Driving productive and inclusive growth for young people across the UK
October 16, 2017
The UK has gradually improved NEET (Not in Education, Employment or Training) rates over the past decade, and further improvements could boost GDP by around £43bn in the long-run, according to the latest edition of the Young Workers Index. But would the gains be spread evenly across the UK’s regions? And how can public policy help make a positive impact?
Let’s look at the current situation. There continue to be large disparities in NEET rates across the UK. In England alone, rates vary from 12% in the South East to 21% in the North East (see map below - click to expand).
England NEET Rates (19-24, 2016)
There are also large differences in the outcomes for young people regionally. This reflects not only lower educational attainment in certain regions but also a relative lack of labour market opportunities for young people compared to regions such as London. For instance, one recent survey found that 72% of Londoners believe that, compared to other parts of the UK, the opportunities available for people to progress were good compared to only 28% of people in the North East.
In addition, Brexit could have considerable effects on current EU funding streams for youth projects in less economically developed regions of the UK. For instance, between 2014 and 2020, the European Social Fund (ESF) and European Regional Development Fund (ERDF) will invest a total of £11.8bn across the UK. This funding provides a key role in stimulating and sustaining youth employment in poorer regions in the UK.
So what can public policy do to revive regional prospects and create opportunities for young people? Ultimately a new model of skills provision is needed, one which changes the way the skills sector is funded and how young people and business engage with it. The new model needs to be demand driven and employer-led at a local level, with clear funding flows and an effective process for matching young people to job opportunities.
The system also needs to be more devolved. Devolution offers the opportunity to develop solutions for young people that work locally and deliver the right skills in the right places. A locally-driven model means skills planning is done on a place basis, with employers in the driving seat, shaping skills planning in line with local needs.
But for a place based system to work, a devolved approach to funding is also needed. Devolved funding gives local leaders and employers the ability to tailor their approach to skills to their own unique labour market strengths, weaknesses and potential, meaning money follows demand and is targeted on local needs, in this case on improving the job opportunities for young people.
In addition, while young people have the opportunity to take the training they want, they don’t have efficient or effective careers information to make that choice informed or meaningful. More effective careers guidance is particularly important for young people to find work and develop in their careers, as well as helping match supply and demand at a local level and delivering a potential boost to productivity.
With local institutions strengthening such as Combined Authorities, with newly elected metro mayors, and Local Enterprise Partnerships, there is a window of opportunity to create a new locally-driven inclusive skills system that can deliver for young people across all regions in the UK.