Employers in London are struggling to find suitable talent due to a skills system that is “not fit for purpose”, MPs have been told.

London Councils, which represents all 32 London boroughs and the City of London, has urged the government to “overhaul” the skills system in the capital to help plug the skills gap.

Speaking at an All Party Parliamentary Group inquiry on small business productivity on Wednesday, Peter John, London Councils’ executive member for employment and skills, warned that people were missing out on jobs and businesses were struggling to fill vacancies due to a “lack of local influence, poor labour market information and a flawed system of incentives for skills providers”.

He added that the current skills system is not fit for purpose, and called for the devolution of the skills agenda to a local level, as well as reforms to the way colleges and training providers are funded, to ensure provision meets local needs.

“There is a disconnect between the skills London is producing and the skills businesses, especially small businesses, need.

“Too much funding is being wasted on courses that employers do not need or want such as hair and beauty, car mechanics or health and safety.

“We need to address this urgently if we are to avoid producing a generation of Londoners unprepared for the labour market.”

London Councils has put forward several recommendations in a bid to overhaul the system, including:

• Ensuring that a greater proportion of funding for skills providers is linked to local economic need and measured by progression into work.
• Devolving funding to London Enterprise Panel, which would work closely with London boroughs to manage the adult skills system at a London level, rather than national.
• More timely and forward-looking labour market information to be published locally, regionally and nationally.

Last month, the Local Government Association called on the government to overhaul its approach to youth services by giving local authorities more power to run youth training and employment schemes, in an attempt to help more young people into work or learning.