‘Toxic cocktail’ threatens local labour markets

A leading think tank has warned the government that it risks repeating ‘the same mistakes’ if it does not incorporate an ‘acute sense of place’ into its economic plans.

A new report by Localis, entitled ‘In Place of Work – Influencing Local Labour Markets’, warns there is a ‘staggering gulf’ in the strength of local markets across England.

It claims around half of the 47 local labour markets in England could be hit by a ‘toxic cocktail’ of Brexit, automation and a shrinking skills base.

The report also challenges the traditional view of a ‘north-south’ economic divide by warning of large differences within individual regions.

It claims the labour markets in areas like Kent and Essex need just as much support as certain parts of the north-east.

The report calls on the government to devolve control of adult education budget to all upper-tier authorities, empowering them to convene local colleges, training providers and businesses in order to set priorities for local labour market strategies.

And in local areas where industry collaboration is weak and relationships with the county councils and unitary authorities need formalising, the report recommends councils establish employer guilds.

These guilds would work with the county council to help shape labour market policy, thus ensuring a steady supply of qualified labour for future business requirements.

The report’s sponsors, the County Councils’ Network, claim the report makes a clear case for devolving powers to its members so they can devise local labour strategies.

Speaking at its launch yesterday in Parliament, Localis chief executive Liam Booth-Smith said while there is a national labour market in England, there are also 47 ‘highly fragmented’ labour markets across the country.

‘We say in Gloucestershire, automation will be the saving grace of their economy, but it will be the death sentence for the West Midlands,’ he explained.

‘We need automation, we need to develop our skills base and we need immigration too, but we need it in the right amount in the right places.

‘It needs to be far more targeted and as the government starts to think through the industrial strategy. I sincerely hope BEIS, the Treasury and Number 10 take note and understand if they are going to make a success of whatever comes out of the next two years. If they do not have an acute sense of place as part of their answer, they will just repeat the mistakes that have led us to this point now.’

Also speaking at the same event, the chair of the all-party parliamentary group, Peter Aldous, said that, while a lot of the devolution debate has focused on cities, counties ‘do have a very important role to play’.

Referring to failed attempts to devolve power in Norfolk and Suffolk, he said: ‘Since the [general] election, I sense it has been rather quiet on that front. I’m just beginning to get some murmurings that things are beginning to happen. With everything going on with Brexit we need to focus on how best to get our county economies operating.

‘I sense it will be back on the agenda over the next year, with ambitious devolution deals which will capitalise on the advantage that county areas have to unleash England’s full potential.

‘I think Brexit does have some advantages in that issues and challenges to do with skills and productivity have been bumbling for years. They can’t bumble along much longer. We have to do something about it and this can be the catalyst for change.’

• Read the report here.