The UK has a higher level of regional inequality than any other large wealthy country, including the United States, France and Germany. This inequality is evident both economically, in terms of income, productivity and economic growth, and socially. The impact of the COVID-19 pandemic has further exposed inequalities in employment, both between and within geographic regions. The Government has a clear ambition to level up opportunity and investment across the UK and unleash the country’s full potential. This requires the creation of jobs, provision of training and other interventions to grow productivity in places that have experienced economic decline and the loss of industry.
Who holds the key to unlocking levelling up?
The UK has significant long-term skills shortages observed across multiple industries. These skills shortages reduce economic efficiency and productivity, and are, according to the post-18 review of education and funding, the result of serious structural problems within the UK’s post-18 education system. In a 2020 Policy Exchange paper, David Goodhart suggests that while ‘Higher education remains a British success story … it is possible to have too much of a good thing’ and that ‘much intellectual work is now being automated and routinised in the way that manual work was for an earlier generation’.
The simple solution may be to direct more young people towards practical and vocational qualifications, and we have seen this solution enacted through apprenticeships, T Levels and Higher Technical Qualifications. But the obvious solution is not necessarily the right solution. As an organisation that works at the interface of education and employers, we are often asked what the appetite for different types of qualifications is among the local employer population. There is never an easy answer. It requires knowledge of, or considerable research into, local employer needs. Despite the link between local labour market requirements and education and training provision, regional skills agenda often focus primarily on increasing the number of young people undertaking technical qualifications. For skills initiatives to make a true contribution to levelling up, policymakers should target funding to where it will have the most economic impact. Building a workforce that can drive economic recovery will require the kind of high-level skills a university education provides.
Taking levelling up to the next level
While funded graduate internship schemes are effective from a graduate employment perspective, the impact they have on levelling up is often less clear. Regional initiatives led by Higher Education Providers (HEPs) that have taken real steps in the pursuit of levelling up are those that take the approach that levelling up should be achieved, according to the Government’s briefing notes alongside the 2021 Queen’s Speech, ‘not through a one-size-fits-all approach but nurturing different types of economic growth and building on the different strengths that different places have’. They are specifically focussed on tackling the unique challenges of their local labour market.
De Montfort University’s (DMU) THE award-winning Leicester Future Leaders project, co-funded by the Office for Students (OfS), aims to tackle the lack of ethnically diverse business leaders in the city by supporting small and medium-sized enterprises (SMEs) to recruit diverse graduate talent. The businesses gain recruitment support from the university, as well as a toolkit and diagnostic meetings with DMU experts to understand how they can attract and retain diverse talent. Crucially, the benefit to the business extends to the wider local economy since research demonstrates that diverse businesses are more productive, more profitable and benefit from greater employee engagement and retention.
Does geographical mobility lead to social mobility?
As Chris Millward, then the OfS’s Director of Fair Access and Participation, reported in August 2021, if the graduate population is split into earnings quintiles, the areas with most graduates in well-paid jobs are virtually all in London and the South East. While higher average earnings do exist in these areas, the cost of living in these regions far exceeds that of other areas, and graduates have, on average, less disposable income and purchasing power.
Research by Prospects found that 64 per cent of graduates would relocate for a higher salary and 46 per cent would if there was a lack of opportunities where they live. Graduates from neighbourhoods with low participation in higher education are more likely to study and work in their home region or return to their home region after graduation; however, if they are aspiring for higher salaries and better job prospects and don’t see their town or city as providing them, they may be tempted to move to high quintile areas for employment. They may not realise that their disposable income is lower than had they have stayed in, or moved to, their preferred region of employment.
Millward suggested that we can tackle regional inequality in graduate earnings through education providers working with businesses and the public sector to improve opportunities for students who want to live and work in the area where they grew up. Many successful schemes exist that seek to this end. One that has demonstrable success in creating new jobs and growing productivity in places that have seen the loss of industry is the Sheffield City Region (SCR) RISE scheme, delivered in partnership by Sheffield Hallam University, the University of Sheffield and Sheffield City Council, with funding from the European Regional Development Fund.
Since 2013, RISE has supported more than 400 SMEs across the Sheffield City Region (SCR) to recruit more than 500 graduates. As well as producing a net gross value added (GVA) of £14 per £1 invested, the scheme has actively increased high skilled graduate employment in all parts of the SCR, including Barnsley, Rotherham and Doncaster. This has been achieved through targeted engagement with graduates originally from those regions who want to return, as well as a marketing campaign to dispel misconceptions of these areas to graduates who have never considered them a potential post-graduation destination.
Its impact on the regional economy is clear. In a 2019 analysis, the net GVA of the scheme to the region was £7.7 million. Its success arguably lies in its business-first approach, that it is open to graduates from any university – which enables it to connect with graduates seeking to return to their home region – and its strong collaborative foundations between the two HEPs, the local authority, expert suppliers and local business champions.
Graduate retention, not just recruitment
By definition, levelling up is not limited to job creation, but also includes ‘boosting training and growing productivity in places that have seen economic decline’. If our goal is to truly level up regions through higher education, then we should give equal focus to graduate retention and progression in local businesses, not just recruitment.
Nottingham Trent University’s Innovation Community Lab (ICL) programme aimed to develop the confidence, business acumen and leadership potential of graduates working in SMEs in the Derby, Derbyshire, Nottingham and Nottinghamshire (D2N2) region. Through the programme, graduates were supported to implement changes in the business with a view to driving business growth and sustainability. The outcomes for this programme were impressive: 73 per cent of participants felt that the programme had a positive impact on their capability to innovate and 95 per cent of managers said ICL had a positive impact on the culture of the organisation.
Potential for policy and practice
Speaking at the Universities UK (UUK) conference in October 2021, Professor Steve West, Vice-Chancellor of the University of the West of England, remarked on how, regarding the future of learning, ‘coronavirus has ripped up the playbook’ and that ‘we must not simply revert to how things were before’. The OfS’s short course trial challenge competition is a welcome step, and we hope it results in increased provision of short training programmes, delivered through partnerships between education and industry, to enable graduates to work in skills-shortage roles in their local area.
Guidance and support for local employers to recruit graduates is arguably more important than ever, since vast numbers of graduates have not had the opportunity to gain the same work experience as before the pandemic. A collective approach to training SMEs how to attract, recruit and train graduates is a simple and scalable way to support the creation of new graduate-level jobs. Such training could include guidance on how to support graduates from underrepresented backgrounds to transition to, and succeed in, the labour market.
We hope that the Government’s promise of ‘bold new policy interventions’ will result in opportunities for HEPs, the public sector and the private sector to create exciting new initiatives that demonstrate the role of higher education in enabling every place to reach its productivity potential.