Tackling Labour Market Disadvantage in London

  • By Jenny Gulliford


Many people experience significant barriers to sustainable work and are either trapped in long term worklessness or move frequently between unemployment and low paid work. These groups are poorly supported by current back to work provision but are often heavy users of local government services. 


London’s employment rate stands at 75%, with unemployment at just 5%.1 This is a record that national and local government should be proud of. However, these figures disguise ongoing structural weaknesses in the capital’s labour market.

In London today there are over half a million people who want to work but are not currently in employment.2 58% of Londoners living in poverty live in a working household.3 

Key facts
There are currently 251,800 unemployed people living in London.4
There are a further 290,400 people who are economically inactive who want to work.5
London has significant regional variation in unemployment rates. [see map]
London has the highest rate of youth unemployment in the country at 15.5%.6
58 per cent of Londoners in poverty live in a working household. This is a 50 per cent

increase over the last decade.7

Too many people in London and the UK are still struggling to find jobs that enable them to get on in life. Challenges remain for many even in employment, with in-work poverty, precarious work, underemployment and stagnating wages all growing forms of labour market disadvantage.

Current national support has proven successful at helping people recently out of work but struggles to tackle entrenched labour market issues.

Employment services must work in new ways. They need to: 

  • Make sure that people experiencing multiple barriers to work receive coordinated support from a range of specialist services, including voluntary and council led provision.
  • Reflect geographical variation in labour market disadvantage and work with local communities.

They must also adapt and provide support in the context of a changing economy. London, like elsewhere, is experiencing a period of significant change in the way our labour market and economy is structured, linked to factors such as to increased globalisation, technological innovation and Brexit. These risk further entrenching labour market disadvantage through increased precariousness and skills polarisation. But these changes can be impetus to open the labour market to previously excluded groups.

Local authorities have a vested interest and demonstrable successes in supporting the employment needs of their communities and their local economies. They provide many services targeted at the most vulnerable members of society, often with employment as a secondary outcome. London government has demonstrated an ability to design and deliver large programmes aimed at the hardest to help, and to handle significant and complex funding streams. This needs to be built upon, taking advantage of the devolution of the Adult Education Budget to the Mayor’s office, and the Work and Health Programme to subregional groups of boroughs.


  1. Introduce devolved decision making over new and innovative funding streams.

Funding pressures have made it harder for the employment and local authority sectors to pilot new and innovative approaches to help people to enter survive and thrive at work. This has left a significant gap in provision for people with complex back to work support needs. The national government must:

Take a ‘local first’ approach to all new employment support programmes. When considering successor or new employment and back to work schemes government should take a ’local first’ approach and consider whether the service could be more effectively delivered at a local level. This should build on and go further than the model of devolution created through the Work and Health Programme.

Develop a new Healthy Working Innovation Fund and ‘what works’ centre. A funding stream should be set up to pilot and test new ways of preventing unemployment as a result of ill-health at a local authority level, using the funds available as a result of the cancelled ‘Fit for Work’ service. This would be underpinned by a ‘what works’ centre delivered in partnership with the Work and Health Unit, collating this evidence with a view to scaling successful programmes.

Preserve an employment focus in the UK Shared Prosperity Fund at a local level. The replacement for European Structural and Investment Funds, the UK Shared Prosperity Fund, must continue to be delivered with a focus on employment and skills. Local powers over delivery should be strengthened, with full devolution to London government.

  1. Re-focus employment support on the hardest to help and bring services together through co-location.

Jobcentres are well placed to provide targeted support for people who are recently out of work. However, they struggle to identify and support the significant proportion of people who face multiple barriers to employment.

This group is usually comprised of heavy users of local authority services. Greater coordination between local and national provision would allow them to act collectively. This has proved difficult to achieve past, but co-location of services will help address these barriers.

Boroughs should act as trailblazers and co-locate employment and local authority services and align skills and resources.

  1. Align Jobcentre delivery areas with sub-regional geographies, underpinned by joint governance

The London sub-regional partnerships of boroughs represent organic economic, social and political geographies. They enable boroughs to act strategically within a larger geographic level. They have undertaken a number of joint projects, including the delivery of the Work and Health Programme. Jobcentre Plus districts should be aligned with these partnerships, working together to coordinate activity, deliver the trailblazer hubs and build future devolved programmes through sub-regional governance boards.

  1. Create a shared data infrastructure to underpin coordinated service provision

Underpinning the new trailblazers and sub-regional geographies must be a shared data infrastructure. This would provide strategic and practical support to enable closer ways of working and efficient and targeted delivery.

  1. Support in-work progression through an enhanced skills support offer

The devolution of the Adult Education Budget to London is an opportunity to enhance inwork provision and support more people to enter and stay in work. Alignment between skills and employment provision would significantly enhance the offer available to people in lowpaid roles and would help us to tackle the looming skills challenges that London faces.

  1. Local enforcement of the national minimum and living wages

Any attempt to improve levels of in-work poverty must explore greater enforcement of existing minimum wage legislation. London boroughs need the full suite of powers to enforce the national minimum and living wages. HMRC should continue its programme of targeted enforcement and the national helpline and could play a role coordinating and supporting local enforcement efforts. This devolved model would be made sustainable without additional funding from national government by allowing local authorities to retain all civil penalty income generated.

Conclusion: Work with London local government to create a Memorandum of Understanding to implement these recommendations

To begin delivery of this reform national and local government will undertake collaborative negotiations leading to a Memorandum of Understanding between London local government, the London Mayor and national government.

Please read the full report here.


1 Labour Force Survey- headline indicators July 2018 – September 2018

2 This figure is achieved by combining the total number of people who are unemployed with the total number of people who are economically inactive and say that they want to work. NOMIS: Annual Population Survey-Unemployment rate 16+ combined with % of economically inactive who want a job, Jul 2017 – Jun 2018.


4 Being unemployed is defined as being out of work, having actively looked for work in the last four weeks and

being able to start work in the next two weeks. NOMIS: Annual Population Survey – July 2017 – June 2018.

5 NOMIS: Annual Population Survey – July 2017 – June 2018.

6 NOMIS: Annual population survey – unemployment by age. June 2017 – June 2018.


Jenny Gulliford, Principal Policy Officer

T: 020 7934 9756

E: [email protected]