Centralised Skills System Causing Nationwide Skills Mismatch
#Skills2030 – 6M People Could Be Left Behind By £120 billion #SkillsMismatch Caused By Centralised #SkillsSystem
Six million people in England risk being without a job or in work they are over-qualified for by 2030, new research for the Local Government Association suggests today (16 Jan).
A new report commissioned by the LGA, which represents councils in England, estimates that not meeting the skills needs of employers could lead to a potential loss of £120 billion in economic output by the end of the decade.
The report “Local Skills Deficits and Spare Capacity” aims to model potential skills gaps and skills mismatches in England by 2030, with particular focus on eight areas within England.
These are:
- Essex, Southend and Thurrock
- Nottingham City
- Staffordshire
- Gloucestershire
- Greater Lincolnshire
- Lambeth, Lewisham and Southwark
- North Tyne
- Southampton and Portsmouth
The research for the LGA by the Learning and Work Institute (L&W) also reveals that by 2030 there could be:
- 5.1 million low-skilled people chasing 2 million low-skilled jobs – a surplus of 3.1 million low-skilled workers;
- 12.7 million people with intermediate skills chasing 9.5 million jobs – a surplus of 3.1 million people;
- 17.4 million high-skilled jobs with only 14.8 million high-skilled workers – a deficit of 2.5 million.
Brexit is an opportunity to improve the current centrally-governed skills and employment system, which sees £10.5 billion a year spent by eight government departments or agencies across 20 different national schemes.
The LGA says this is creating a confusing, fragmented, untargeted and ineffective system.
It said that councils, combined authorities and their partners can help the Government tackle skills gaps and more effectively reduce long-term unemployment and the number of young people out of work by being able to target support locally.
The LGA is calling for the Government to use the Budget to devolve all back-to-work, skills, apprenticeship, careers advice, and business support schemes and funding to the local areas in which they are used.
This would see groups of councils across England given the power and funding to deliver a one-stop ‘Work Local’ service for skills, apprenticeship, employment, careers advice and business support provision.
It would bring together local skills planning, oversee job support including Jobcentre Plus and the Work and Health Programme and coordinate careers advice and guidance for young people and adults.
Sector Response
Cllr Kevin Bentley, Chairman of the LGA’s People and Places Board, said:
“Millions of people face a future where they have skills mismatched for jobs at a huge cost to people’s lives and the local and national economy.
“Councils are ideally placed to lead efforts to help the Government bring growth and jobs to all parts of the country and ensure everyone is fully equipped with the skills they need to compete for future jobs.
“For that to happen, our complex and fragmented national skills system needs to adapt to a changing jobs market.
“Better local coordination of services would provide better opportunities for young people to increase their skill levels and adults retrain and upskill for future jobs. This is key to driving up productivity, closing local skills gaps and boosting local economies.”
Stephen Evans, Chief Executive of Learning and Work Institute, said:
“Improving skills is central to making the 2020s a decade of growth.
“Other countries have continued to invest in skills, while progress in England has stalled over the last decade, the result of large cuts in England’s adult education budget which has left us lagging behind other countries and the number of adults improving their skills at a record low.
“We now need a decade of investment, in order to boost life chances, economic prosperity and to level up the country. That investment needs to be delivered through a partnership between national and local government, employers and trade unions. The cost of inaction is large and growing: it is time for action and investment in lifelong learning.”
Paul Swinney, Director of Policy and Research at Centre for Cities, said:
“A lack of skilled workers in many cities and large towns outside the Greater South East is the biggest thing holding back this country’s productivity and prosperity. It is no coincidence that northern cities such as Burnley, Bradford and Blackburn have among the highest proportions of people without any qualifications, and also the weakest local economies in the UK.
“Where appropriate, powers to tackle this skills crisis should be devolved to the local level. But this is set to a background of longer term cuts to FE budgets. So this must be matched with extra funding to help left-behind places upskill their workers.”
Tom Bewick, Chief Executive of the Federation of Awarding Bodies (FAB), said:
“This is an excellent report, which exposes sharply, the massive mismatch of the skills available and the skills UK plc will need in future. In the last decade, we have seen employers invest about £5 billion less per annum in workforce training, despite the Apprenticeship Levy raising approximately £2.4 billion in England. With the cuts to 16-19 and adult education in FE — as detailed by the Augar Review — and a decline of about 2.2 million adult learning opportunities since 2015; it is no exaggeration to state our skills and workforce training system is currently in crisis.
“FAB members stand ready to play our part in plugging the skills gaps identified by this report. We already work closely with employers and local communities to identify skills needs and, often, tailor bespoke qualifications and industry credentials to meet specific workforce needs.
“The Chancellor’s Budget on 11th March is a once-in-a-generation opportunity to put investment in the British workforce back on track, and to fix the Apprenticeship Levy, once and for all. The Department for Education also needs to proceed with caution in terms of its planned review and rationalisation of qualifications at Level 3 and below. We are in danger of throwing the baby out with the bathwater.
“In a post-Brexit scenario, with a new points based system for immigration being muted, we need to recalibrate our whole skills system to one that is focussed more clearly on growing the domestic pipeline of talent. Such a model does not have to be in contradiction to being open to the rest of the world, where we should continue to address specific skills gaps and shortages via fair immigration, particularly where demand can’t easily be met by British workers. What this report shows, however, is the importance of devolving decision-making to local delivery areas, while maintaining a national framework of adult learning and workforce training entitlements, to avoid a postcode lottery.”
Roger Gorman CEO Founder of Workforce optimisation Vendor ProFinda, said:
“We know from working with UK plc organisations to help them understand their internal skills inventory that there is a large skills deficit in many areas and this is massively hampering growth.
“Now post Brexit we believe it is the number one challenge for many companies and sectors. We welcome all initiatives to align the skills of the workforce with the demand from UK plc.”
Matthew Fell, CBI Chief UK Policy Director, said:
“Adult learning is heading in the wrong direction at precisely the wrong time for our economy and our society. Technology is rapidly changing the world of work and driving up demand for new and higher skills. This is a huge opportunity – which is why we need the partnership of the century between business, government, the education sector and workers to deliver the retraining essential to ensuring everyone benefits.”
Kirstie Donnelly, CEO City & Guilds Group said:
“This report is just another warning for Government to stop deprioritising adult education and start making skills a priority. Our Sense & Instability report last year highlighted the issues with our disjointed skills system and the real risk to people who are falling through the cracks of an underinvested system.
“Devolving skills budgets to local councils would be a step in the right direction but what we really need is better intelligence about local labour market needs and for employers and colleges/training providers to work together to focus on developing the most needed skills.”
Case studies of discretionary schemes run by councils can be found here
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