• The ‘employment cost’ of low skill levels is concentrated in the most deprived local authorities.
• Levelling up basic skills could boost employment by up to 302,000 in the most deprived areas and 573,000 across the whole of England.
• CPP calls on the government to address skills inequality in the UK to help solve the employment crisis and to deliver on levelling up.

In some parts of England the proportion of people without any formal qualifications is as low as one in 40. In others it is more than one in five. New CPP analysis presented in this paper suggests that this disparity comes at the cost of hundreds of thousands of jobs.

CPP has developed a new model of employment in local areas, quantifying the link between basic skills coverage and employment rates. Using this model, we estimate the employment cost of place-based inequality in basic skills coverage in England.

If the share of the local working age population without any formal qualifications were reduced in every area to the rate seen in the top 10% of local authorities, CPP estimates employment in England would be up to 573,000 higher. The analysis suggests this employment cost is concentrated in the most deprived fifth of local authorities, where tackling basic skills inequality could boost employment by up to 302,000.

For example, in Sandwell in the West Midlands and Pendle in Lancashire– two of the most deprived areas of England – more than 20% of the local working age population lack any formal qualifications. Our model suggests that reducing this percentage to the rate enjoyed in places like Richmond upon Thames and Bath and North East Somerset – around 3% – is associated with an employment uplift of up to 3,700 in Pendle and 14,300 in Sandwell.

Helping people onto and up the skills ladder can give England’s most deprived areas a significant employment boost as the government seeks to build back better after Coronavirus. CPP is calling on the government to support skills training to help build back better by:

• Removing financial barriers by offering free childcare and transport for learners lacking any formal qualifications.
• Simplifying the funding system and offering a three-year funding settlement for community learning, which covers a range of community-based outreach to bring adults together to learn. This can serve as a vital route back into learning for those hardest to reach.
• Promoting progression by introducing clear pathways through the skills system, with next steps explicitly designed into qualifications at each level. Comprehensive job training support should also be offered, both in terms of practical training but also advice and guidance of how learners can climb the skills ladders to access good jobs in their area.

• Breaking down institutional barriers by improving ease of access to courses and taking advantage of existing community assets to build community learning centres. More opportunities for blended online and traditional learning should also be introduced.
• Tackling learners’ dispositional fears (e.g. feeling too old to learn, or a fear of feeling stupid or unsupported in the classroom) by providing one-to-one support from well-trained and well-resourced professionals. This must be coupled with active outreach programmes, based on accurate data on who is most at need. Run by local and combined authorities these would engage prospective learners on the benefits of, and routes to, adult education.
• Boost demand for learning among those already in employment by reversing the decision to cut funding to Unionlearn, which evaluations have shown to be highly effective.

Andy Norman, Research Analyst, Centre for Progressive Policy, says:

“Too many people are cut adrift from economic opportunity because they lack basic skills. CPP’s analysis has shown that helping these people onto and up the skills ladder can provide a massive boost to employment, particularly in the country’s most deprived areas. If the government truly is committed to getting people back into work and ‘building back better’ after coronavirus, then they must start by levelling up skills in the most deprived parts of the country.”

Key findings

1. The lower the share of local residents without a formal qualification, the higher the employment rate: a 1 percentage point decrease in the share of residents without a formal qualification is associated with a 0.26 percentage point increase in the employment rate.
2. The relationship between coverage of formal qualifications and employment is strongest in the most deprived parts of the country: a 1 percentage point decrease in the share of residents without a formal qualification is associated with a 0.33 percentage point increase in the employment rate in the most deprived areas.
3. The total employment cost of inequality in basic skills in England is between 348,000 and 573,000 jobs: reducing the share of people without a formal qualification to the rate in the top 10% of local authorities implies a significant uplift in employment across the country.
4. The employment cost is greatest in towns and cities with a large working age population and low skill levels: in Birmingham, increasing coverage of at least basic skill levels to the rate seen in the top 10% of local authorities is associated with 18,700 to 28,800 more people in work.
5. The cost of low skill levels is concentrated in the most deprived local authorities, equating to 196,100 – 302,300 jobs: in the least deprived areas, the employment cost is 14,900 to 29,200 jobs.

Table 1: The ten highest modelled estimates of the employment uplift associated with reducing the basic skills gap with the top 10% of local authorities (Range represents the 95% confidence interval)

Table 2: Modelled estimates by local authority deprivation quintile of the employment uplift associated with reducing the basic skills gap with the top 10% of local authorities. (Range represents the 95% confidence interval)

Notes to the editor

1. The report ‘Skill up to level up: reducing place-based skills inequality to tackle rising unemployment‘ can be found here. For enquiries please contact Thomas Hauschildt, THauschildt@progressive-policy.net / 020 7070 3370.
2. Where a range is given, this signifies the 95% confidence interval.
3. About CPP: The Centre for Progressive Policy is a think tank committed to making inclusive economic growth a reality. By working with national and local partners, our aim is to devise effective, pragmatic policy solutions to drive productivity and shared prosperity in the UK. Inclusive growth is one of the most urgent questions facing advanced economies where stagnant real wages are squeezing living standards and wealth is increasingly concentrated. CPP believes that a new approach to growth is needed, harnessing the best of central and local government to shape the national economic environment and build on the assets and opportunities of place. The Centre for Progressive Policy is funded by Lord Sainsbury and hosts the Inclusive Growth Network.
4. For more information on the Centre for Progressive Policy, please see our website or follow @CentreProPolicy