From jabs to jobs – why employment must be the next focus

By Rohan Malik, EY, UK&I Managing Partner – Government & Infrastructure

The COVID-19 crisis has deepened inequalities in the UK but at the same time has created greater motivation to address them. This blog looks at how to turn that intention into action, urgently.

A pressing and unequal problem

As unemployment, particularly among the young and in the regions, rises – and looks set to increase further before recovery begins – the need to act quickly becomes more pressing.

The good news is that the UK Government recognises the issue and is putting levelling up at the core of its agenda. A series of initiatives – including its Ten Point Plan for a green industrial revolution – aims not only to promote growth but to target it where it is most needed.

While this is welcome, the need to accelerate action with clearly defined outcomes has never been greater. According to the World Bank, 9 out of 10 jobs are created by the private sector, so unleashing its power – while carefully directing it with the right incentives – is likely to be the fastest route to success.

Regional inequalities

Between 1997 and 2019, EY research shows that the share of the UK economy accounted for by the four most southerly regions increased from 60% to 63%. In the same period, London’s economy grew by an average of 3.2% annually compared with 2.2% for England’s other core cities.

During the pandemic, already weakened and underperforming regions have been less able to withstand its economic impacts. Places with the highest levels of unemployment before the COVID-19 pandemic have suffered the greatest rises.

The UK Chancellor’s 2020 Spending Review underlined the Government’s commitment to geographic rebalancing and announced a ￡4 billion Levelling Up Fund for England. But its progress has been slowed by the pandemic and success will be dependent on improving skills and training before job creation can begin in earnest.

Sector discrepancies

One of the key drivers for regional and social inequality is the predominance of high-value growth sectors – from technology to finance and life sciences – in and around London. While it is rarely wise to work against market forces, we can spot and exploit existing trends. For example, a remarkable 86% of manufacturing activity is located outside the UK’s major cities and the largest number of manufacturing jobs are found in the Midlands, followed by Yorkshire and the Humber. With the COVID-19 pandemic and Brexit encouraging businesses to look closer to home for their suppliers, many are now expecting to re-shore activity to the UK. This could offer a once-in-a-generation chance to re-shape the UK’s economic geography.

The green revolution

The UK’s Ten Point Plan for a green industrial revolution aims to support 250,000 British jobs and deliver over ￡40 billion of private investment by 2030. This provides a huge opportunity to right the mistakes of the past by creating the jobs of the future. Its radical agenda has the potential to create dramatic shifts rather than gradually moving the dial. But the new industries – for example, those producing the millions of batteries that will be needed to power the electric vehicles of the future – will need new skills and the right environment for significant private investment. Foreign direct investment will play a crucial part, as outlined in my earlier blog.

 Looking ahead to a more even future

What this whistle-stop tour reveals is that, while the challenge remains great, the remedies are both real and within reach. What’s needed is a clear plan and concerted action to get cracking. Strategies must become plans, proposals must become projects and those must become jobs.

The good news is that, once more, the foundations are in place. The Build Back Better Council brings together 30 business leaders from across the British economy to work in partnership with the Government to unlock investment, boost job creation and level up the whole of the UK. Co-chaired by the Prime Minister and Chancellor, it has the power and the people to act decisively, but it must wield it in order to build back quicker.

Now is the time to set out a clear objective with a clear plan and clear incentives for the private sector. All fixed on a clear outcome – more skills, more jobs and a more equal society.

Only by acting together – across business and government – can we reset now rather than let existing divisions run deeper.

To continue the conversation further, please get in touch.