‘Levelling up’ was a central feature of last week’s Spending Review. But while the Chancellor’s statement mostly emphasised the role that infrastructure and capital investment can play in levelling up opportunities across the country, the 122 pages in the Spending Review document went further to highlight that skills and job creation will play a central part in this agenda too.
Skills are a key determinant of the success of people and places. Research by the Social Mobility Commission shows that education explains around 80 per cent of the earning gap between adults brought up in poorer and richer families. And this is visible among places too: cities and large towns with a larger share of population with high-level qualifications tend to have more vibrant labour markets and to be more productive.
As such, the Spending Review’s announcements around employment, skills and education programmes may bode well for levelling up. The Chancellor confirmed a £2.2 billion uplift for school funding in the next academic year, further investment in further education, and £375 million for the National Skills Fund alongside increased funding and improvements to the apprenticeship system. A new three-year long £2.9 billion Restart programme was also launched to provide bespoke support for people facing long-term unemployment, the Kickstart programme aimed at supporting young people back into work was expanded, and pilots for the new UK Shared Prosperity Fund announced.
The good thing about these announcements is that they are mostly based on evidence of what works. But, to make sure they really translate into levelled-up opportunities across the country, three things need to happen.
Firstly, there needs to be better connection between these new programmes and other initiatives already in place, both at the national and local level. These new announcements add extra layers of complexity to an already complicated skills system. Government departments need to streamline the interaction between these different schemes, making it clearer for businesses and individuals what kind of programmes they should be accessing based on their needs.
And there is scope for better coordination at the local level too: while metro mayors often stress the importance of investment in skills to improve opportunities in their area, there is little oversight locally of all the funding streams available for support and how they interact with each other.
Secondly, support must be tailored to the most disadvantaged groups. Evidence from the Work Programme – the initiative on which the Restart programme heavily draws – shows that while the scheme was effective overall in helping people that were long-term unemployed get back into the labour market, there were still particular challenges in supporting some specific groups, such as older workers and disabled adults. These challenges must be addressed to ensure the success of this new programme.
Lastly, these interventions must be combined with strong jobs growth. A key challenge in many ‘left-behind’ places is that there are too many people competing for not enough job openings. Covid-19 has made the situation even more difficult and there aren’t currently many jobs available for people who find themselves unemployed. This will require two things – a short-term fiscal stimulus to create jobs, which should be on the Chancellor’s list for his spring budget, and a longer-term focus on making struggling places more attractive to investment from higher-skilled businesses (which should be the central aim of the levelling-up agenda).