 1,650 people moving into work. This could boost the local economy by £35 million per year and save the taxpayer an extra £23 million per year. Taking account of wider benefits such as health and wellbeing could more than triple the economic benefits, up to £87 million per year.
• For a large combined authority, with a working age population of 1.8 million, more effective use of around £680 million investment per year – which represents 3.4 per cent of England spend - could improve employment and skills outcomes by about 15 per cent, meaning an extra 4,200 people improving their skills each year and an extra 3,850 people moving into work. This could boost the local economy by £80 million per year and save the taxpayer an extra £52 million per year. Taking account of wider benefits such as health and wellbeing could more than triple the economic benefits, up to £260 million per year.
• For a larger rural local authority, with a working age population of 475,000, more effective use of around £77 million investment per year – which represents 0.38 per cent of England spend - could improve employment and skills outcomes by about 15 per cent, meaning an extra 1,150 people improving their skills each year and an extra 640 people moving into work. This could boost the local economy by £14 million per year and save the taxpayer an extra £9 million per year. Taking account of wider benefits such as health and wellbeing could more than triple the economic benefits, up to £54 million per year.
• For an urban local authority, with a working age population of 172,000, more effective use of around £51 million investment per year – which represents 0.25 per cent of England spend – could improve employment and skills outcomes by about 15 per cent, meaning an extra 250 people improving their skills each year and an extra 370 people moving into work. This could boost the local economy by £8 million per year and save the taxpayer an extra £5 million per year. Taking account of wider benefits such as health and wellbeing could more than triple the economic benefits, up to £27 million per year.

Work Local is good for the economy – by integrating services, responding to local economic needs, and delivering better outcomes at lower costs; good for people – with more personalised, joined-up and responsive services; and good for employers – by delivering a locally rooted, demand-led and integrated approach.

Work Local will enable local government to take a whole systems approach by bringing together decisions around infrastructure and capital investment with learning, skills and employment to maximise opportunities for residents, businesses and the wider local community.

Transforming the skills and employment system: a joint leadership approach

‘Place’ must now be front and centre of policies and programmes, and not an afterthought. In addition to these being informed by better use of existing local data and intelligence, as the Levelling Up White Paper sets out, councils, MCAs and the GLA are vital to co-designing these with Whitehall.

A new national and local government partnership – a Work Local Board – of politicians and officials from the Department for Work and Pensions (DWP), the Department for Education (DfE), the Department for Levelling Up, Housing and Communities (DLUHC), the Department for Business, Energy and Industrial Strategy (BEIS) and local government should be agreed by the end of 2022 with independent advice from businesses, employers and others as needed.

The partnership should co-design new and repurpose existing provision, so it lands more effectively locally, commit to bring forward a more joined-up, longer-term funding system and pave the way for any legislative change required to support devolution. This will also ensure local government plays a full part in the successful delivery of employer-led further education reforms. It would also enable local areas to early warn Government of labour market issues, skills gaps and shortages affecting multiple areas, and allow a quicker and coordinated response. The Ministerial Local Government EU Exit Delivery Board is an example of how such a partnership can work to good effect.

The Work Local Board would lead three transformation programmes:

• Get the basics right everywhere. No matter where you live, everybody deserves access to a joined up, coherent and locally responsive employment and skills offer that is easy to understand, accessible and connects with local services. But all too often services are disconnected making the system difficult to navigate for residents and businesses. To address this, we must embed ‘place’ and local oversight into all provision, and agree improvements to the current system to free up partners to join up the employment and skills offer more effectively across all places. This is important given the majority of England's population is not yet covered by a devolution deal, deals take time to negotiate, and some provision will be deemed out of scope for devolution.
• Empower local leaders to go a step further by agreeing a vision and framework for future employment and skills devolution as part of the wider devolution framework. It should offer more structure and certainty than previous negotiations and agree: a prospectus for devolution; a single set of readiness criteria for all employment and skills activity; and a trajectory and clear pathway to progress from being ‘non-devolved’ to ‘devolved’ over time. It will be crucial to draw on the good practice and lessons learnt from MCAs and the GLA and broker technical support from them to enable devolution to be implemented smoothly and at pace.
• Implement Work Local and roll out more place partnerships sooner than 2030.

