Advance devolution with clearly defined powers for local skills policy innovation, research says

Skills mismatches are a challenge that successive governments have been grappling with for years. As industries across the UK continue to respond to technological advancements and changing global demands, the skills needed for the future (including digital, innovation, and green skills) must develop to meet new economic, technological, and environmental challenges.

New research from City-REDI at the University of Birmingham and the Local Policy Innovation Partnership Hub argues that increasing devolution for skills policy will help local governments address local skills needs more effectively. The Skills Evidence Review summarises skills policy across the UK, focusing on challenges and opportunities in designing innovative local skills policies, the role of local skills ecosystems, and that of higher and further education institutions in supporting skills development. It draws on local and international case studies from the academic and policy literature to highlight key learnings from place-based interventions related to skills. The research was funded by ESRC, AHRC, and Innovate UK.

Dr Konstantinos Kollydas, Research Fellow at City-REDI and the author of the report, said: “The UK faces a productivity challenge partly due to the centralised nature of related policies, such as education and skills, innovation, transport, and planning, alongside fragmented local

institutions in terms of both function and location. Scotland, Wales, and Northern Ireland each manage their own skills systems. England adopts a more centralised approach, although certain subregions have been granted devolved powers. Still, cities like Birmingham, Manchester, and Glasgow lag behind not only London but also similar European cities in terms of productivity. This is partly because of weak devolution, fragmented policy-making, and inconsistent funding, which makes it hard for local governments to implement national policies or develop tailored investment strategies.”

The report identifies key challenges relating to how skills policy is currently managed:

• Geographical disparities in local powers and governance for skills-related policies limit the ability and capacity of many UK places to enact innovative local skills policies.
• Many areas lack the capacity to integrate skills interventions within broader economic development strategies.
• Variations in the capacity of higher and further education institutions across places impact skills alignment with local requirements, while the limited direct levers of regional authorities over higher education complicate cohesive local partnerships
• Diverse skills needs across places highlight urban-rural disparities, driven by differences in infrastructure, economic opportunities, and local training access.
• Underutilisation of skills in local economies often stems from a disconnect between job requirements at the point of hiring and actual skills usage in practice.