Is devolution the answer to better align education and skill systems with the requirements of local labour markets?
The UK’s high rate of young people not in education, employment or training is strongly shaped by uneven local labour markets, raising questions about whether greater devolution of education and skills policy can improve outcomes. Drawing on their recent research on Scotland and Wales, Steven Ballantyne and Elke Heins introduce the concept of ‘constrained divergence’ to show that devolved governments can pursue distinctive priorities and governance approaches while remaining limited by the UK’s wider growth model, welfare regime and fiscal structures. They find that skills systems in Scotland and Wales remain surprisingly similar to that of the UK as a whole, contributing to persistent mismatches between locally available skills and labour-market demand. The authors argue that devolution can support better-tailored policy, but that its effectiveness depends on recognising the powerful national constraints within which subnational governments operate.
The number of young people not in Education, Employment or Training (NEET) in the UK has become a national crisis. Recently, the UK Department for Work & Pensions (DWP) published its Young People and Work Interim Report and the Resolution Foundation published its own Lost in Translation report on the causes of the UK’s high NEET rate. The reports do a great job of identifying some of the causes and pointing towards some potential policy responses.
The headline NEET rate of 15% among 18-24-year-olds, about 900,000 (or more evocatively “nearly one million”) young people, has made headlines. Yet, that figure hides as much as it reveals. As highlighted in the DWP report, the risk of being NEET is strongly associated with the dynamics of local labour markets and is unevenly distributed throughout the UK.
Researchers and policymakers have often advocated for the devolution of education and skills policies to help better align education and skill systems with the requirements of local labour markets. Devolution certainly has the potential to enable regional and local leaders to directly tailor funding, qualifications, and training to local industry demands and growth opportunities. But is it contributing to improved outcomes in places where it has already happened?
Introducing the novel concept of ‘constrained divergence’, we argue in our recently published article in Regional & Federal Studies that the ability of the devolved governments in Scotland and Wales to develop skill formation systems which diverge from the UK-wide system is limited by the nationally bounded UK growth model and welfare regime and the incentives and inequalities that these generate.
In line with the existing academic literature, we agree that subnational governments seek to exercise their power(s), respond to local political demands, and reflect local identities. We also expect that differences in local labour markets are likely to yield different functional pressures and thus different policy responses by subnational actors. Unemployment resulting from the transition to knowledge economies or decarbonisation, for example, is not uniform within countries and thus creates greater or lesser pressures for responsive public policies at the subnational level. Yet, the literature also suggests limited policy powers (constitutional capacity) and fiscal capacity might act to limit policy divergence within countries. We contribute to this literature by theorising and exploring empirically whether national welfare regimes and growth models also constrain subnational policy divergence. We expect that national growth models can hinder subnational divergence in policy outputs as well as outcomes despite the attempts of subnational governments to take different approaches from those at the political centre.
In our article we show how governments in Scotland and Wales diverge from Westminster rhetoric in line with partisan politics and have different models of governance. Yet, the skill formation systems look surprisingly similar when it comes to policy outputs, which contribute to misalignments between the skills being created and those in demand by local labour markets. This is especially true in Wales, where manufacturing is a more important sector compared to the rest of the UK. Yet, the system still prioritises and incentivises mass participation in higher education, while young people have far fewer high-quality vocational options. When it comes to outcomes, the devolved governments’ ability to shape social outcomes is constrained by the UK’s inadequate benefit system, emphasis on free markets and associated high levels of inequality.
The devolved government level and comparisons within nation states too often get overlooked in comparative welfare state research despite important policy innovations at substate level - in our case in skills policy in Scotland and Wales. To the extent that most redistributive social policies are funded and administered by central governments, it makes sense to take nation states as the units of analysis in comparative research when analysing programmes such as unemployment insurance or pensions. However, as welfare states have become increasingly service-intensive with a focus on supporting ‘social investment’ in the form of education, skills, lifelong learning or health prevention programmes from the late 1990s, the increasing attention paid to social policy provision by subnational units is appropriate as it is in the provision of services that subnational units tend to play a key role. While considering the subnational level is important, we would equally warn against a 'methodological subnationalism' as we demonstrate that devolved governments are limited in how far they can diverge within nationally bounded growth and welfare regimes. Our research illustrates that empirical differences (or lack thereof) among subnational territories cannot be fully understood without an appreciation of the wider national context in which they are observed. In other words, we challenge the implicit assumption that subnational units are discrete units of analysis. Instead, we argue for a balanced research approach that incorporates both national and subnational perspectives in comparative welfare state analysis.
We conclude that devolution of policy competencies and fiscal resources may lead to policies which are better aligned with local socio-economic contexts but national structures and institutions exert considerable constraints.
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Dr Steven Ballantyne is a Postdoctoral Researcher at the Otto Suhr Institute for Political Science, Freie Universität Berlin, where he works on the project Territorial Inequality in Education. He was awarded his PhD from the European University Institute in 2024. His research focusses on the territorial dimension of the welfare state with a specific focus on education, skills and inequality.
Dr Elke Heins is Senior Lecturer in Social Policy at the University of Edinburgh. Her research interests focus on comparative and European social policy, in particular labour market, skills and unemployment policy as well as the politics of welfare and wellbeing in the UK, including at devolved level.
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Note: this blog represents the views of the authors, and not those of Regional & Federal Studies, the Centre on Constitutional Change, or the University of Edinburgh. It summarises this article from Regional Federal Studies, which is available Open Access.
Image credit: Paul Farmer via Wikimedia Commons, CC BY-SA 2.0
