DWE0016
Written evidence submitted by The Local Government Association
Inquiry: Developing workforce skills for a strong economy
I would like to take this opportunity to write on behalf of the Local Government Association (LGA), as your Committee takes evidence on the challenges in the UK country having a sufficiently skilled workforce.
The LGA works on behalf of councils across England and Wales to ensure local government can play their full part in making a positive difference to people and places. Councils have vital functions in their local economies and skills systems, and want to work with Government to unlock talent, tackle local labour market and economic challenges, support more people into quality jobs, and address broader challenges such as tackling socio-economic inequalities, supporting residents with the cost of living and delivering a just transition to net zero. Our research shows that the skills and employment system remains highly complex and fragmented, and as a result is unable to effectively address pressing labour market and socio-economic challenges. With the right flexibilities and funding, local government could do much more create place-based, integrated skills and employment systems, which could more effectively tackle national and local skills challenges and drive inclusive economic growth.
Skills challenges
The major skills challenges and opportunities in the national economy are affecting local areas acutely, with every area having its own distinct labour market and skills challenges. Analysis from the Institute of Employment Studies illustrates the urgency of this task, revealing that local needs and priorities vary significantly across local areas given differing economies, labour markets, and demography. Areas – often within the same regions – are facing distinctly different challenges and opportunities around labour force participation and employment demand. The analysis also found that, without effective intervention, 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’ and improve productivity.
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 challenges. At the same time as digital and green jobs offer new opportunities, the nation lacks the right mix of skills to meet future demand. Our analysis forecasts that up to 1.18 million new jobs will be created in low carbon sectors by 2050 in England, and delivering the pipeline of skills for these jobs will be essential to achieve net zero. Skills gap predictions for the LGA also 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, demonstrating that ‘place’ really does need to be factored in when designing and targeting provision.
Creating a place-based skills system to tackle skills gaps
As the National Audit Office report highlights, there are a growing number of skills programmes which can be disjointed and hard for learners, employers and training providers to navigate. Councils and combined authorities are vital to bringing together a skills and jobs offer around ‘place’ that works for residents, local employers and communities. Investment and interventions must connect up across Government and at a local level if they are to support people of all ages, as well as employers of all sizes, to progress.
The current national skills system has proven unable to address labour market and productivity challenges across the country. Our research shows that the skills and employment system remain highly complex and fragmented – delivered across 49 employment and skills-related schemes or services across England, managed by multiple Whitehall departments and agencies, and delivered over different boundaries by various providers – with no one local point of coordination. This includes programmes such as the Levelling Up Fund, Towns Fund and Help to Grow, as well as support to get people into work and training including Restart, Bootcamps and the National Careers Service.
No single organisation is responsible for coordinating these programmes nationally or locally, meaning there is no accountability over how the totality of provision is improving local outcomes. This makes it extremely challenging for local government to provide place leadership and coordinate, plan, target and join-up provision, often resulting in gaps in provision or duplication.
Funding for skills and employment support is short-term, fragmented and held centrally, and powers to affect change are too remote, unless a council is situated in an area with a devolution deal. Through the delivery of the Adult Education Budget, the Government does engage with mayoral combined authorities and the Greater London Authority about skills provision, but there is limited engagement with the rest of local government. This matters because half of the country is not currently in a devolution area. Councils, as democratic leaders of place, large employers in their own right, and trusted convenors of partners, have wide-ranging functions and expertise that are vital to getting the employment and skills offer right for its residents, communities and businesses.
The Department of Education (DfE) has recently moved to work with local government to help design programmes like Multiply and engage councils as employers to develop a T-level offer. However, the majority of DfE policy does not adequately embed place into its thinking, which means different initiatives are hard to piece together on the ground and develop coherent pathways and progression. More systematic and strategic discussions early on between local and national government are needed. Additionally, Government’s commitment to streamlining growth funding is positive, but should not ignore the wider proponents of growth, such as skills and employment support.
Work Local
We are pleased that the Levelling Up White Paper includes devolving AEB as an option for councils securing devolution deals. Councils and combined authorities have the appetite and expertise to go even further to increase local and national productivity.
