Blog - Are skills finally on the government’s priority list?

Blog by Claire Tunley, Chief Executive, Financial Services Skills Commission

It’s been more than 100 days since the new Government took office, and the focus on skills has been promising. In our pre-election policy statement, we emphasised the need for upskilling and reskilling the workforce, collaboration with employers, and incorporating financial services into the industrial strategy. The Government’s actions so far suggest close alignment to these goals: most notably the planned creation of Skills England. This new body aims to bridge gaps between businesses, employees, public authorities, and unions to ensure a steady supply of the skills the economy needs. The focus on skills is welcome, and there’s goodwill all round to see this ambition translate into action.

Skills are an essential driver of growth, competitiveness and productivity

Ahead of the election, we called for the next government to prioritise skills to drive economic growth, especially in the financial services sector. A highly skilled workforce is essential to solving the UK’s productivity challenges and maintaining its competitiveness on the global stage. It’s reassuring to see skills being recognised as central to the government’s growth mission, but the real test will be in the implementation.

Government moving at pace
The Government is acting quickly, which is welcome. To respond to rapid technological and demographic changes, there is an urgent need to raise skill levels in the workforce: especially for the 160,000 financial services workers requiring upskilling[1].

The first policy paper from Skills England has outlined the complexities facing the new body, including merging different functions, aligning with government agendas such as tackling economic inactivity and delivering the clean energy mission. Skills England must be both a leader on skills and an enabler for broader government priorities.

We have long advocated for an industrial strategy to guide economic growth and highlight where skills investment should be focused. The recent industrial strategy green paper identifying financial services as a growth-driving sector and skills as a cross-cutting theme is a positive step.

Addressing the growth and skills levy

The Growth and Skills Levy has been positioned as a way to broaden access to quality training. However, early announcements indicate there will be stricter rules on how employers can use their levy funds. The Prime Minister has stressed the importance of apprenticeships for young people and the youth guarantee, while also signalling that firms may need to use their own funds for the most advanced levels of training rather than using their apprenticeship levy.

Three-quarters of jobs in financial services are highly skilled and the demand for highly skilled professionals will only increase. Reskilling and upskilling the current workforce is key, especially considering that 80% of the 2030 workforce is already in employment[2].

We therefore need a responsive system and a levy that increases investment in high-level skills, not restricts it.

Engagement with industry
It’s crucial for the Government to engage with industry and build genuine collaboration and alignment of effort. The skills challenge isn’t just an issue for businesses; it’s a national challenge. Financial services firms already invest significantly in training, spending over £2,400 per employee per year. This is far more than any other sector, except construction, and far exceeding what they contribute to the levy. Harnessing these efforts can help drive long-term growth for the entire economy.

Designing a skills system purely from Westminster risks missing out on the benefits of collaboration with employers and regional stakeholders. Availability of employment opportunities and labour market skills can very hugely by region, so there must be maximum flexibility for the regions in both making investment in skills and in implementing policy if we are to deliver balanced growth. However, there must be cohesion between national, regional, and local approaches. Given my background as a town planner, I can draw parallels to English planning policy; a tiered approach could be beneficial for skills strategy, balancing national directives with regional flexibility and implementation.

Budget constraints and strategic investment

The Treasury’s message is clear: there is no more money in the pot, so spending must be strategic. Skills England’s task will be to demonstrate that investing in skills delivers long-term value for the UK and supports economic growth. Making a strong, evidence-based case for skills investment is essential to positioning skills within competing priorities across government.

Our research shows that strategic investment in reskilling and upskilling is more cost-effective for employers than recruitment-focused strategies[3].

Investing in employee training does not always mean increased spending. Improved skills forecasting enables firms to target investment, ensuring the right training reaches the right employees at the right time. This efficiency is crucial for closing skills gaps, which remains our primary objective. So, we would encourage the Government to target spending where it can generate the biggest step change in skills, productivity and economic growth.

The road ahead for Financial Services

The UK Financial Services sector must continue to lead globally, not only as a hub for business but as a place to build long-term careers. Aligning the emerging industrial strategy with an ambitious and comprehensive skills plan is a sound approach, but there is still much work to be done to ensure these plans progress swiftly and effectively.

The Financial Services Skills Commission represents the collective voice of 40 firms that employ a third of the UK Financial Services workforce, working collaboratively to address skills gaps. Preparing a future-ready workforce isn’t the responsibility of a single entity. We stand ready to partner with government, industry, unions, and educational providers to create a skills-based ecosystem that adapts to a tech-driven, people-centred future.

The first 100 days have shown promise, but sustained engagement with employers and a strategic approach are crucial. There is no doubt that financial services – as a prioritised sector in in the industrial strategy – can be a driving force for growth. But, the Government and industry must work hand-in-hand. At the Financial Services Skills Commission, we continue to act as the collective voice of skills, and stand ready to work with government on this agenda.

[1] Financial Services Skills Commission (2023), People +Technology: How skills can unlock value for Financial Services

[2] Financial Services Skills Commission & Professional Business Services Council (2021), Skills for Future Success: How financial, professional, and business services can address skills challenges to deliver recovery and growth in UK regions and nations

[3] Financial Services Skills Commission (2022), Reskilling, a business case for financial services organisations