This piece of writing is part of a series of blogs designed to stimulate discussion around the five key elements of the ERSA Manifesto: commissioning, complex needs, skills, employer needs, youth employment. Any opinions represented within this blog are the authors and do not represent the views of ERSA.

Local government in London faces a period of prolonged financial austerity. By 2019/20, London boroughs could be facing a reduction in core funding of close to 70 per cent in real terms compared with 2010/11. Combined with a rapidly increasing demand for local services, they face funding pressure of more than £3.4 billion by 2020.

London’s councils recognise the scale of the challenges that lie ahead. Tackling these will require a reform of public services that focuses on integrated, preventative services that help avoid the high costs of dealing with failure. A key service that will benefit from an integrated, preventative approach is employment support. With cyclical joblessness receding, the priority is to tackle long term unemployment and structural worklessness.
If this challenge is not effectively met, a significant minority of citizens will remain locked out from the social and economic benefits of work, while often also facing a wider range of complex and unmet needs. The resulting high costs and high demands will continue to fall on overstretched public services – including those funded and managed both centrally and locally. London believes that significant gains can be made from providing local areas with the freedoms and flexibilities to design, commission and integrate services.

Through a new relationship between central and London government, we can collectively devise solutions that maximise our impact on this complex challenge. This relationship can be realised through three models:

• co-commissioning and co-design of specialist employment support
• partnership delivery of specialist employment support (partial devolution)
• local leadership and control of specialist employment support (full devolution).

These potential models allow for a differential approach to employment devolution, with different models running concurrently. (More detail on our proposed models for employment support devolution can be found on London Councils’ website.)

The benefits:

Local service integration and alignment: using London government’s position as a commissioner and place leader to lead the implementation of an integrated customer journey incorporating employment, health, housing, family services and other interventions around the needs of the individual. This will reduce duplication, help to intervene as early as possible and save money.

Unlocking access to other local services: London will commit meaningful and quantifiable ‘skin in the game’ to make devolution work. Devolution would allow the capital to align budgets and unlock access to local services. Locally contributed resources can come from:

• public health (including drug and alcohol services)
• homelessness support services
• adult social services
• childcare and early years services
• the Troubled Families programme
• local financial support such as Discretionary Housing Payments and Council Tax support.

There would be further benefits from aligning the work of further education colleges in the delivery of skills provision, alongside the Mayor and the London Enterprise Panel (LEP).

The challenges:

Governance: Groups of boroughs in London are already rising to the challenge of developing robust sub-regional governance structures, capable of taking on the risks associated with a devolved employment support budget. These are being developed on the foundations of existing mature partnerships such as Central London Forward (CLF) comprising eight boroughs including Camden and Westminster. This can be seen in action in the delivery of the employment support pilots negotiated via the London Growth Deal including CLF’s ‘Working Capital’ programme.

The diverse nature of local labour markets: Regional and local differences in employment growth and skills levels are important to consider in relation to commissioning at national or local level, as some regions and local authorities may perform better than others. This is the case now with nationally-commissioned support but with national programmes there is the scope to vary funding by area – should that be desirable. With greater local commissioning there would need to be consideration and negotiation around devolution of funding in line with regional and local differences which could potentially be complex.

London Councils will be working with our partners to develop these models further over the coming months and we would welcome feedback on the proposed models.