From education to employment

London’s business groups unveil roadmap to tackle skills crisis

Collaboration, employee engagement

Boosting digital and green skills critical to future-proofing capital’s labour market

An ambitious plan to tackle skills shortages, address inequality and boost labour market inclusion in London has today (Friday 11 August) been published by the city’s leading business groups, following the biggest data deep dive on the issues the capital has ever seen.

The Local Skills Improvement Plan (LSIP) for London sets out a blueprint for getting more Londoners into better, higher-paying jobs by better matching training provision to employer demand. It has been led by BusinessLDN, in partnership with Federation of Small Businesses London (FSB London), London Chamber of Commerce and Industry (LCCI), and CBI London, with the backing of the Mayor of London and funded by the Department for Education. 

The LSIP identifies the need to help employers navigate the complex and fragmented skills system. It also highlights four cross-cutting themes that should be prioritised to future-proof the capital’s jobs market: digital skills, green skills, transferable skills and labour market inclusion. Its recommendation include launching a new one-stop-shop to support job-seekers, creating a London Recruitment and Skills Support Hub to help businesses navigate the fragmented skills landscape and steps to boost digital and green skills across the capital.

Skills shortages are a drag on London’s economy and put the capital’s position as a world leading city at risk. A survey of more than 1,000 London business leaders and HR managers conducted earlier this year by the four groups developing the LSIP found that three-quarters of firms (77%) were reporting open vacancies and of those two-thirds (65%) were struggling to fill them. More than half (57%) cited a low number of suitable applicants with the required skills as the biggest challenge to recruitment.

While London’s workforce has the highest levels of qualifications in the country, businesses are facing severe skills gaps and struggling to recruit, retain and upskill staff to meet the requirements they need. The capital’s unemployment is around 1% higher than the national average and 21.9% of the labour market was economically inactive for the three months ending January 2023 according to the Office for National Statistics.

John Dickie, Chief Executive at BusinessLDN, said:

“The capital urgently needs to tackle skills shortages to get more Londoners into jobs, reduce inequality and ensure businesses can access the people they need to grow. This roadmap sets out steps to future-proof London’s labour market by ensuring our skills system is fit for purpose as the transition to net zero and rapid technological change reshapes the jobs market. We will use the LSIP’s next phase to bring together London government, business and training providers to close the skills gaps holding back our economy by turning this plan into action.”

Over the last year, the LSIP team engaged with more than 1,000 employers, training providers and key London stakeholders to assess the London labour market and its key challenges.

The report outlines detailed recommendations to improve London’s skills system for employers, job-seekers and training providers. This includes:

  • Employment support: Launching a new one-stop-shop to support job-seekers by bringing together employment support, careers advice and skills support informed by private sector expertise.
  • Business support service: Creating a London Recruitment and Skills Support Hub to help employers, especially small and medium enterprises (SMEs), navigate the employment and skills systems, including support with apprenticeship access.
  • Boosting London’s digital skills capabilities: Employers across all sectors currently lack digital skills at both ends of the spectrum – advanced and basic – with a recent survey by the Learning & Work Institute showing over half (56%) of respondents felt that their business would need more advanced digital skills over the next two to five years while a third (33%) felt that more basic digital skills would be required. To address this and ensure all Londoners are equipped to thrive as rapidly-evolving technology transforms ways of working, the report proposes:
    • A new London Digital Skills Partnership that brings together the expertise of the private sector and London’s leading educators to co-design courses, especially in areas with fast-changing advanced and cutting-edge technology such as Artificial Intelligence and data analytics.
    • At a more basic but no less essential level, creating a coalition including the Greater London Authority, boroughs, employers and educators and other business bodies to ensure every Londoner has the everyday digital skills needed for life and work. This will require working with partners including the London Office of Technology & Innovation to redouble efforts to tackle digital poverty and exclusion to help disadvantaged Londoners gain access to devices, connectivity, and training courses.
  • Green skills: Boosting green skills in order to support the Mayor’s target of London becoming a net zero carbon city by 2030. A plan to increase uptake of electrical engineering courses in London, particularly through employer partnered provision like apprenticeships, is needed to meet growing demand while a form of ‘carbon literacy’ or green skills training should be included in training courses funded by London’s Adult Education Budget.

The Mayor of London, Sadiq Khan added:

“This is an extremely important plan as we work to develop the workforce our economy needs now and in the future, and build a better, more prosperous London for everyone.

“Skills shortages are a barrier to growth and I am pleased that we are teaming up with businesses to ensure Londoners have the skills they need to get on and succeed.”

Laura Timm, FSB London Policy Chair, said:

“We are pleased that the Greater London LSIP has embraced the views of small businesses and will equip local people with the skills Greater London businesses really need. A good skills base in any area links to business productivity and the health and happiness of individual workers, so for FSB to play any part in improving those important issues is a genuine pleasure. We look forward to supporting our members and the small business community in securing the skills they need to achieve their ambitions. We want to see the LSIP go forward with Greater London’s people and businesses firmly in mind.”

London Chamber of Commerce and Industry Head of Policy and Public Impact, James Watkins, said:

“This is a step change in addressing the skills crisis in the capital. This is an ambitious plan which addresses the needs of learners, businesses and providers across London. With the Local Skills Improvement Plan highlighting the requirement for modular and flexible training – making it easier and more accessible to access training – this is a demand led response to the needs of firms today as well as working to meet the needs of all Londoners towards the 2030s”.

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