Our prospectus for change, below, sets out how this can be done.  

No matter where you live, everyone deserves access to a joined up, coherent and locally responsive employment and skills offer that is easy to understand, accessible and connects with local services. Our prospectus sets out the changes needed in policy, ways of working, funding and data for this to happen.

A ‘local first’ approach to policy

Many improvements can be made without the need for more funding or finding the time and political goodwill for legislation, as the levers are in the hands of Government departments and their agencies. Devolution and a ‘local first’ approach should be the default position for new programmes and initiatives, with the overall aim of taking more decisions locally and freeing up departments to tackle national challenges and opportunities.

Local government must be able to plan a targeted, place-based skills and employment offer to deliver outcomes for residents and businesses through co-commissioning for councils and devolved functions for areas with a deal, which should be made easier by agreeing a single set of readiness criteria for devolution. This means:

Coordinating a local employment and skills offer

• A national and local government partnership should be established to co-design new and repurpose existing provision, so they land more effectively in all places.
• The Government should progressively align employment and skills boundaries – including contract package areas (CPA), JCP districts, Education and Skills Funding Agency (ESFA) regions, Local Enterprise Partnership (LEP) areas and new LSIP footprints – to functional economic areas (FEAs) as determined by local partners, and ensure agencies and providers collaborate with one another and engage local government to join up all provision. This should also link with related services such as Integrated Care Systems (ICSs).

Improving skills

• Local government should have lead responsibility to plan a post-16 local offer so young people have a coherent picture of available options (A-Levels, T Levels, apprenticeships).
• Councils’ role in delivering the Government’s FE reforms is not covered on the face of the Skills and Post-16 Education Bill. LSIP guidance should be consulted on, and set out a clear, strategic role for councils in developing them. This is vital to support alignment with other local strategies and local skills and employment boards. A mechanism is needed to raise issues if LSIPs are not addressing local need.
• Non-devolved councils should be given a new ‘Community Skills’ function to plan, commission and have oversight of all adult skills provision up to Level 2 for their area including Multiply and AEB. This would enable them to coordinate what is being delivered and how it fits together.

Supporting people into and progress in work

• Employment support should be devolved, with local government trusted to design, commission and manage it. DWP should work with local government to rethink JCP's role, moving from being a claimant employment service to a public employment service and re-engaging ‘economically inactive’ people.

A commitment to collaborative working

In other cases, a shift towards a more collaborative approach would mean policies are better designed and more effectively delivered, with fewer unintended consequences. For example, in any one area, DfE and DWP provision is delivered or commissioned by agencies like JCP, ESFA, NCS, and multiple employment, training and careers providers. As no one organisation is responsible or accountable for coordinating it, this can result in gaps or duplicated activity that make it difficult to join up support for jobseekers, learners, career changers and businesses on the ground. Local government is keen to share its expertise in how ‘place’ needs to be factored into policy and funding for it to be as effective as possible. For example, this could look like:

Coordinating a local employment and skills offer

• All Government contractors delivering large infrastructure investment in a 'place' – such as a multi-million pound, multi-year road building programme – should be required to engage local authorities early on in the project to build in social value and local employment opportunities for residents. This will unlock local talent by supporting residents to gain skills to compete for jobs created by this investment.
• The Government negotiates a wide range of employment and skills related pilots, trailblazers and devolution deals, across different places and timescales, to tap into the innovation action of place-based partnerships. It should make learning from these publicly available, and set out how it is informing future public policy.

Improving skills

• The Government should facilitate a closer place-based relationship between local government and FE providers to plan post-16 provision and capital investment. This would enable wraparound services (maintenance, subsidised transport costs, welfare support whilst training) to be built into provision to better support learners, and ensure investment fills gaps and ‘cold-spots' and meets local economic need and demographic growth.
• Councils should be empowered to support the development of a coherent and complementary provider network across their area which includes adult and community learning, FE colleges, independent training providers and links with higher education that can build pathways from one institution to another.

Supporting people into and progress in work

• DWP should empower the expanded JCP to work with local government to co-design support, co-commission JCP’s Flexible Support Fund and co-locate where possible.  
• Whitehall should strengthen policy coordination across its departments and local government to remove barriers that claimants face to move into, or progress in work. For instance, DWP should permanently enable Universal Credit (UC) claimants to retain benefits while training and access the UC childcare element if needed.

Careers advice and guidance

• Schools, colleges, councils, and agencies like the NCS, Careers and Enterprise Company, JCP and ESFA deliver careers advice and guidance initiatives for different age ranges and groups in an area. Place based coordination is essential with local government able to coordinate provision across institutions and move towards a place based, locally relevant, DfE endorsed all-age careers service. All partners and providers should mobilise around it, ensuring residents should be supported to can navigate the local employment and skills offer. This means devolved National Careers Service and Careers and Enterprise Company functions.
• The National Careers Service can be more effective straight away by working with councils to plan provision, co-locate face-to-face services with wider council services such as libraries, share data, and be accountable to local boards.

Simplify and localise funding

Around £20 billion is spent on the 49 employment and skills related schemes or services in England (April 2021). This money could be spent more effectively if the system was simplified, with an end to competitive bidding and a move to long term funding attached to deliverables. Local government can add value to existing funding, attracting more investment and driving up value for money. For example, Lincolnshire County Council receives £250,000 in Government funding each year for its business growth hub which it grew into £1.8 million through match funding and grants. In addition to wider reforms, these funding issues should be considered:

Coordinating a local employment and skills offer

• Many local discretionary and devolved support services to improve peoples’ skills and job prospects, and help businesses are reliant on European Social Fund (ESF) match funding. ESF referrals close in mid-2023 but the replacement UKSPF ‘people’ element is not due until 2024-25. The Government should work with us to assess the impact of this funding gap and bring forward arrangements to address it.
• The White Paper commits to defragment growth funding. The same should apply to employment and skills funding, with an end to competitive bidding, and move to three-year funding arrangements for all provision. This would give local government and providers the ability to strategically plan provision for their areas and create more effective pathways for people which will also help businesses' workforce needs.
• Learners and job seekers in rural areas often cite long journey times, cost of transport, scarcity of childcare, and accessible job opportunities for those with caring responsibilities as reasons for dropping out of a course or struggling to secure work. The Government should explore a rural premium to unlock talent. In urban areas the largest disparities and greater socio-economic challenges will also need addressing, as outlined in our vision for urban growth and recovery report.
• Greening our economy, including retrofitting homes and buildings will generate jobs everywhere. Alongside efforts to grow the retrofit industry, skills investment should create its workforce. Local government can work with industry, training providers, housing associations etc to design talent pipelines and a place-based employment and skills offer to support local supply chains and jobs to grow while the market gains confidence to invest.

Improving skills

• Councils’ duties to integrate young people experiencing disadvantage, those at risk of, or who are NEET, care leavers, and special educational needs, into learning and work, should be matched with adequate funding, with an end to nationally commissioned programmes so it is transferred to councils who can effectively target need and join up services.
• To help adults progress from community-based learning to level 2 (and benefit from the free Level 3 offer), adult skills funding (Level 2 and below) should as a minimum be restored to 2010 levels and devolved to local government so funding is targeted to support the least qualified be part of the skills talent pipeline.
• A place based, three-year, programmatic approach to post-16 capital funding should replace annual competitive funding rounds. This would enable local government to work with providers and business to set up new facilities, purchase kit and hi-tech equipment for delivery of specialised curriculum to meet new employer demand.
• With more funding, adult and community learning (ACL) can play an even greater community engagement and outreach role to support levelling up ambitions. For instance, reaching more ‘left-behind’ communities to engage in learning, using community education (carbon literacy) to raise residents’ awareness about energy efficiency and net zero and increasing health and wellbeing.

Business support

• Local government has reach to businesses of all sizes and sectors across a ‘place’. The Government should support this and ensure they have sufficient funding to help businesses with practical support to engage with the range of employment and skills schemes. Their expertise could also better support smaller SMEs to undertake workforce planning and workforce training needs analysis. 

Better use of data

Data on national provision such as Kickstart, Restart and from Government agencies such as the NCS, ESFA and the National Apprenticeship Service is vital so local government can make strategic decisions on how other provision can work around it to maximise outcomes. However, this data has not been made easily available to local partners – either at aggregate level to support local planning, or at individual level where the same people are being supported across services, resulting in missed opportunities to integrate provision and better support local people and businesses. To address this:

• All employment and skills data should be shared to local and combined authority level to enable effective planning and delivery of services with providers mandated to support integration. This should also be available on the newly established independent data body.

The Government has access to a large amount of national and local data on how the economy is changing and what the implications will be for skills demand now and in the future. This includes the national skills and productivity board, sector specific forums such as the recent task and finish national green jobs taskforce, public sector apprenticeships and a range of sub-national intelligence through skills plans and skills advisory panels. However, it is not always clear what the totality of this tells us about changing sectoral demand and how it is informing national policy and funding decisions. In addition, opportunities to learn from local analyses such as our report into how councils are supporting digital skills and our research into low carbon and net zero jobs were missed. To address this:

• The new Future Skills Unit should bring skills forecasts together to support local, devolved and national commissioners and providers understand labour market trends.

Supporting business by reforming the apprenticeship levy

The Apprenticeship Levy has transformed the way employers manage their skills and training functions. Incremental and time-limited changes to help employers overcome obstacles in spending it have also resulted in it becoming more complicated. The Chancellor’s Spring Statement committed to reviewing how employers can make better use of the apprenticeship levy. To best support businesses, employers, jobseekers and learners, this should include the following:

• more data on local levy expenditure and provision to help inform local decisions.
• empowering employers to more easily collaborate to transfer and pool funds, allowing it to be spent on related activity (pre-apprenticeship, administration, salaries). 
• extending the two-year limit to spend levy funds where employers were unable to use them due to the pandemic or standards introduced late and establish an appeals process.  
• committing ESFA to co-design unspent levy / non-levy funding with local government.
• rolling out flexi-apprenticeships across sectors and places.
• enabling local government to pool the levy (if there is agreement with other employers) in a separate pot to better plan provision across an area, address supply / demand issues, target sectors, and widen participation.
• devolving of unspent levy and traineeships to local government to design and commission local provision.

It is clear the current system has much room for improvement, so local government leaders are always seeking to find innovative ways of improving the design and delivery of skills and employment support in their local area. Whether supporting people or employers, councils and combined authorities are striving to do the best they can to level up opportunity across the country.

Supporting businesses

Councils and combined authorities are committed to supporting businesses to access the skills they need to recover from the pandemic and are to tap into emerging industries such as digital and green that will be increasingly important to employers and investors.

Skills are critical to meeting our labour market needs, and the Government has invested in and reformed part of the system including the free Level 3 provision (A-Level or equivalent), a National Skills Fund which enabled bootcamps, FE planning reforms and a lifelong loan entitlement for level 4 and above. Investing in Level 3 will support many, but the 9 million adults in England lacking functional literacy and numeracy skills will not benefit, nor will the 13 million UK adults not qualified to Level 2 (GCSE or equivalent). Equally important is unlocking talent through English for Speakers of Other Languages (ESOL) and helping citizens become more digitally proficient to get on in life and work. The least qualified are unlikely to engage in learning, yet most likely to be in low-paid work, and suffer job loss, so helping adults progress from community-based, pre-entry learning through to Level 2 is vital. Devolved Adult Education Budget has led to a more coherent adult learning offer, augmented the local offer and improved participation.

Supporting people

It is difficult for any employment support provider working to DWP’s large CPAs to know what combination of support a long term unemployed person needs in a specific location spanning a CPA Swindon to St Ives (230 miles apart), or Chester to Carlisle (130 miles apart). This often results in capacity issues, with providers having to prioritise areas or people which will give them the quickest outcomes, and capability issues where providers may not have the local knowledge of a vast spatial area, so often need to work with councils or sub-contract to draw in local providers. Joined up services are critical to support some groups back into work, especially long-term unemployed people that may need support including housing, skills and financial management advice, and those with long-term physical and mental health issues who may struggle to get into, retain and progress in work which affects their confidence, pay, living standards and productivity. 

