Disparities and devolution: how can the next government close divides in skills and employment?

29 November 2019

Devolution hasn’t been a major theme in the election debate – and with Brexit dominating it’s unlikely to be. Yet against a backdrop of relatively high inequality, devolution needs to be a central part of the next government’s attempts to improve outcomes across the country. Decisions should be taken as close as possible to those affected by them, involving people in the process, and the focus should always be on improving outcomes for people. While some things should be national e.g. apprenticeship standards, many will be better designed and delivered at the local level.

Progress to date on skills and employment devolution has been limited

Parts of the country, such as the Black Country and Tees Valley, are still struggling with the impacts of previous recessions with high levels of unemployment and inactivity, and there are stark variations in outcomes for young people across the UK, as highlighted by our Youth Opportunity Index.

Skills is one of the most important factors driving these disparities. But, to date, cities and towns have been given relatively little power and responsibility to address their skills and employment challenges.

One of the most significant changes as part of the devolution agenda in recent years has been the devolution of the Adult Education Budget (AEB) to London and six mayoral combined authorities. The other was the devolution of the Work and Health Programme to Greater Manchester and London. Early signs are that local areas are identifying different priorities: London has introduced free training for those earning less than the London living wage (a significantly higher threshold than the 2018/19 national pilot), while Greater Manchester is exploring how to link AEB to work and health strategies.

But flexibility at the local level is still relatively limited: the AEB has been cut by over 45% over the last decade and statutory entitlements limit scope to shape how it’s used. The devolution agenda as a whole appears to have stalled with no new devolution deals in the past two years.

The manifestos promise further devolution but the devil will be in the detail

There are a few common themes in the 2019 manifestos, including devolution. The Liberal Democrats have pledged to ‘kickstart a devolution revolution’. Labour meanwhile promises to bring about ‘radical decentralisation of power’. And the Conservatives’ ambition is for full devolution across England.

Beneath these high-level statements, pledges tend to focus on capital investment and physical infrastructure though. Big questions remain on the future of the devolution agenda, particularly when it comes to employment and skills policy. What role for local leaders and partners in Labour’s National Education Service or in the Liberal Democrat’s Skills Wallet policy? And what control, if any, would subnational bodies have over the investment promised by the Conservatives?

There needs to be a step change in devolution from 2020 onwards

The next government needs to deliver a step change in devolution to combined authorities and other areas. This will mean reviewing governance arrangements in non-mayoral combined authority areas to ensure there is an appropriate level of democratic accountability and scrutiny, and looking at a wider range of policy areas to ensure that there is less fragmentation.

Providing clarity over the replacement of the European Social Fund (ESF) should be high on the list of immediate priorities. The £2.6 billion allocated between 2014 and 2020 aimed to support more than 2 million people to improve their skills and find employment. It is vital that the Shared Prosperity Fund, or any other successor to ESF, is flexibility designed, focused on outcomes, and gives control to local areas to enable them to improve prospects for residents in their areas, particularly in a post-Brexit era.

As plans for future devolution get laid out, the next government should adhere to several guiding principles. Firstly, the aim should be for more fundamental and transformational change than we’ve seen before. Secondly, devolution should enable the coordination and integration of services. Granting limited flexibilities over single programmes or budgets for a limited time impedes the ability of local partners to take a ‘whole systems approach’ that is more effective and efficient. Thirdly, rather than taking a one-size fits all approach, change should be underpinned by Labour Market Agreements between national government and local areas which are tailored to different places.

The new decade – and new government – should bring with it a renewed and more radical approach to devolution. This is critical in order to empower leaders across the country to help close divides and improve living standards.

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Naomi Clayton, deputy director of research and development, Learning and Work Institute

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