In the aftermath of an election, there follows a period of frenetic activity as the new administration seeks to assert itself and begin implementing its agenda. The first days of the Labour government in the UK have followed that pattern, with announcements such as the plan to build 1.5 million new homes coming within the first week, and proposed legislation set out in the King’s Speech including a National Wealth Fund Bill and an English Devolution Bill.
According to Labour’s manifesto, the new government’s first mission is to return Britain to a period of sustained economic growth after several years of economic flatlining. In a pre-election interview, Sir Keir Starmer expressed an ambition to see annual GDP growth of 2.5%, which is significantly higher than last year’s growth of 0.1%, and well above 1.9% forecast in 2025 by the Office for Budgetary Responsibility (OBR) in their March 2024 report.
How will they attempt this? Their manifesto cited six policy areas for kickstarting economic growth. Drilling into the detail, we’ve identified three challenges within these policies that will be key to success – Local Growth; Skills Strategy; and Career Pathways – but which can only be tackled effectively using good, granular labour market insights. This piece demonstrates how a data-driven approach can provide the foundations for success.
Local Growth
The expansion of the devolution agenda is set to play a big part in this administration, with its manifesto committing to “deepen devolution settlements for existing Combined Authorities” and to give towns and cities “the tools they need to pursue growth, create jobs, and improve living standards.” Furthermore, it pledged to legislate for Local Growth Plans:
At the centre of our approach is a new statutory requirement for Local Growth Plans that cover towns and cities across the country. Local leaders will work with major employers, universities, colleges, and industry bodies to produce long-term plans that identify growth sectors and put in place the programmes and infrastructure they need to thrive. These will align with our national industrial strategy.
More detail of what these Local Growth Plans will include was set out in the Labour Party’s Power and Partnership policy paper in March, with one of the key ideas being that of local leaders identifying “economic clusters” in their area and setting out their plans to “build on their local advantages”.
But this begs the question: how exactly will local or combined authorities be enabled to identify the economic clusters which give them a local advantage?
This is a challenge Lightcast set out to answer several years back when we created a methodology for grouping the 563 ONS-defined industries together into 49 economic clusters, on the basis of their tendency to co-locate, supply chain connections, and the make-up of their workforce. We then divided these clusters into those that tend to export both nationally and internationally, therefore having the potential to drive growth in an area (Tradable), and those that tend to be tied to a local area, such as schools and hospitals (Local). With this methodology and these definitions, we can look at economic clusters for any local or combined authority, in terms of their employment concentration in comparison to the rest of the country.
As an example, let’s look at the local authority in which Sir Keir Starmer’s constituency of Holborn and St. Pancras is located: the London Borough of Camden. In the chart below, we’ve included the top 20 economic clusters in the area, measured by employment concentration on the horizontal axis, and national job growth from 2022-2023 on the vertical axis. Employment concentration is benchmarked nationally at 1.0, so anything above about 1.2 indicates that Camden has a comparative advantage over other areas of the country.
Camden has a particularly strong Creative economic cluster, but it also has a strong comparative advantage in clusters such Education and Knowledge Creation (e.g. Life Sciences); Printing and Publishing; and Digital. Furthermore, each of these sectors has seen job growth both locally and nationally between 2022-2023. These insights (plus job numbers and GVA, which you’ll find on the pop-ups when clicking on a circle), give a real evidence-based view of economic cluster strengths and opportunities, particularly when analysed together with the economic composition of neighbouring local authorities to understand similarities and differences. For local and national decision makers, such data provides a solid basis as they plan the interventions and investments most likely to kickstart growth.
Skills Strategy
A second area in which the new government is looking to focus on is skills, with plans to “establish Skills England to bring together business, training providers and unions with national and local government to ensure we have the highly trained workforce needed to deliver Labour’s Industrial Strategy”, plus a commitment to “empowering local leaders to have greater control of skills development in their areas.”
More details can be found in Power and Partnership:
With Labour, local leaders will work with colleges, businesses, universities, and employers to align skills and training provision with real job opportunities. Labour will transform existing further education colleges into new Technical Excellence Colleges, based on proposals put forward by local communities aligned to their local skills improvement plans, to ensure local areas, education providers and businesses feed in to define the training needs of their communities. Bids to specialise will be assessed by Skills England to make sure local skills provision meets national strategic growth priorities and reskills people in the jobs of the future.