There is a growing awareness of the relationship between health and prosperity, with differences in health helping to explain productivity gaps between places. The Levelling Up White Paper rightly stresses the link between people’s health, education, skills and employment prospects and focuses on policies to ensure everyone, wherever they live, has the opportunity to lead healthy and productive lives. The forthcoming Disparities White Paper and the Cross Government Forum on Health Disparities should offer more place-based solutions.  Where local government has more flexibility to work hand in hand with providers from the outset, there are positive outcomes.

Ensuring all residents have access to training and jobs is essential. Understanding inequalities and barriers that some groups face when accessing skills or employment is key. Local areas will have their own inequalities based on protected groups (such as disability, ethnicity, age and sex), socio-economic status, rural isolation, veterans, care leavers and any other inequalities that may exist in a community. Local interventions target provision more effectively as it has a greater understanding to the nuances in local inequalities.

There is a continued role for councils to act as the ‘middle tier’ in local education systems, between the DfE and schools, irrespective of school structures. As the Government retains an ambition to see every school become part of a strong Multi-Academy Trust (MAT), in a fully academised system councils would be ideally placed to bring together their existing duty to promote wellbeing of all children with place-based leadership as well as synergies with their wider role around safeguarding, public health, criminal justice, employment, skills and cohesion. We would also like to see children and young people have access to a broad curriculum within local schools that includes vocational courses and skills that would benefit both pupils and the skills needs of local economies.  

Significant and different labour market and skills challenges and opportunities exist at both a national and local level. The pandemic has created new skills and employment issues and exacerbated previous ones we were already facing.

Prior to the COVID-19 pandemic, unemployment in England fell to its lowest since the 1970s, but challenges remained, both at a national level and locally across our towns and cities. One in ten workers were in insecure work, two million people were in work but wanted more hours, those furthest from work struggled to get back to work, and the disability gap had reached more than 30 percent. Four-fifths of manufacturers struggled to hire staff with the right qualifications or experience and nine million adults lacked literacy and numeracy skills. Skills gap predictions for the LGA revealed that by 2030, there would be an oversupply of three million people with low and intermediate qualifications compared to jobs generated, and 2.5 million too few higher skilled workers. Importantly skills gaps were starker within than between places, emphasising that ‘place’ really does need to be factored in when designing and targeting provision.

The pandemic-induced lockdowns accelerated previous trends including online shopping and working from home. It exposed vulnerable industries including travel, hospitality and retail and increased demand in others including logistics. There is no doubt that the impact has fallen unevenly across the country, with some people and places able to bounce back sooner than others.

Several analyses, including a House of Commons report on the impact of coronavirus on the labour market, highlighted that workers from an ethnic minority group, young and older workers, low paid workers, and disabled workers were most negatively impacted economically, while the Learning and Work Institute shone a light on the impact on lone parents. These groups are more at risk of being left behind if they are not at the forefront of provision to regrow our economy. Areas reliant on one or more sectors hit hard were bound to suffer more, such as Crawley due to heavy job losses or furlough, given the importance of the aviation industry.

The furlough scheme averted a mass unemployment crisis by protecting businesses and people’s jobs, yet unemployment rose prompting numerous Plan for Jobs interventions aimed to provide training and job help for those that needed it. Many though in less secure work including the self-employed and gig economy workers, had limited access to government support. And of course, those out of work prior to the pandemic and with low confidence and out of date skills stood less chance of securing work than someone becoming newly unemployed. The effect of lockdown took its toll on peoples’ mental health too, with the Health Foundation predicting a rise in referrals across England for the next three years at an annual additional cost of around £1.1 billion.

Over a year later, the challenge is very different, and there are many more job vacancies than we can fill. The Institute for Employment Studies showed that there were 1.29 million vacancies and fewer than 1.3 million people unemployed. This recruitment crisis is being fuelled by a participation crisis, with 590,000 fewer people in work and 490,000 more people out of work and not looking, than before the pandemic. All told, there are now 1.2 million fewer people in the labour force than there would have been had pre-pandemic trends continued, with nearly three fifths of this gap – or 670,000 people – is explained by fewer people aged over 50 in the labour market, especially women, with fewer than a quarter claiming benefits. Figures also suggest the largest annual growth in worklessness due to long-term ill health since records began in 1992 – taking the figure to 2.38 million (its highest since 2004).

Lower migration is also an important contributing factor, with 94,000 more EU nationals leaving the UK than arriving in 2020. The British Chambers of Commerce revealed four out of five of their businesses are struggling to recruit, with hospitality and construction firms most likely to report difficulties (each 83 percent). A CBI report found that as many as nine in ten people will need to reskill by 2030 as a result of changes in the economy and labour market. The City & Guilds found that of a total of 3.1 million key worker job openings expected in next five years - making up 50 percent of openings in UK job market, only a quarter of working age adults would consider those roles which include health and social care, and food production, agriculture or animal care. As major local employers in their own right, local government has workforce capacity issues of its own that predate but have been exacerbated by COVID-19. In a recent survey of councils, shortages were highlighted in adults' social care, children's services, planning, environmental health, and waste collection.

Addressing these shortages is key to economic recovery. 69 per cent of councils told us that addressing the local mismatch between skills supply and demand, having sufficient skills provision for future growth sectors were critical.

At the same time, economic and social change is creating new opportunities. Greening our economy will offer jobs across the country. Analysis for the LGA by Ecuity found that there could be as many as 694,000 direct jobs in low-carbon and renewable energy sector by 2030 across every part of England, rising to over 1.18 million by 2050. If such levels of employment come to fruition, local government will need to play a key role in facilitating technology transitions in homes and businesses, engaging residents, supporting local businesses and upskilling the local workforce. Action to accelerate activity, including through retrofitting, will only be successful if industry has a workforce to deliver it, but skills take time to develop. We need collaborative efforts between local and national government, industry, and training providers to develop training, create jobs, grow local supply chains, and match skills supply with industry demand.

With record vacancies and a smaller pool of unemployed and employed people, employers already seem to be responding. The CIPD found around half of employers were responding to recruitment challenges by raising pay, advertising more jobs as flexible and upskilling existing staff. The big challenge now is to do more to identify, engage and encourage the economically inactive back into the jobs market and give them the right skills and support.

In 2020 the TUC reported one in nine workers, or 3.6 million workers across the UK are now in insecure work – i.e. those on zero hour contracts, in insecure forms of agency work, and self-employed workers, and the Resolution Foundation reported many young people had now moved to the gig economy. Households particularly those on lower incomes and those in receipt of Universal Credit, are feeling the impact of the pandemic on their earnings. This is compounded by rising UK inflation, which is expected to reach 8 per cent in Spring 2022 and 10 per cent in the Autumn. This is increasing cost of living items including energy, food, household services and transport. Supporting people and places to be more resilient to future shocks is now critical. Councils want to work with government on an effective long-term solution to move away from providing crisis support towards improving life chances.

Moving towards a high skill, high wage economy will in part be met by a range of further education and technical reforms but also critically joining up skills and employment support and work with employers on skills utilisation. However it also needs action to improve essential skills. We welcome DfE’s approach to localising Multiply to increase adult numeracy skills, but there is more to do given nine million people lack basic skills like literacy or numeracy, while 11.8 million (36 per cent) of working adults lack the digital skills needed for work. This locks people out of the chance to work and build a career, with those qualified below Level 2 (equivalent to five good GCSEs or equivalent) nearly three times more likely to be out of work than those qualified at Level 4 or above (degree level). Being digitally proficient is now a near-universal requirement for employment, with digital skills now an essential entry requirement for two-thirds of occupations which account for 82 per cent of online job vacancies. According to Hays Recruitment employers struggled to fill one-third of vacancies last year due to lack of digital competency. 

The LGA would like to thank the following councils and combined authorities that have helped inform this refresh: Babergh and Mid Suffolk Councils, Bristol City Council, Cambridgeshire and Peterborough Combined Authority, Central London Forward, Devon County Council, Essex County Council, Greater Manchester Combined Authority, Hampshire County Council, Hull City Council, Lincolnshire County Council, Liverpool City Region, Northumberland County Council, Staffordshire County Council, Tees Valley Combined Authority, West Midlands Combined Authority, West Yorkshire Combined Authority. Thanks also go to the Local Government Associations of Wales, Scotland and Northern Ireland, Dave Simmonds, Rachel Potter, the Institute for Employment Studies, and the Learning and Work Institute.