Skills, growth and productivity: plan plays a critical role

The economy is at a pivotal moment. The South Midlands plays a critical role in the local and national economy, with strengths in logistics and transport, advanced manufacturing and engineering, food and drink, construction and retrofit, health and social care, and professional and digital services. Yet despite this strong base, skills shortages remain one of the most frequently cited barriers to business growth.

Employers report persistent vacancies, difficulties recruiting ‘work-ready’ staff, and uncertainty about how to access the right training at the right time. These pressures are not new – but they are becoming more acute as businesses adapt to automation, net zero, digitalisation and changing workforce expectations.

This is the context for Local Skills Improvement Plan (LSIP) 2.0 in the South Midlands.

What is happening locally?

Labour-market intelligence and employer engagement show that demand for skills in the South Midlands is both broad and deep. Logistics and warehousing continue to grow, driven by the South Midlands’ strategic location.

Manufacturing and engineering employers require increasingly advanced technical capability, whilst construction faces rising demand linked to housing, infrastructure and retrofit. Health and social care remains the largest employer by headcount, with ongoing recruitment and progression challenges.

Alongside technical roles, employers consistently highlight shortages in supervisory capability, digital confidence, leadership, communication and problem-solving skills. These cross-cutting skills are critical to productivity but are often overlooked in traditional sector discussions.

Insights from the South Midlands Growth Hub reinforce a clear message from businesses: the issue is not simply the number of courses available, but how well skills provision aligns with real business need, location and operating pressures.

What are the skills challenges for businesses?

Employers across the South Midlands report a set of recurring challenges:

• Work-readiness gaps – candidates may be qualified but lack practical experience, confidence or understanding of workplace expectations
• Complexity of the skills system – many SMEs struggle to understand what training exists, what it is called, or how it fits their business
• Licence-to-practise requirements – particularly in construction, logistics, IT and care, where qualifications and compliance do not always align with funded provision
• Rural and semi-rural access issues – transport, travel time and provider location remain barriers for both employers and learners

As a result, training can feel like a ‘nice to have’ rather than a practical growth tool, even when employers recognise its importance.

Too often, engagement with providers feels transactional or product-led, rather than consultative and responsive to business realities.

What LSIP 2.0 is doing to support business?

LSIP 2.0 is designed to tackle these issues directly. Building on two years of employer-led evidence gathering, it shifts the focus from strategy to delivery and alignment.

At its core, LSIP 2.0 acts as a connector bringing employers, colleges, universities, training providers, local authorities and trade bodies together around shared, evidence-based priorities.

Key actions include:

• Employer-led priorities shaped by vacancy data, Growth Hub intelligence and direct business engagement Task & Finish groups that convert employer feedback into agreed provider actions, curriculum changes and delivery plans
• A strong emphasis on work-attached learning, including apprenticeships, Skills Bootcamps, V Levels, T Levels, placements and sector based Work Academy Programmes
• Simplifying the language of skills so training offers are understandable and meaningful to employers Actively addressing licence-to-practise and compliance gaps by convening providers, awarding bodies and sector partners
• Feeding rural access and transport barriers into local authority planning and commissioning

Importantly, LSIP 2.0 recognises that skills shortages are not only technical. Leadership, management, digital and transferable skills are treated as integral to sector productivity, not optional extras.