If there is a persistent theme in the ambitions of the Labour government elected in 2024, it is growth: growth to bring the jobs that will enable individuals and places to thrive; growth to rebuild the public finances; growth to fund the other missions the government was elected to pursue.
Central to this growth ambition is the Industrial Strategy – a statement of priorities and focus centred on eight economic sectors (the IS-8) in which the government believes the UK has a comparative advantage.
That 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 Mayoral Strategic Authorities that now exist across much of England.
Another element is the major shift in the allocation of public research and innovation funding by the national body UK Research and Innovation (UKRI) to support the Industrial Strategy and help scale up innovative businesses in the eight sectors. The aim is to get universities to harness what they do in research and innovation – which is, in many areas, genuinely world-leading – to power this growth agenda.
Together, this adds up to a powerful “triple-helix” vision: government at different levels, industry, and universities aligning their capabilities to deliver growth through innovation.
But while that alignment is arguably stronger now than in earlier iterations of industrial strategy, something is missing. Innovative growth sectors need workforces with the skills to flourish amid the rapid technological change that innovation brings – and at the forefront of that 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 supply 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 £490bn in additional economic value for the UK by 2030. This potential uplift could raise annual GDP growth by around 2.8 per cent.
We often hear pessimism about AI, but our research suggests it will augment the potential of the IS-8 sectors far more than it will drive obsolescence through automation. The future productivity gains that deliver growth will rely on workers’ ability to deploy AI alongside advanced judgement, creativity, and technical sector expertise. These are all graduate-level capabilities.
Our data maps nearly 1,900 UK occupations against the IS-8. The results are unequivocal: of the 1,436 occupations identified as critical to delivering the Industrial Strategy, 80 per cent require a bachelor’s degree or higher.
It also allows us to identify over 630 “transectoral” occupations – roles rated as high or very high importance across 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 only be felt within a single sector, but across the board.
Here is the challenge for government, employers and education providers: to build the same kind of triple-helix approach to skills that we have for innovation. We deliberately say “education providers,” not just universities. While university graduates are fundamental to delivering innovation, we will need skills at all levels to feed the innovation economy, including apprenticeships and the plumbers and carpenters whose technical skills are often portrayed as alternatives to, or superior to, graduate-level skills. We need all of them.
But in the skills space, we do not yet have frameworks for triple-helix collaboration as we do for innovation. The national body, Skills England, is still finding its feet. It does not yet have strong strategic connections to Mayoral Strategic Authorities and their Growth Plans. The mayors have inherited Local Skills Improvement Plans designed by Chambers of Commerce that often have limited representation from leading-edge 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 innovation triple helix to drive forward the Industrial Strategy as an integrated innovation-and-skills strategy.
This strategy will be potent at a regional level, where mayors, businesses, universities and colleges can tailor skills pathways to distinctive IS-8 sectoral strengths. York and North Yorkshire has focused its ambitions on bio/agritech, railtech, and creative technologies – all areas of research and innovation strength at the University of York, and all fed by its graduates, from bachelor’s 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 programmes delivered by the Mayoral Authority and in-house training within larger companies.
The task is to bring all that together in a strategic skills partnership. To build the evidence base for this strategy, QS, the University of York and Public First are preparing to conduct a deep-dive analysis of future labour market requirements for the Industrial Strategy in Yorkshire and Humber. The aim is to build a replicable model for how labour market skills analysis can be integrated into place-specific growth delivery plans, so that we can get the best out of our most innovative sectors and fulfil that core government ambition of growth.
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