By 2030, the Government wants 200,000 more people in England to successfully complete high-quality skills training annually, including 80,000 more people in the lowest skilled areas. Work Local, our plan for a devolved and integrated skills and employment system, is a blueprint for making this happen at less cost. A Work Local approach would give democratically elected local leaders the power and funding to work with local partners – businesses, training providers, the education system –to join up careers’ advice and guidance, employment, skills, apprenticeships, business support services and outreach in the community, to create a joined-up and locally targeted offer to help more people to upskill, reskill and move into quality work in in-demand sectors.
A cost benefit analysis demonstrates that a Work Local model could result in a 15 per cent increase in the number of people improving their skills or finding work by using existing investment more effectively, by adult skills, contracted employment support and UKSPF, and giving local areas more influence in apprenticeships and 16-19 funding. Based on analysis that £20 billion is spent on employment and skills related provision in England, devolving a small proportion of this overall spend would make a big difference to communities.
For a typical medium-sized combined authority, with a working age population of 960,000, an around £270 million investment per year – which represents 1.35 per cent of national skills and employment 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.
Introducing these measures could boost the prospects of residents and businesses, improve the health and wellbeing of local communities while reducing costs to the public purse. It would help not just those who left the jobs market directly because of the pandemic, but also job seekers, learners, people seeking a career change and young people working out their careers path.
Expanding lower-level skills provision
Even before the pandemic hit, the Government recognised that continued learning throughout our working lives will be critical to keeping the workforces’ skills relevant for the changing labour market. The pandemic has also brought into sharp focus the need for reskilling and upskilling so that people can move into new occupations or sectors. Alongside existing interventions, the Government has brought in new initiatives like Skills Bootcamps; the Lifetime Skills Guarantee, to enable people gain a Level 3 qualification for free; and the lifelong loan entitlement (LLE), to support people to access funding for training at levels 4 and above.
While these are positive and will expand opportunities to upskill and reskill, these interventions do not help those furthest away from the labour market and more must be done to support people with low or no qualifications to be part of the talent pipeline. They are still nine million adults in England that lack functional literacy and numeracy skills, and thirteen million UK adults not qualified to Level 2 (GCSE or equivalent). Given the least qualified are unlikely to engage in learning, yet most likely to be in low-paid work and suffer job loss, helping more adults progress from community-based, pre-entry level learning through to Level 2 is vital to tackling equalities and closing skills gaps.
There is an urgent need to prioritise and fund activity to help adults progress from community-based, pre-entry level learning through to Level 2. Training at Level 2 is primarily provided by local authority adult and community learning (ACL) services who are experts in delivering community outreach and the intensive work required to meet need below Level 3. Funding for adult skills mainly comes from the £1.5 billion annual Adult Education Budget (AEB), which has been vital in providing support for those without Level 2 to improve their basic skills and gain essential qualifications. Mayoral Combined Authorities and the Greater London Authority already have responsibility for adult skills in their area, with devolved AEB, and have used it innovatively to deliver on local skills priorities.
DfE is proposing reforms to adult skills funding and accountability. This will include a new Skills Fund which will subsume the £1.5 billion Adult Education Budget and Community Learning with the intention of rolling in other adult skills funds in the future. We believe the Skills Fund must incorporate a mixed and balanced funding offer for community skills, basic and functional skills, alongside technical and higher-level skills to help adults progress through the skills pipeline if we are to make inroads into addressing productivity, levelling up, and social mobility. Councils tell us that it is critical that provision for Level 2 provision and below is adequately funded and that far more coordination at a local level is needed to help join the provider base together. We will be setting out our views in our response to the relevant DfE consultation.
For councils that are not already involved in negotiating deals, they should have a new ‘Community Skills’ function with strategic responsibility to plan all adult education to Level 2 through an Investment Plan, which would allow them to combined AEB, National Skills Fund and Multiply funding, and align local provision with Local Skills Improvement Plans.
