*To be checked against delivery
Thank you, Claire, and good morning, everyone.
It’s a great pleasure to welcome you all to the Future Skills Conference, a combined effort from TheCityUK and the Financial Services Skills Commission.
I’d like to start by thanking our sponsors KPMG, Lloyds Banking Group, Nationwide and Natwest, as well as our superb group of speakers and panellists for giving up their time today.
We’re here to discuss how we can ensure that the UK's financial and related professional services industry has the talent and skills it needs to thrive in the future and drive the country’s economy.
These businesses are built on skills. Winston Churchill said in 19431 that “the empires of the future are the empires of the mind.” And how right that has proven to be.
This collection of financial and related professional sectors generated a trade surplus of 114 billion pounds and employed almost 2.5 million people in 2023, contributing 110 billion pounds in tax receipts for the UK treasury.2
We should call this the skills dividend.
It is the result of centuries of innovation, centuries of investment into the institutions and firms that have made the UK a world-class financial centre, and importantly, centuries of skills passed down to new generations.
Legal skills, accounting skills, investing skills, management skills, technology skills. All enabling economic growth across the UK and supporting companies at home and abroad.
But this skills dividend is fragile. It is under constant attack from two fronts.
The first is that without investment skills naturally decay – not because of an ageing brain per se but because skills gradually lose their relevance over time. There is not much need today for gas lamplighters on our city streets. And because every new generation starts from zero. No one is born with an innate knowledge of how to draft a contract or how to use a discounted cash flow valuation model.
At least I hope that’s the case, as it would be very unsettling for new parents.
The second challenge is competition. Any outsized dividend, even one based on skills, must be built upon and its strength maintained in a competitive world.
So, while professional skills are a competitive advantage for the UK, we must be aware of the constant need to maintain and improve on them over the long term.
Domestic capability has to be the bedrock of this. We need both skills and a level of proficiency. In financial services over two thirds of skills face a proficiency gap. The skills might be there, but some are not at the level needed to do all of the tasks required.3
Government is beginning to respond. Skills England has been created precisely to map current and future shortages and pull Whitehall, combined authorities, industry and unions into a single evidence-based plan. Its first report warns that lack of skills is holding back growth and social progress alike, and calls for a tighter feedback loop between colleges, universities and business.
In addition, international talent remains indispensable. We continue to remind policymakers that international and domestic talent are not incompatible, they are complementary. The best global talent brings innovation and creativity, stimulating domestic talent. The Global Talent and the Global Business Mobility visas for intra-company transfers need to be processed quickly, if we are to out-compete Hong Kong, Dubai, Paris and Singapore for the brightest talents, and policy in this area will have to be agile.
As negotiations with the EU over a youth-mobility scheme are set to begin, this shows that agile diplomacy can reopen channels for early-career talent without recreating full free movement.
Regional talent pools are another under-exploited asset. Two thirds of the nearly 2.5 million people working in financial and related professional services, for instance, are already based outside London, in hubs from Belfast to Bristol.4
Across the country, Local Skills Improvement Plans, brokered by mayors and underwritten by Skills England, now have the potential to partner with employers to align levy spending, bootcamp places and local education provision with the growth clusters identified in the Industrial Strategy, whether that is quantum in the North East or offshore wind in Humberside.
This will help to deliver the coordination, clarity and consistency that would allow firms across our industry to invest even more in skills and local economies. Doing so activates the “whole-UK” labour market that the government’s growth mission envisages.
Finally, skills policy cannot sit in a silo. The forthcoming Industrial Strategy must treat skills as critical infrastructure, just like ports or broadband. Universities and further education colleges, meanwhile, need effective incentives to work even more closely with employers so that graduates arrive into the world of work job-ready and able to upskill fast over a working life that will span several technological revolutions.
Similarly, we know that future generations will face challenges that are impossible for us to imagine. Skills are the tools with which they will overcome those challenges, adapting and reinventing them to the requirements of their specific roadblock or paradigm shift.
So, given the skills dividend is worth tens of billions to the economy, it is absolutely crucial that we place it at the forefront of policy for the long term.
Before I go, and as this will be my last speech as chair of TheCityUK board, I would like to thank Miles and the team for all their support and hard work over the past three years.
I also want to take the opportunity to wish my successor, Omar Ali, the very best in this role for the next three years. When I started in 2022, my predecessor Mark Tucker of HSBC said he hoped I’d have a calmer time in the role than he did, dealing with the Covid pandemic.
Well, four prime ministers and five chancellors later, I would be very wary of passing on the same jinx to Omar. So, all I would say is break a leg and good luck. I look forward to working with you in my new role as chair of TheCityUK Leadership Council.
Thank you.
1: Quote from a speech at Harvard, Sept 6, 1943
2: Latest figures from TheCityUK Enabling Growth Across the UKreport
3: Figure is 70%, according to FSSC
4: Figure from TheCityUK
