Improving living standards requires raising the skills floor, and not just prioritising the highest earners, to drive economic growth and prosperity everywhere.
Skills levels determine both the ability of a place to attract high-paying jobs and the extent to which these jobs benefit people across a city. So, where do cities stand when it comes to skills?
Productivity drives income growth and improves living standards. A highly-skilled workforce is fundamental to achieving these goals. This is shown in Figure 1 – cities with a higher proportion of highly-qualified residents (above A level or equivalent) are more productive.
That said, skills do not seem to be the whole story. Other factors may be preventing cities from shifting their existing high-skilled workforce into cutting-edge jobs. Structural barriers such as transport and health, as well as the type and quality of skills these workforces are composed of in different UK cities, requires further investigation.
Of course, not everyone will be in a position to take a high-skilled job. If a goal is to improve living standards for everyone, it is essential to address broader employment challenges.
This means tackling skills at the other end of the qualifications ladder. Cities with a higher proportion of residents lacking any formal qualification have some of the lowest employment rates of all UK cities (Figure 2).
People with high skills are concentrated in cities. But this is also true of people with no formal qualifications. And, while cities make up 55 per cent of the overall population, 61 per cent of the UK’s urban population have no qualifications.
But these concentrations tend to happen in different regions.
In cities in Scotland and the Greater South East (e.g., Oxford, Edinburgh, Cambridge) the majority of residents are highly–qualified and they have a very small low-skilled population. This compares to places in the North like Wigan, where only a third have high-level qualifications, and Sunderland where one in eight residents have no formal qualifications (Figure 2).
The visualisation in Figure 3 sets out to capture how skills feed into the economic performance of cities. There are two main points to draw from it.
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The first is that on the whole there is a positive correlation between productivity and skills. There are some exceptions in the bottom right of the chart, like Stoke and Gloucester, but generally speaking these two things are not competing goals. The stronger performers are largely in the Greater South East, while the weaker ones are largely in the North of England or Wales.
Secondly, reflecting the analysis above, the skills profiles of cities with better-performing economies are much stronger than those with weaker economies. The ‘mushrooms’ in Figure 3 show the share of people with high-level and no formal qualifications. The mushroom caps represent skills at the top end. The mushroom stalks represent skills at the bottom – residents with no formal qualifications. These caps and stalks are larger and smaller respectively at the top right of the chart than the bottom left.
Skills are central to the Government’s Industrial Strategy and achieving the 80 per cent employment rate outlined in the Get Britian Working white paper. If it is to be successful in putting more money in people’s pockets across the country, then both improving the attractiveness of a place to high-skilled activities and increasing the likelihood that people can benefit from opportunities created will depend on improving skill levels, particularly in the North of England.
You can read Cities Outlook 2025 in full here and use the data tool to see the scale of economic performance variations across cities and towns in the UK.
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