This is essential as currently no one organisation has local responsibility for coordinating level 2 education. To effectively support people into training and tackle skills gaps, there needs to be far more coordination and alignment at a local level to help people and businesses navigate a growing number of skills and employment interventions. Local government should have a key role in designing this offer with relevant local and national partners, supported by devolved, multi-year funding instead of short-term, competitive bidding processes which prevent long term-planning.
Green Skills
The NAO report also highlights the Government’s commitment to achieve ‘net zero’ greenhouse gas emissions by 2050 will create new skilled jobs and economic opportunities. In our report ‘Local green jobs – accelerating a sustainable economic recovery’ our analysis forecast that up to 1.18 million new jobs will be created in low carbon sectors by 2050 in England. However, to deliver on our net zero ambitions, we need to accelerate current action to build green skills pipelines.
As place leaders, asset owners and significant purchasers, councils will continue to be an essential partner in delivering the transition to net zero, with the ability to impact on more than a third of emissions across villages, towns and cities in areas such as housing, transport and the natural environment. Many councils across the country are already playing a leading role in developing their green workforce, aligning green skills development with their long-term economic growth and climate change programmes. The LGA is also playing a key role in supporting councils to develop green skills through our sector-led improvement programme. Given the right funding and powers, councils and combined authorities could play an even greater role in identifying local future green skills demand, supporting local businesses to develop their knowledge of the skills they will need to meet net zero targets and work with local education providers, employers and other partners to develop skills pathways to meet demand.
The demand for different types of green jobs varies across regions and local areas – such as the low carbon and energy sector jobs identified in the LGA’s Green Jobs report – and local authorities across the country are at different stages of developing their green jobs pipeline. Therefore, it’s vital that every area has the right powers and resources to take a joined-up, place-based approach to green skills development, coordinating industry, education providers and other local partners to meet local and national demand for green skills, now and in the future. This will require long-term funding, devolved powers and easier access to complex government funding pots. Working with local government and industry, Government must bring forward a joined-up, cross-Government strategy for green skills. Alongside devolved skills and employment funding, we are also calling on Government to provide place-based packages of targeted investment – including to retrofit social housing and public buildings - to accelerate decarbonisation and stimulate demand for green jobs in every area. Any packages should easily align with wider growth funding, such as the levelling up fund and the UK Shared Prosperity Fund. This will enable to plan the workforce requirements for different green sectors, bringing together community activity, business support and the wider employment and skills system.
Local government workforce challenges
Within their own workforces, councils continue to experience major workforce capacity issues in part due to a shortage of skilled professionals. These issues predate, but have been exacerbated by, the pandemic. With an expanding range of specialist professions in short supply, there is a significant risk to the ongoing delivery of some core local government services. The LGA has been monitoring this over recent years and the number of professions affected has increased, as has the severity of the shortages.
In our most recent survey of councils, 51 percent said there is a moderate or high risk that shortages in workforce capacity will negatively affect their ability to deliver services. The services most likely to be affected are adults' social care, children's services, planning, environmental health and waste collection. While the challenges in waste collection relate to a specific current shortage of HGV drivers, the challenges the wider services are a result of shortages in specialist professions where either there are insufficient qualified people in the country or there are insufficient numbers to meet the demands of all the sectors of the economy that require these skills. For example, there are too few qualified social workers in England and Wales (adults, children's and mental health) to meet current and future demand, whereas planners and building control specialists are in greater supply overall but local government has difficulty competing with the private sector to employ them.
The LGA has asked councils to report where they have difficulties recruiting the necessary skills. Of councils with children’s social care responsibilities that had reported recruitment difficulties, 93 per cent were having difficulties recruiting children’s social workers while in district councils, 62 per cent of those with recruitment difficulties said they were having problems recruiting environmental health officers and 76 per cent were having problems recruiting planning officers. We would be pleased to share the full data from these surveys if helpful to the Committee.
To help address these skills shortages, Government should take a lead in coordinating greater support for the sector in meeting its workforce capacity challenge and in doing so could aid delivery of its levelling up ambitions. Specialist professions in local government do important and varied work and generally earn above average salaries. As they are needed in all parts of the country, providing support for the training and recruitment of these skilled professionals would benefit not only the individuals themselves but their local communities and local economies.
October 2022