New London Local Skills Improvement Plan (LSIP) Launched To Tackle London’s Skills Shortages Amid Rise Of AI

Updated London Local Skills Improvement Plan comes as demand for digital talent surges and the city records the highest regional unemployment rate in the country  

An ambitious plan to close the capital’s skills gaps and create new routes into high-growth sectors for Londoners has today been published as the Government puts partnerships between employers and training providers at the heart of its educational reforms.

The new London Local Skills Improvement Plan (LSIP) identifies the roles and skills needed by employers in London’s key growth sectors – from construction, to social care, to hospitality – and sets out an action plan for getting more Londoners into better, higher-paying jobs by aligning training provision with business demand.

It builds on the early successes of the first LSIP, published in 2023, and has evolved to reflect shifting business priorities and a more challenging labour market. The plan has already strengthened collaboration between employers and training providers, driving an increase in the creation of training programmes that are co-designed to better meet demand.

It has also spurred the formation of the Grow London Local business support hub, which has helped around 4,000 firms access skills support; the West London Retail Skills Hub, which has guided dozens of jobseekers into new opportunities; and the Greater London Authority (GLA)’s Early Connect Programme, which has provided support to hundreds of young Londoners interested in apprenticeships.

The LSIP centres on three priority areas for action: meeting business demand for advanced digital and AI skills, now the biggest cross-cutting priority for all sectors; ensuring Londoners are equipped with transferable skills such as problem-solving, communication and management, which matter to firms as much as technical qualifications; and building a system that is easier for employers and educators to navigate and engage with, including shorter, bite-sized training programmes.     

A survey of more than 2,000 London business leaders conducted by Survation for the new plan finds that only half (50%) say their existing workforce has the skills and capabilities needed to meet the requirements of their business – down from 63% last year. Around a third (35%) report some gaps in skills and capacity whilst the remaining 15% report significant gaps. More than three quarters (78%) of London firms surveyed forecast a significant need for AI and advanced digital skills over the next five years – up from 66% in 2025. 

Muniya Barua, Deputy Chief Executive at BusinessLDN, said:

“London’s superpower is its talent. Equipping people with the skills that businesses need is the best way to help more Londoners into work. AI is rapidly reshaping the world of work, meaning the skills system needs to respond faster to changing demand. And with the Government’s ambitious devolution agenda giving Mayors a bigger role in shaping skills and employment services, there’s an opportunity to turbocharge the LSIP’s recommendations. This plan shows the value of bringing business, training providers and City Hall together towards a shared goal of creating a more joined-up and responsive system.”

Howard Dawber OBE, Deputy Mayor for Business and Growth, said:

“As the world of work changes, London needs to stay ahead by giving people the skills they need to succeed and businesses the talent they need to grow. This refreshed Local Skills Improvement Plan supports the Mayor’s approach of bringing employers, training providers and public partners together so that London’s skills system responds to the real needs of our economy. At a time when too many Londoners, particularly young people, are struggling to find work, it is vital that training leads to real jobs and rewarding careers. By opening up routes into high-growth sectors and helping more Londoners develop the digital and AI skills increasingly needed in the workplace, we can create new opportunities, drive growth and build a fairer and more prosperous London for everyone.”

London has the highest regional unemployment rate in the country

Publication of the new LSIP comes as the capital continues to record the highest regional unemployment rate in the country, with young people being hit especially hard by a challenging jobs market. One in five Londoners aged 16 to 24 are out of work.

BusinessLDN is working jointly with the Greater London Authority to deliver the government-backed plan, with support from sub-regional partnerships: Central London Forward, Local London, the South London Partnership, West London Alliance and West London Business. It was developed alongside the Federation of Small Businesses London, London Chamber of Commerce and Industry and CBI London. 

The updated LSIP provides new data on how the plan’s partnerships-led approach is bearing fruit. A significant majority (86%) of firms surveyed for the LSIP are engaged with employment support providers, educational institutions, training providers or are delivering apprenticeships or T-Levels. The figure is up from 78% in 2023 when the plan originally launched, and 81% last year. Around one in ten (13%) say they are not engaged with any educational institutions and the remaining 1% responded ‘don’t know’.

The plan brings together insights from thousands of employers and wider stakeholders from around the capital, including companies of all sizes, further education colleges, universities, London Councils, GLA leaders and employer bodies. Its wide-ranging recommendations, which will help to both deliver the skills that London’s employers are demanding and bring down the capital’s high number of young people not in education, employment or training (NEETs), include:

• Creating a unified, all ages London Careers offer to make it easier for those seeking new opportunities to find the right roles and develop skills that businesses need. The service would align the work of the incoming national Jobs and Careers Service as well as sub-regional careers hubs.
• Supporting the Mayor’s commitment to all Londoners having access to basic AI training, including through employer partnerships developed via the Mayor’s AI and Jobs taskforce.  
• Building a fresh work experience programme which establishes the GLA as the convening body for developing opportunities for young Londoners. The new initiative would join up with the work of sub-regional careers hubs and the Jobs and Careers Service.    
• Promoting and expanding shorter and modular training opportunities that can be developed at pace to meet evolving skills needs and are accessible for employers.

