Upskilling employees’ digital skills is the highest priority for London businesses in training their own workforce

With London’s economy still in lockdown and the capital facing the highest rates of unemployment in the UK, a new report released today provides an insight into the impact of the pandemic on the capital’s businesses, and their recruitment plans and skills requirements as they look towards economic recovery during 2021.

The ‘London 1000’ report from London Chamber of Commerce and Industry and London Councils, with survey work from YouGov*, highlights a constrained labour market during 2020 with reduced business confidence in London’s economy and fewer apprenticeship opportunities.

The report also considers the role of increased remote working in focussing the labour market on professional and digital skills, and the financial support measures that business leaders wish to see to continue to help them through the pandemic.

The report, based upon the views of more than 1000 London business leaders across the capital’s boroughs, also shows a plan to continue remote working throughout 2021.

Business leaders are also saying that remote working is now their leading measure in helping to deliver their carbon reduction plans – perhaps suggesting a longer-term pattern of hybrid working in the capital.

Headline findings show that:

• Half of business leaders see cashflow as a main threat to business recovery from COVID-19.
• Grants via local councils, VAT relief, an extension of the business rates holiday, and continuation of workforce support are all seen as the most useful business support to deal with the impact of COVID-19.
• 84% of London business leaders are less confident about London’s economy than they were a year ago, and 86% in the UK economy.
• 44% of businesses recruited or tried to recruit in 2020, with 41% of business leaders expecting to recruit staff over the next year (rising to 77% of large firms).
• 63% of businesses say that staff retention has stayed the same since the COVID-19 outbreak, but three in ten (31%) say it has decreased.
• Upskilling employees’ digital skills is the highest priority for London businesses in training their own workforce.
• The number of London businesses that had no one working remotely moved from 51% in 2019, to 24% in 2020.
• Almost half (46%) of business leaders expect to have over two-fifths of their staff still regularly working remotely in twelve months’ time.  A third (32%) of business leaders say all of their staff will return to working in-person in a year’s time. The number of business leaders saying that 81-100% of their staff will regularly work from home a year from now has doubled (22%) compared to 2019’s figure (11%).
• Only 8% of London businesses employ apprentices.
• 78% of businesses are currently taking action to reduce their environmental impact.
• Encouraging tele-commuting or remote working (37%) is the most common way businesses plan to reduce their environmental impact.

This year’s London 1000 report tells that the most common type of role recruited for was professional/managerial staff, whereas in 2019 it was skilled manual/technical staff. This may well reflect the impact on the labour market for certain sectors, such as financial and professional services, which were more resilient to Covid-19 restrictions and lockdowns than industries such as hospitality.

The report shows support for Government support mechanisms to maximise cash flow, with continued grants, VAT and business rates relief all highlighted as methods to aid the chances of business recovery – something that both LCCI and London Councils have been campaigning for to enable business to make longer term plans and safeguard their future.

There has been a downward trend in recruitment over the past three years – in 2018, over half of businesses had tried to recruit staff in the last twelve months (55%), dropping to 50% in 2019 and 44% in 2020. A similar pattern is seen in intentions to recruit over the next twelve months, with the drop even more marked from three-fifths in 2018 (59%) to two-fifths (41%) in 2020.

Initiatives to boost employment, such as the apprenticeship levy, are still failing to have an impact in growing staffing numbers. London Councils and LCCI again repeat their call of recent years for devolved apprenticeship funding, to allow for local design and delivery of apprenticeship programmes that ensure businesses and employees have the skills they need.  

63% of businesses reported that staff retention had stayed the same as 2019.  Over half of business leaders reported training of their existing staff is currently the most important way to acquire the new skills their firm needs.  Upskilling digital skills is the main priority, whilst a fifth (22%) of London businesses cite managing a remote workforce as their main skills and labour market challenge over the next 12 months, growing to 39% for larger firms.

Unsurprisingly, given the ongoing restrictions, the role remote working will continue to play for businesses and their staff is evident, including through 2021. However, remote working is now also judged as the key measure to helping deliver carbon reduction and an environmentally sustainable recovery for London.

The large majority of London’s business leaders clearly understand the importance of their role in tackling climate change and as such most firms already have measures underway.  In addition to the role of tele-commuting or remote working, using greener technologies and using sustainable suppliers or procurement policies are most common amongst business plans.

Businesses also recognise the role that government and councils have to play in carbon reduction and over half of business leaders said that financial incentives, such as grants, would help further motivate businesses to lower greenhouse gas emissions.

The report tells that Government should support green recovery via fiscal levers, and supporting sectors that are critical to a green recovery; for example, reducing VAT on energy efficiency measures and increasing green skills support.

Overall, whilst the current business environment remains a significantly challenging one, the London 1000 report outlines some clear agreements about the route to London’s economic recovery from COVID-19.

Richard Burge, Chief Executive of London Chamber of Commerce and Industry, said: “This is a detailed report and I urge all London councillors, MPs, and the Government to read it.

“Commitment now from the Government to VAT and business rates relief beyond Spring will give more businesses the chance to survive to fuel London’s economic recovery, once vaccination roll-out allows it to fully get underway.

“It’s pleasing to see the appetite for that recovery to be an environmentally sustainable one.  The large majority of firms have carbon reduction plans underway, and it’s interesting to see how many employers believe that a continuation of some form of remote working each week will play a key part in their carbon reduction efforts.  The likes of flexible rail season tickets could help to support that and a footfall recovery in London’s many high streets.

“It’s clear that London will come out of this pandemic with a different economy and ways of working than when it went into it.  We need all London players to come together to consider these changes, the opportunities, and how we can best ensure the economic recovery of capital and country.”

Cllr Danny Thorpe, London Councils’ Executive Member for Business, Europe, and Good Growth, said: “This report is a vital window into the main issues businesses are facing in the capital. This year especially, we must listen to what businesses need and create the right environment for them to recover from the challenges of the pandemic and prosper moving forwards.

“Based on the findings of this report, and working closely with London’s businesses, we will continue to make the case for the immediate on-going support businesses need, but also plan for the recovery.

“We also need certainty for businesses as they plan for the future, including an immediate announcement of a targeted extension to the Business Rates holiday and extension to VAT reliefs beyond March 2021.

“London’s businesses are facing a turning point, with many of them reviewing their practices as a result. It is great to see that so many of them are focussing on an environmentally sustainable recovery with carbon reduction as a firm feature.

“London boroughs are calling for reform of the apprenticeship levy to increase the skills and employability of Londoners of all ages. This is especially crucial given that London is facing the highest unemployment rates in the country.

 “London’s businesses are a huge part of what makes our city so unique. We must listen to them and work together to build a clear, successful road to recovery.” 

Methodology: *YouGov surveyed 1,251 London business decision-makers online between 29th September and 5th November 2020. The research was delivered during the UK Government’s national COVID-19 alert system, in which London was placed into Tier 2. The data collection was completed before the national lockdown imposed on England from the 5th November to 2nd December 2020.

The sample frame included 1,000 core responses representative of business size and an additional 250 responses from large businesses (with 250 employees or more). The final achieved figures have been weighted to be representative of London businesses by size and industry. Due to rounding, some combined figures may not sum to 100 or the net percentage figure. The weighted proportions are representative of the London business population by size and therefore micro and small businesses are the predominant view in the weighted data.