Skilling up the regions: Driving productive and inclusive growth across the UK

The current skills system is not delivering the skills that UK businesses or the economy needs. Skills shortages consistently top the list of concerns of business leaders in our annual Global CEO survey, while the lack of powers over skills is a concern for local leaders.

Without addressing this issue, the skills gap will only grow wider. If the UK is to improve productivity, and build an economy fit for growth, focusing on delivering the right skills for the economy, the improvement of people and the growth of businesses will be essential.

Group of colleage students walking, holding papers.

Getting skills right offers a once in a generation prize... failing to take this opportunity will have repercussions for many years

£163 billion increase in GDP over next decade by improving vocational skills
£9 billioin lost revenue in taxation as a result of people not fulfilling thier potential in the labour market
£45 billion or 2.3% increase in GDP if the UK NEET rate for 20-24 year olds matched German level
£105 billion or 5.8% increase in GDP if the UK employment rate for workers aged 55+ matched Swedish levels

1 City & Guilds Group, 2015, The economic benefits of vocational education and training in the UK
2 PwC, 2016, Young Workders Index,
3 PwC, 2016, Golden Age Index,
4 Joseph Rowntree Foundation, 2016, Counting the cost of UK poverty,

A new model of skills is needed

A new model of skills provision is needed, which changes the way the skills sector is funded and how people and business engage with it. The new model should be demand driven and employer-led at a local level, with clear funding flows and an effective process for matching individuals to job opportunities.

Devolution offers the opportunity to develop solutions that work locally and regionally and deliver the right skills in the right places. A locally-driven model would mean skills planning is done on a place basis, with employers in the driving seat, shaping skills planning in line with local needs.

For a place-based system to work, a devolved approach to funding is needed. Devolved funding will give local leaders and employers the ability to tailor their approach to skills to their own unique labour market strengths, weaknesses and potential, meaning money follows demand and is targeted on local needs.

A further challenge of the current skills system is that individuals have the opportunity to take the training they want, but don’t have efficient or effective careers information to make that choice informed or meaningful. More effective careers guidance will both help individuals find work and develop in their careers, as well as helping match supply and demand at a local level and delivering a potential boost to productivity.

A window of opportunity

The vote to leave the EU has drawn renewed attention on the need to reshape the UK economy and create an agile, highly skilled workforce which makes the UK a place where companies want to invest, where products drive trade and where people have access to opportunity.

With local institutions such as city regions, LEPs and Combined Authorities strengthening, there is a window of opportunity to create a new locally-driven skills model that can deliver on this vision. This new devolved approach requires a radical reorganisation of the current system.

Central government, local government and business, as well as skills providers, will all have their role to play in building this new inclusive skills system which helps people reach their full potential, businesses grow and regions prosper.

Contact us

Caitroina McCusker

Education Consulting Lead, PwC United Kingdom

Tel: +44 (0)15 0960 4098

Michael Kane

, PwC United Kingdom

Tel: +44 (0)289 041 5303

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