Better Ways to Work: Tackling labour market disadvantage in London

  • By Jenny Gulliford

London’s employment rate stands at 75%, with unemployment at just 5%. This is a record that national and local government should be proud of. However, these figures disguise ongoing structural weaknesses in the capital’s labour market.

In London today there are over half a million people who want to work but are not currently in employment. 58% of Londoners living in poverty live in a working household.

Challenges remain for many even in employment, with in-work poverty, precarious work, underemployment and stagnating wages a growing concern. 

Current national support has proven successful at helping people recently out of work but struggles to tackle entrenched labour market issues. Employment services must work in new ways. 

The steps needed to deliver a more localised and responsive employment system are set out in London Councils’ latest report ‘Better Ways to Work: Tackling labour market disadvantage in London’.

We believe that local authorities have a vested interest and demonstrable successes in supporting the employment needs of their communities and their local economies. They provide many services targeted at the most vulnerable members of society. This needs to be built upon, taking advantage of the devolution of the Adult Education Budget to the Mayor’s office, and the Work and Health Programme to sub-regional groups of boroughs.

Our reccomendations are summarised below and set out in more detail in the accompanying report.

1. Introduce devolved decision making over new and innovative funding streams.

Funding pressures have made it harder for the employment and local authority sectors to pilot new and approaches to help people to enter and thrive at work. This has left a gap in provision for people with complex back to work support needs. The national government must:

  • Take a ‘local first’ approach to all new employment support programmes
  • Develop a new Healthy Working Innovation Fund and ‘what works’ centre.
  • Preserve an employment focus in the UK Shared Prosperity Fund at a local level and retain and expand local controls over priorities and spending.

2. Re-focus employment support on the hardest to help and bring services together through co-location.

Jobcentres are well placed to provide targeted support for people who are recently out of work but struggle to identify and support people who face multiple barriers to employment. This group is usually comprised of heavy users of local authority services. Greater coordination between local and national provision would allow them to act collectively and focus on those who need support most. London boroughs should act as trailblazers and co-locate employment and local authority services and align skills and resources.

3. Align Jobcentre delivery areas with sub-regional geographies, underpinned by joint governance

The London sub-regional partnerships of boroughs represent organic social and political geographies. They enable boroughs to act strategically within a larger geographic level and deliver the Work and Health Programme. Jobcentre Plus districts should be aligned with these partnerships, working together to coordinate activity, deliver the trailblazer hubs and build programmes through sub-regional governance boards.

4. Create a shared data infrastructure to underpin coordinated service provision

Underpinning the new trailblazers and sub-regional geographies must be a shared data infrastructure. This would provide practical support to enable efficient and targeted delivery.

5. Support in-work progression through an enhanced skills support offer

The devolution of the Adult Education Budget to London is an opportunity to enhance in-work provision and support more people to enter and stay in work. Alignment between skills and employment provision would significantly enhance the offer available to people in low-paid roles and would help us to tackle the looming skills challenges that London faces.

6. Local enforcement of the national minimum and living wages

Any attempt to improve levels of in-work poverty must explore greater enforcement of existing minimum wage legislation. Local authorities need the full suite of powers to enforce the national minimum and living wages to London boroughs. HMRC should continue their programme a national level and could play a role coordinating and supporting local enforcement efforts.  This devolved model would be made sustainable without additional funding from national government by allowing local authorities to retain all civil penalty income generated.

Conclusion: Work with London local government to create a Memorandum of Understanding to implement these recommendations

To begin delivery of this reform national and local government will undertake collaborative negotiations leading to a Memorandum of Understanding between London local government, the London Mayor and national government.

Jenny Gulliford, Principal Policy Officer