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What will be the impact of the ‘Future Skills Unit’? 

Around the launch of the ‘Levelling Up’ whitepaper, the UK government announced the intention to establish a new Future Skills Unit. Although full details currently remain unclear, like many policies linked to this agenda, one objective will be to collate and examine evidence on skills gaps across industries.

Longstanding, if not often poorly defined, issues of skills shortages and the need to understand future skill needs could mean such efforts are welcomed.  

At the same time, it will be interesting to see how the unit will differ from pre-existing efforts, such as the government’s Skills and Productivity Board or, more broadly, how levelling up policies will succeed on spatial inequalities where prior efforts have not. 

Addressing regional skills gaps:

Devolution could be the answer to regional jobs gaps

Regions need more control over skills and employment

UK’s persistent digital skills gap poses risk to economic recovery

At the heart of the problem is that many regional or finer spatial skills issues have longstanding economic, political and institutionally engrained causes.

For example, beyond a data-driven focus on predicting future demand and opportunities, which presents its own technical challenges, there are issues of whether the institutional context of the UK provides sufficient stakeholder coordination between employers, education institutions, government bodies, trade unions and other actors to optimally facilitate adaptation.

A similarly longstanding problem, even where future skill needs can be accurately predicted, is how government can encourage employers to engage more deeply with the development of vocational education or raise levels of workplace training. 

‘Levelling up’ and spatial inequalities add further complexity, particularly where the incentives for investors to engage in more longer-term human capital development within disadvantaged areas can be less spelt out.

Similarly, a problem with area-based interventions is that, even where levels of education and skills are boosted, in the absence of local employment opportunities, better transport connectivity to jobs, or an improved neighbourhood environment, there may be little to prevent brain drain to other localities offering greater opportunities.  

A further question is whether there is sufficient devolution for local decision-makers to have the necessary financial and fiscal powers to address spatial problems in a bespoke manner.

Overall, what is clear is that solving spatial disparities in skills and productivity extends far beyond just increasing the supply of skills or predicting future needs. 

At the same time, many HR managers are already acutely aware of the organisational challenges of current skills shortages, but also of identifying and addressing future needs.

The extent to which the Future Skills Unit can provide a coherent, evidence-based framework to support business intelligence and broader government strategy beyond prior initiatives remains to be seen.  

Nonetheless, in addition to addressing social inequalities, there are also likely benefits to business of a more geographically diffuse skilled workforce, meaning a spatial dimension is warranted, at least where it is genuinely matched by greater support to innovation and investment within the regions.

Many organisations have already reaped the benefit from moving operations beyond the high costs and congestion of the capital region.  

Such skill-focused policies in the long term could provide further opportunities, although problems that have solidified from decades of regional imbalances are unlikely to be solved overnight.

Engendering a long-term commitment from government, employers and other stakeholders to the future skills and ‘levelling up’ agendas will therefore be key. 

Professor Anthony Rafferty is managing director at the Work & Equalities Institute (WEI) at Alliance Manchester Business School