Debbie Akehurst, Chief Executive of the Central District Alliance and Chair of the London LSIP Advisory Board, said:

“The London LSIP has been instrumental in bringing the business community and education providers together to meet the growing needs of industry, helping to shape the future of London and to ensure that we have a workforce fit for the future.  The partnership between BusinessLDN and the Greater London Authority has further driven the collaboration. Working with Business Improvement Districts, who have reach across London, has helped to meet the needs of employers and London communities. I am proud to be part of the initiative and thank the LSIP Board members, Primera Corporation, BusinessLDN and the GLA for their input, their guidance and expertise in making this a success for London – its people, its businesses, and its future.”

David Symons, Advisory Board member and Future Ready Global Lead at WSP, said:

“As a major employer of engineers, scientists and advisers across London, we know first-hand how critical skills are to delivering the capital’s future growth. The London Local Skills Improvement Plan is helping bring employers, education providers and policymakers together around a shared understanding of the skills London needs, both today and in the years ahead. That collaboration is essential if businesses are to access the talent they need while creating new opportunities for Londoners and supporting sustainable economic growth.”

Asfa Sohail, Deputy CEO and Principal at London South East Colleges, said:

“This plan rightly recognises the importance of co-design between employers and education providers in addressing London’s skills shortages. Our Sector-Based Work Academy, developed in partnership with The Cory Group, demonstrates the value of working closely with employers from the outset to ensure training programmes are aligned with current and future workforce needs. At a time when too many young Londoners continue to face barriers to employment, strengthening the role of colleges in shaping and delivering skills provision will be critical to creating clearer pathways into sustainable, high-quality careers.”

Laura Timm, Regional Chair at the Federation of Small Businesses London, said:

“Small businesses are the backbone of London’s economy and we know that their growth depends on having access to the right skills and talent. To have a productive and growing economy, business owners and their staff must have the right skills which allow them to work efficiently and adapt quickly to the inevitable changes and challenges that come hand in hand with running a business. The LSIP puts employers at the heart of shaping skills provision, helping ensure training reflects real business needs and supports future growth. By strengthening links between businesses, education providers and policymakers, we can build a more responsive skills system that works for both employers and Londoners.”

Anneka Hendrick, Regional Director, London & South East, at the Confederation of British Industry London, said:

“London’s updated Local Skills Improvement Plan comes at a crucial moment for the capital, with businesses facing persistent skills gaps at the same time as AI and digital transformation reshape the world of work. It is encouraging to see the plan build on the progress already made by strengthening collaboration between employers, training providers and London government, while focusing on the practical skills firms need to grow. By prioritising advanced digital and AI capabilities, transferable workplace skills and simpler routes for businesses to engage with the system, the LSIP can help more Londoners access better opportunities in high-growth sectors. The CBI looks forward to continuing to work with partners across the capital to ensure the plan remains responsive to employer demand and supports London’s long-term competitiveness.”

Karim Fatehi OBE, Chief Executive of the London Chamber of Commerce and Industry, said:

“We want London to be the most attractive city in the world to do business in and that requires a workforce fit for the future. The capital’s workers, especially young people, need support to develop essential skills, find a job, and build their futures. We are proud to support this plan, which will bring businesses, policymakers and educators together to ensure the capital has the high-skilled talent businesses need, particularly in strategically important areas such as AI and technology. Growth in every postcode depends on growth in the capital.”

Cllr Kam Rai, Chair of Local London and Leader of the London Borough of Redbridge, said:

“We welcome the publication of the new Local Skills Improvement Plan (LSIP) for London and the Local London Annex, which highlights the skills priorities that matter most in the nine north east and south east London boroughs. Building on the progress made since 2023, we will continue working with employers and the sub-region’s skills providers network to address skills and talent needs in our five priority sectors (construction, health and social care, transport, manufacturing and the creative and digital industries), helping people and businesses thrive across Local London’s nine boroughs.”

Sarah Ireland, Chief Executive of the Royal Borough of Kingston upon Thames and co-chair of the South London Partnership’s Skills and Employment Alliance, said:

“Skills are fundamental to creating inclusive growth and ensuring that local people can access the opportunities being created across South London. This refreshed annex recognises that we need stronger pathways into employment, especially for young people, as well as better support for those who face barriers to entering or remaining in work. Through programmes such as Connect to Work and our wider partnerships with employers, colleges and training providers, we are creating a more connected and responsive skills system. By working together across borough boundaries, we can help residents develop the skills that employers need today and in the future.”

Cllr James McAsh, Chair of Central London Forward and Leader of Southwark Council, said:

“Central London is the engine of the UK economy, however too many of our residents feel far removed from the wealth and opportunity in our sub-region. But we can help improve living standards and tackle inequality by upskilling local people and supporting Londoners into highly-skilled roles. The new LSIP shows the extent of the skills gaps in Central London and how difficult it is to support those with barriers to employment into good jobs. Now it’s time to put the learning into action and help Londoners access the skills they need to thrive.”