The recent vote to leave the European Union is going to throw up some interesting challenges for the labour market, particularly outside London. As yet, we do not know the details, but it seems certain that there will be some sort of significant upheaval for both business, and those responsible for providing skills and training for employment.

Last week, a report published by the Association for Public Service Excellence and researched by NLGN (New Local Government Network) recommended that local councils should have greater powers to help tackle unemployment and skills shortages in their area. After last few fast-moving months, this appears more crucial than ever before.

Of the councils we surveyed, 98 per cent said that they thought they were better placed to be able to provide the links between persistent unemployment and the specific problems faced by those in their authority. Of course it shouldn’t be surprising that councils want to have greater devolved powers – but what is striking is that 80 per cent are already taking steps to improve the employment and skills provision in this area, despite the main responsibility sitting with central government.

This set up isn’t without problems. One of the greatest challenges is the division between employment and skills at the national level. While employment sits within the Department of Work & Pensions, the Department for Education is responsible for skills. With silo-ed thinking directing funding and programmes, it’s no wonder that integration of employment and skills is a challenge on a local level.

Added to this, employment problems do not operate in a vacuum. The links between unemployment and mental health, homelessness and many other social issues are well documented – but central government cannot solve these problems collectively as it is, let alone create tailored programmes for each area.

Pilots and pathfinders

And so, as each locality responds to the changes that will likely happen to the labour market after Brexit, they need to have the powers and flexibility to create the unique and tailored programmes to tackle the unique set of problems that they face.  

Some local authorities are already starting to address the integrated approach. One of the areas we looked at in our research was Blackpool, which will shortly be implementing integrated services that will provide proper links between mental health and employment – to help those for whom depression and anxiety prevent them from holding down a job.

Our research also found that there was a strong desire from local business to help with tackling long-term unemployment – they want and need employees with the right training and skills. Over 75 per cent of councils reported support from business.

The City and County of Swansea Council is taking this a step further: many of its procurement contracts require targeted recruitment and training for young people or the long term unemployed. Using business to help tackle unemployment is a beautifully symbiotic relationship – but one that can only be driven by local councils who have extensive knowledge of the gaps between jobs available and their local workforce.

The bottom line

Of course, budget cuts are always going to come into this debate. Of respondents to our research, 84 per cent of councils said that they were prevented from providing the most effective services because of a lack of funding.

Approximately £13bn is being spent on 28 different employment and skills programmes at a national level. This is a staggering amount of money that could almost certainly be spent more effectively and be better targeted if it was handed over to councils to use in tailored programmes where it is needed most.

It’s become increasingly clear that after a turbulent few months – and more uncertainty to come – we are going to need to reassess our labour markets and the upcoming skills gap in light of it. It also now seems fairly safe to say that how people relate to central government and advice services has also shifted further than we could ever have anticipated. While there is obviously a link between the Brexit vote and the distrust of central government (we will leave it to braver experts to articulate the reasons for this), the scale of it has a potentially huge impact on the reception of employment advice and services that comes from central government.

Whatever your opinion of Brexit, we need to turn this into an opportunity to reshape how we tackle this skills gap properly, and give councils the devolved powers we are confident they deserve.

Claire Mansfield is head of research, and Claire Porter head of external affairs, at the New Local Government Network.