Government warned of potential north-south divide in regional economic performance if plans for decentralising employment support are not properly managed, according to a new report by Localis.
The report, titled ‘Guarantee of Potential: Place-based Employment Support within a New Local Policy Ecosystem’, urges councils and combined authorities to ensure that they are equipped to deliver the biggest reforms to employment support in a generation. The report also emphasises the importance of achieving a national long-term target of an 80 per cent employment rate.
The report highlights the risk of widening regional gaps if southern counties, with stronger economies and increased capacity, implement their own devolved powers without proper consideration for areas with higher unemployment and levels of economic inactivity. This could potentially lead to a north-south divide in regional economic performance.
The study also suggests that if revised funding formulas or political attention favour the country’s big cities, coastal, rural and post-industrial parts of the country may have their unique employment support needs overlooked.
The report, authored by Callin McLinden, a senior researcher at Localis, states that “local government is being asked to tackle worklessness with more responsibility, but lacks either sufficient capacity or resources to do so confidently.” The report sets out a practical roadmap for transforming fragmented employment services into coherent, integrated, and place-based support systems.
However, the report warns that without proper investment in local capacity, long-term funding certainty, and shared governance between the government and localities, the potential to reduce worklessness risks becoming perpetually stunted.
Ayden Sims, CEO of AKG, a company that delivers joined-up support across employment, learning, and health, said: “The report arrives at a pivotal moment, as the UK grapples with persistent economic inactivity and the need for more inclusive growth and offers a compelling case for enhanced local ownership.”
The report recommends that the government set up a formal partnership forum between the Department for Work and Pensions (DWP), the Ministry of Housing, Communities and Local Government (MHCLG), and local government to troubleshoot implementation issues. It also suggests the development of common outcome metrics and co-designed data systems, support for data-sharing agreements, and exploring new funding mechanisms like outcome-based grants.
The report also highlights the importance of integrating central health, skills, and welfare policy to address barriers to work. It recommends that the government should resource the roll out of cross-department pilot projects embedding employment advisers in health settings and vice versa, align skills initiatives with employment support, and consider improving support for carers.
The report also urges the government to leverage procurement and regulatory levers to incentivise inclusive employment from the centre. It recommends updating the National Procurement Policy Statement to mandate a minimum 15-20 percent weighting for social value in significant procurements, and introducing specific metrics for supporting disabled or unemployed people into work.
The report also provides recommendations for local authorities, including leading and collaborating within coordinated local partnerships to provide one-stop support for jobseekers and the economically inactive. It also suggests tailoring support to local needs and using key local authority levers strategically to stimulate job creation and inclusive hiring.
The report will be launched at the Local Government Association Conference on Tuesday 1st July, 2025, and will be available for download on the Localis website.
Derick is an experienced reporter having held multiple senior roles for large publishers across Europe. Specialist subjects include small business and financial emerging markets.