If there is a running theme in the ambitions of the Labor government elected in 2024, it is growth: growth to deliver the jobs that will enable individuals and countries to thrive; growth to rebuild public finances; increase to fund other missions that the government chose to pursue.
At the heart of this growth ambition is the Industrial Strategy – a statement of priorities and focus on eight economic sectors (IS-8) in which the government believes the UK has a comparative advantage.
This focus is now taking shape in national-level plans for the eight sectors, developed with key industry partners, alongside regional versions in the form of Local Growth Plans drawn up by the Mayor’s Strategic Authorities that now exist across much of England.
Another element is the big change in the distribution of public research and innovation funding from the UK’s national research and innovation body (UKRI) to support the Industrial Strategy and help grow innovative businesses across the eight sectors. The aim is for universities to leverage what they do in research and innovation – which is, in many areas, truly world-leading – to power this growth agenda.
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Together, this adds up to a powerful vision of the “triple helix”: government at different levels, industry and universities aligning their capabilities to deliver growth through innovation.
But while this alignment is perhaps stronger now than in previous iterations of the industrial strategy, something is missing. Innovative growth sectors need skilled workforces to thrive amid the rapid technological change that innovation brings – and at the forefront of this technological change is AI.
This is where new research, published in collaboration between QS, the University of York and Public First, delivers a clear and urgent message: the binding constraint on future growth is not innovation, but the provision of graduate-level skills, delivered through higher education, that enable innovation to be put into practice.
Our analysis estimates that a concerted skills-first strategy – integrating artificial intelligence (AI) through a highly skilled workforce – could unlock £490 billion in additional economic value for the UK by 2030. This potential growth could boost annual GDP growth by around 2.8 per cent.
We often hear pessimism about AI, but our research suggests that it will increase the potential of IS-8 sectors far more than it will drive obsolescence through automation. Future productivity gains that drive growth will rely on workers’ ability to deploy AI alongside the advanced judgment, creativity and expertise of the technical sector. These are all graduate level skills.
Our data maps nearly 1,900 UK occupations against the IS-8. The results are clear: of the 1,436 occupations identified as critical to the implementation of the Industrial Strategy, 80 percent require a bachelor’s degree or higher.
It also allows us to identify over 630 “cross-cutting” occupations – roles rated as high or very high importance in two or more IS-8 sectors, such as AI research scientist, digital transformation leader and innovation manager. Again, these are roles that require a university education – and if there are shortages in their supply, the impact will not just be felt within a single sector, but across the board.
Here’s the challenge for government, employers and education providers: to build the same kind of three-pronged approach to skills that we have to innovation. We deliberately say “education providers”, not just universities. While university graduates are essential to delivering innovation, we will need skills at all levels to fuel the innovation economy, including apprentices and plumbers and carpenters, whose technical skills are often portrayed as alternative to, or superior to, graduate-level skills. We need all of them.
But in the skills space, we don’t yet have the frameworks for triple-helix collaboration that we have for innovation. The national body, Skills England, is still finding its feet. It does not yet have strong strategic links with the Mayors’ Strategic Authorities and their growth plans. Mayors have inherited Local Upskilling Plans drawn up by Chambers of Commerce, which often have limited representation from key innovation sectors. The whole is, at present, much less than the sum of its parts.
This is not just an opportunity, but an imperative: to harness technology for growth through a skills alliance of government, industry and education providers, sitting alongside the existing triple helix of innovation to drive the Industrial Strategy forward as an integrated innovation and skills strategy.
This strategy will be robust at the regional level, where mayors, businesses, universities and colleges can tailor skills pathways to IS-8 sectoral strengths. York and North Yorkshire has focused its ambitions on bio/agritech, rail and creative technologies – all areas of research and innovation strength at the University of York, and all nurtured by its graduates, from bachelor to PhD level. But York’s two FE colleges – Askham Bryan College (in bio/agritech) and York College (in rail and creative industries) – add other components to the mix, as do adult skills programs offered by the City Authority and in-house training within larger companies.
The task is to bring all these together in a strategic partnership of capabilities. To build the evidence base for this strategy, QS, the University of York and Public First are preparing to carry out an in-depth analysis of future labor market requirements for the Yorkshire and Humber Industrial Strategy. The aim is to build a replicable model for how labor market skills analysis can be integrated into country-specific growth delivery plans, so that we can get the best out of our most innovative sectors and deliver on the government’s key growth ambition.
