Guarantee of Potential
Context
Solving the puzzle of worklessness and its connection to productivity is an increasingly challenging task in cities and towns across the country, at a time where the state’s ability to intervene to raise skill levels and improve labour market access is severely limited.
The impending 2025 Comprehensive Spending Review will have little option but to soberly reflect the parlous state of public finances and the need to curb inexorably rising welfare expenditure
Strategically, government must balance this with a need to attain economic growth to pay for services of the future, by investing in our local economies and labour markets.
The ground is shifting, however, in an overall positive direction for decentralisation. The introduction of Integrated Care Systems and the absorption of Local Enterprise Partnerships into councils have added to the momentum of trailblazer devolution deals in creating a new ecosystem of subregional governance.
At this juncture of English devolution in the context of shifting from economic stagnation to renewal, it is worth considering how these networks of governance can be learned from by – and integrated with – new approaches to reducing worklessness and raising productivity within the labour market.
Where are we now?
Some three years on from the end lockdown, hopes of economic renewal are still held back by the unprecedented numbers of those who haven’t returned to the workforce. The UK economic inactivity rate is 1.4 percentage points higher than before the pandemic, making it the only G7 economy where the inactivity rate has not returned to pre-pandemic levels.
Long-term sickness has risen to a record high of 2.8 million people in 2024 and continues to be the most common reason for no-engagement in the labour market among the working age population. Reducing economic inactivity will be essential to reaching the government’s ambition of an 80% employment rate.
To meet this ambition, in the Autumn 2024 Budget, chancellor Rachel Reeves announced the government will invest £115m in 202526 to deliver Connect to Work, a new supported employment programme matching people with disabilities or health conditions into vacancies and supporting them to succeed in their roles.
From 2026/27, this initiative will support nearly 100,000 people a year and it is expected that local authorities will be able to tailor their delivery of Connect to Work in ways that meet their local needs. Combined Authority trailblazers in Greater Manchester and the West Midlands Combined will receive even greater flexibilities, with funding included in their Integrated Settlement.
Understanding the place policy ecosystem
In making the case for place in this context, Localis as an independent think tank of place will work with AKG UK to understand the place policy ecosystem for employment models in relation to:
- Devolution: the publication of the English Devolution White Paper and has spelled out what this will mean for foundational and established combined authorities for the pan-regional commissioning of employment services and the interdependent path of partnership working.
- Health and skills: how will the Get Britain Working White Paper and three-point plan work in practice to make local authorities join up employment, skills and health support amid a crisis point in youth inactivity as recorded by NEET status deliver at the level of place? Can the role of ICSs as key place anchors be magnified to deliver on the promise of the youth guarantee?
- Commissioning and procurement: how might the adoption of the Procurement Act from February 2025 influence and improve the commissioning process for the two supported employment models on offer – Individual Placement and Support and the Supported Employment Quality Framework.
- Public service reform and place-shaping: what is the context for our major cities/city regions and towns for addressing long-term sickness as a ‘wicked’ place issue in partnership with central government, further and higher education, the health service and wider economic anchors, and what can we learn from innovation and best practice?
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