As with Local Growth, this begs the question: how will local leaders and education providers know which skills are needed in their area?
Lightcast has been at the forefront of answering this, particularly with our pioneering Open Skills Library, which contains over 32,000 skills terms taken from the real world of work. This enables us to identify the skills employers are looking for in specific labour markets and for specific sectors.
We can demonstrate this by returning to Camden once again. In the chart above, one of the borough’s strongest economic clusters was Digital, with an employment concentration of 2.18, and with job growth in the borough running significantly higher than the nation as a whole in 2022-2023 (9.9% compared to 4.6%). If local leaders wanted to invest in this cluster to encourage continued growth, they’d need to address the question of what skills relevant employers are looking for. In the chart below, we’ve identified the top 20 Specialised and Common skills that employers in the area have been looking for when hiring for Digital roles over the past two years, measured by the percentage of all job postings for these roles that mention the skill.
It is important to understand that skills demand differs from area to area, depending on the types of industries, jobs and employers in each place. It is not sufficient to look at aggregate skills demand across the country and to assume that it will be the same in each locality. Rather, if the government is serious about solving the skills shortages that have plagued the country for years, and if it is serious about empowering local leaders to have greater control of skills development in their areas, this kind of granular skills data, which can identify current, growing, and emerging skills at the local and combined authority level is essential. Placed in the hands of local leaders, education providers, and indeed Skills England, this kind of data is a powerful tool for truly understanding what skills are in-demand and where they are in-demand.
Career Pathways
Over the past couple of decades, there have been attempts to improve careers advice and guidance to young people, and to create a better system for helping adults who are either unemployed or underemployed to retrain or upskill. Yet the problem persists. Labour’s manifesto highlighted the challenge, promising to “improve careers advice in schools and colleges” and giving a commitment to “devolving adult skills funding to Combined Authorities, empowering local leaders to have greater control of skills development in their areas, alongside a greater role in supporting people into work.”
Once again, a question arises: how can education providers and local leaders ensure that their careers advice and reskilling programmes are aligned to the realities of the workforce?
As with plans around economic clusters and skills development, data is key. Any plans to ensure young people get the support they need to assess their “future options and opportunities”, and which seek to “reskill people in the jobs of the future” can only succeed if they are based on a data-driven approach that adequately takes the needs of employers into account.
Again, Lightcast has been at the forefront of providing the kinds of data that enables education providers to help students navigate career pathways and which sets young people up for success. More recently, we’ve also pioneered a way of understanding the jobs ecosystem by mapping how jobs relate to one another in terms of skills similarities. This means we can identify the transitional skills a person needs to progress from job A to job B – which is an incredibly powerful tool in the hands of local leaders and education providers seeking to help people understand their potential career pathways, ultimately helping them get into work, get back to work, or progress within their work.
Let’s look at an example. Much has been written about Sir Keir Starmer’s numerous references to his father being a toolmaker. But what are the possible career opportunities someone in this job might think about? Using our Career Pathways module, we can look at the data for Tool and Die Maker to see the Next Step jobs for this occupation – that is, the roles that represent a career advancement, and which are closest in terms of skills requirements. The chart below shows the top occupations that are closest to Tool and Die Maker in terms of skills similarity, and which pay a higher salary (dots are sized according to salary):
The closest occupation to Tool and Die Maker that pays a higher salary is Machine Shop Supervisor, with a skills similarity of 81% and a wage difference of £3,847 per annum. The real value in this data, however, is that we can then identify the skills gaps between these positions.
In the chart below, we’ve identified the top 10 skills gaps between Machine Shop Supervisor, and Tool and Die Maker, according to the percentage of postings that request these skills. For example, Machining is mentioned in 77% of postings for Machine Shop Supervisor, but only 29% of postings for Tool and Die Maker, indicating that this could well be an area of reskilling or upskilling that a Tool and Die Maker should consider undertaking to become qualified to move into a higher paid, Machine Shop Supervisor role:
In Conclusion
As with the aftermath of every election, the proof is always in the pudding, and we will need to wait and see how the new government attempts to implement its manifesto commitments. However, for any attempts to kickstart the economy to be successful, particularly in terms of local growth plans, skills strategy, and career pathways, good labour market data will be indispensable.
We'll be diving into this subject even more fully in a webinar in September. Keep an eye on our webinar page over the next few weeks for details.
💡 Want to find out more about how our data relates to local growth, skills, and career pathways? Here's some food for thought:
