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The Spring Budget is an opportunity to strengthen regional economic resilience for growth

Insights Thought Leadership 09 March 2023

A new consensus on growth and empowering the regions to play a bigger role will be key to arresting the trend of limited levels of growth seen in recent years, according to Seetec.

We have today outlined several recommendations for the Chancellor and the wider Government to consider ahead of the Spring Budget in our ‘Resilience for Growth’ publication, focusing on a more proactive approach to labour market resilience by tackling economic inactivity, further embedding an employer-led focus on skills, and empowering regional economic growth with further enhanced devolution deals.

At the start of 2023, the UK had 8.95 million people classed as economically inactive – those aged 16-to-64 who are not involved in the labour market and are neither working or actively seeking employment, including students, early retirees and the long-term sick.

Since the onset of the pandemic, the over-50s demographic has represented the highest proportional increase in inactivity.

In order to address this, we have recommended a targeted re-skilling initiative to encourage older people to fill vacancy gaps, and that the Government should consider fast-track re-skilling opportunities in sectors that are vital for enabling economic growth, as well as an expansion of the Government’s ‘mid-life MOTs’ scheme.

Joel Charles, Director of Policy, Communications and Public Affairs at Seetec, said:

“There is an opportunity for the Chancellor to build on his existing approach to the stewardship of the economy by embracing enhanced devolution from Whitehall to the regions. Metro Mayors manage increasingly sophisticated administrative centres that can support regional economic growth. If the Government wants to truly realise the Levelling Up agenda, tax raising powers, greater control of local labour market policy and filling skills gaps hampering sector-specific growth need to be on the table.

“This could complement the Government’s efforts to tackle economic inactivity, particularly amongst the over-50s, and build a more highly skilled national workforce that is able to meet the challenge of an increasingly competitive global market.

“Economic policy cannot be administered in isolation, it needs a joint response by the Government, business leaders, local politicians, and skills and employability providers to work closely together in the national interest to boost growth and enable the ability to deliver more prosperous communities.”

The number of people reporting long-term sickness as a reason for being economically inactive has also risen since the start of the pandemic, which Seetec says reinforces the need for a renewed focus on workplace health and wellbeing.

For those who have fallen out of work due to issues such as chronic health conditions or caring responsibilities, Seetec Pluss, the employability and skills business area of the group, has incorporated wellbeing services into one of its delivery models, giving service users a holistic approach to respond to their needs.

Joel Charles added: “Prior to the pandemic, none of these services would have been baked into provision, and jobseekers would have been reliant on other local community services, some of which have been scaled down or disappeared since the onset of COVID-19. That must change, so Seetec is recommending the Government consider greater personalisation with the launch of standalone hubs in communities to meet the needs of disabled people and those with long-term health conditions.

“Nobody should be left behind by our society. By boosting job outcomes and supporting wellbeing needs, more people will be able to achieve and succeed.”

We have recommended a reassessment of devolved powers to manage regional economic growth, urging key Government departments to co-commission a review with local politicians, business leaders and the public sector in different English regions to look at what additional powers could help strengthen their resilience.

We have also recommended that the Chancellor should work with Mayoral Combined Authorities to consider granting them powers over aspects of the income tax system, similar to arrangements in place in Scotland and Wales.

Joel Charles said: “The complexities of managing the national economy mean that devolving further powers requires careful consideration, particularly when managing external interdependencies that have a significant bearing on fiscal policy. External factors like conflicts and global downturns require the Government to be able to move quickly to respond to such shocks.

“There is a case for a review of powers to help mitigate the impacts of economic shocks in the long-term regionally because of the devolution deals already in place under the leadership of Mayoral Combined Authorities. Establishing greater capacity in the regions to steer local economic growth in a way that best meets the needs of communities could have a positive knock-on impact nationally.

“The truth is that fiscal powers have already been handed to the Mayoral Combined Authorities, so granting further limited tax-raising powers could be a logical next step.”

Other recommendations include increasing the visibility of technical education routes, reviewing the national curriculum to include further basic employability skills and boosting the reach of the Government’s ‘Skills for Life’ campaigns.

A copy of Seetec’s pamphlet can be found here.