Guarantee of Potential

place-based employment support in a new local policy ecosystem

Author: Callin McLinden   |   01/07/2025

Tackling worklessness, long a stated goal yet persistently unmet by government, has become a structural crisis demanding locally driven reform. With over nine million economically inactive working-age adults, the challenge stems from overlapping issues: long-term illness, regional inequality, and fragmented support services. Centralised, siloed approaches have proven insufficient. Guarantee of Potential argues that local authorities, empowered through the Get Britain Working white paper and recent Spending Review, must now lead the response. By devolving funding, aligning employment with health and skills services, and commissioning strategically, councils can build coherent place-responsive systems that make good work accessible and unlock the potential of residents, advancing both economic inclusion and national renewal.

Key points

Worklessness as both a systemic and place-bound challenge

• Economic inactivity is a systemic policy failure, not merely the result of individual circumstances like ill health or low skills, but a product of fragmented services, disjoined funding streams, and weak institutional coordination, affecting millions of working-age adults.
• Local authorities are best placed to lead solutions, given their proximity to communities and cross-sector convening powers, yet their potential remains underused due to centralised programmes and uneven devolution; with new reforms underway, empowering councils to deliver coherent, place-based responses is now both timely and essential.

Towards a locally led and integrated employment support system

• The current employment support system suffers from short-term policy cycles, fragmented funding, and rigid governance, limiting the effectiveness of local partnership. A shift is needed toward a long-term, devolved settlement; consolidating national funding into multi-year local pots, enabling joint commissioning, and positioning councils as lead commissioners by 2030.
• Councils can drive inclusive growth by embedding employment outcomes into contracts across housing, health, and infrastructure. For this to work, reforms must be backed by strong incentives, enabling regulation, and a collaborative central-local partnership framework.

Guaranteeing potential through mission-led local delivery

• Employment policy must move beyond narrow goals of economic output or caseload reduction and instead focus on realising each resident’s potential—through integrated support across health, care, employment; future-facing, locally relevant skills provision; and strong partnerships that deliver personalised, community-embedded interventions.
• With new legislation and devolved powers reshaping the local policy landscape, there is now a critical opportunity to empower and resource local government as the strategic anchor of a more inclusive, proactive employment support systems, one that addresses root causes and fosters long-term social prosperity.

Recommendations

Central government recommendations:

• Commit to facilitating coordination and innovation through central-local partnerships.
  • Immediate: Set up a formal partnership forum between DWP, MHCLG, and local government to troubleshoot implementation issues.
  • Medium-term: Develop common outcome metrics and co-designed data systems, support data-sharing agreements, and consider new funding mechanisms like outcome-based grants.
  • Long-term: Foster a culture of continuous improvement through effective central-local networks, with the partnership forum becoming a permanent feature, and central government acting as a backstop, enabler, and disseminator of best practices.
• Establish long-term, devolved funding and governance for local employment support, moving away from short-term, fragmented funding and giving local areas more control.
  • Immediate: Expedite multi-year funding, establish a pathway for expanding flexible, place-based funding pots beyond mayoralties, and expand Local Get Britain Working Plans.
  • Medium-term: Devote additional budgets and powers through new devolution deals or legislation, aiming for every area to control key employment and skills funding by 2027.
  • Long-term: Establish a fully place-based employment and skills system by 2030, with local government as the lead commissioner and central government providing formula-based funding and supportive regulation.
• Further integrate central health, skills, and welfare policy to address barriers to work.
  • Immediate: 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.
  • Medium-term: Create central joint commissioning frameworks for employment support of people with health conditions, pool funding, expand Working Well style initiatives nationwide, and ensure central-local collaboration on outcome targets and Youth Guarantee implementation.
  • Long-term: Embed a whole-person, whole-system approach in national strategy and legislation, and mandate data-sharing across DWP, NHS, and regional authorities for tracking outcomes and cooperation on employment outcomes.
• Leverage procurement and regulatory levers to incentivise inclusive employment from the centre.
  • Immediate: Issue further guidance on the Procurement Act, implement reforms in accordance with Office for Value for Money findings, and require social value criteria (local job creation, apprenticeships, upskilling of inactive groups) in all new major contracts.
  • Medium-term: Update the National Procurement Policy Statement to mandate a minimum 15-20 percent weighting for social value in significant procurements and introduce specific metrics for supporting disabled or unemployed people into work.
  • Long-term: Broaden the use of regulatory levers beyond procurement, explore tax system or Apprenticeship Levy adjustments to reward businesses hiring and training those furthest from the labour market, and encourage national adoption of good employment charters.

Local authority recommendations:

• Lead and collaborate within coordinated local partnerships to provide one-stop support for jobseekers and the economically inactive.
  • Immediate: Form or join local employment and skills taskforces (preferably within ICS governance), align existing plans with formalised strategic frameworks at the mayoral level (if relevant), and ensure LGBWPs are up and running in every area, with non-devolved areas collaborating across district and county lines.
  • Medium-term: Develop place-based strategies aligned with broader economic plans and DWP outcomes and invest in training frontline staff and shared case management systems.
  • Long-term: Institutionalise these local partnerships as part of the public service fabric, aiming for fully integrated local employment services by 2030, focusing also on in-work progression.
• Tailor support to local needs and target it to those facing the greatest barriers using on-the-ground knowledge.
  • Immediate: Use local data and community insight to identify priority groups and neighbourhoods and start or expand proven initiatives.
  • Medium-term: Innovate with tailored interventions, scale up successful pilots, develop dedicated programmes (e.g., work and health, Youth Hubs), and embed target setting and evaluation.
  • Long-term: Reduce disparities and achieve inclusive growth outcomes specific to the locality, periodically refreshing strategy based on economic changes, and in non-devolved areas, continue to make the case for more freedom.
• Use key local authority levers strategically (planning, procurement, convening of anchor institutions) to stimulate job creation and inclusive hiring.
  • Immediate: Update council procurement strategy to align with the Procurement Act and maximise social value requirements and use planning agreements creatively for local employment benefits.
  • Medium-term: Convene local anchor institutions to commit to inclusive employment and form local anchor networks.
  • Long-term: Work toward embedding a culture of social responsibility in the local economy, with procurement and planning routinely delivering community benefits, and explore local bylaws or charters to formalise commitments.