New report outlines £120bn cost of not closing skills gap

A call from the report’s authors, the Local Government Association, for skills training to be decentralised, echoes Government findings published last year

A new study from the Local Government Association (LGA) has underlined the huge potential cost of not closing England’s skills gap.

‘Local Skills Deficits and Spare Capacity’, published today, reports that not meeting the skills needs of employers could lead to a loss of £120 billion in economic output by 2030.

The research, conducted for the LGA by the Learning and Work Institute (L&W), also suggests that six million people risk being either unemployed or in work they are over-qualified for by the end of the decade.

The findings also conclude that, by 2030, there may 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

The cost of inaction is large and growing: it is time for action and investment in lifelong learning
 – Stephen Evans, Learning and Work Institute

At the moment, the centrally-controlled skills and employment system sees £10.5 billion a year pumped into 20 different national schemes via eight government departments or agencies, notes the LGA.

This nationally-orchestrated fragmentation, it argues, makes for a confusing and inefficient system.

Thus, the association is calling for the Government to devolve back-to-work, skills, apprenticeship, careers advice, business support schemes, etc, to the local areas in which they are used.

“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,” said Cllr Kevin Bentley, chairman of the LGA’s people and places board.

“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.”

Digital skills are becoming near-universal requirements for employment

The call echoes government findings, published in June 2019 by the Department for Digital, Culture, Media and Sport.

“Digital skills policy should be driven locally,” said the report. “Digital skill requirements vary substantially from region to region, and so should efforts to train workers. For example, data and design skills are particularly important in London to meet the needs of the finance and creative industries, while engineering and advanced manufacturing skills are particularly important in high-tech engineering centres such as Cambridge and Bristol.”

The same report made clear that digital literacy will be key to closing the skills gap:

“’Baseline’ digital skills such as Microsoft Office and other productivity software tools are commonly required in jobs across all skills levels and have become a ticket to entry in the labour market.

“When breaking the job market down by skill level into low-, middle-, and high-skill roles, we find that over 75% of job openings at each level request digital skills.

“Through this analysis, we find digital skills are becoming near-universal requirements for employment.”

Councils are ideally placed to lead efforts to help the Government bring growth and jobs to all parts of the country
 – Cllr Kevin Bentley, Local Government Association

Experts note that education will be central to improving the country’s digital skills level.

Jisc’s head of change, Sarah Knight, wrote in these pages last month about how UK universities are struggling to keep up with the pace of technological change required by employers.

And Stephen Evans, chief executive of L&W, says that: “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.”