24 July 2024
Fuelling growth and productivity; five priorities for Skills England
Ahead of the general election, we called on the next government to drive growth by prioritising skills in financial services. We were clear that increasing the skill levels of the UK workforce is essential to solving Britain’s productivity problem, delivering stronger levels of sustainable growth, and helping the country to compete on the world stage.
That’s why we welcome the establishment of Skills England, which will bring together businesses and employees, as well as national and regional authorities, and unions, to ensure a better supply of the skills the economy needs.
The prioritisation of skills is a positive signal, and we look forward to closely following the proposals as they develop. We stand ready to work in partnership with government, industry, unions, training and education providers, Chartered Professional Bodies, and combined authorities, as well as all those who recognise the importance of skilled-based organisations that can adapt to the tech-driven, people-centred future we see approaching over the next decade.
As we wait to hear more about the new organisation’s role and remit, we have set out five priorities for Skills England.
1. Create a skills strategy, clearly aligned to industry needs
- A comprehensive, national skills strategy must be created in partnership with industry. It should set out the steps needed to turn around historic underinvestment, and insufficient focus, on the priority skills needed to drive growth and support technological change.
Enabling our workforce to remain at the forefront of technology and innovation is vital to the continued competitiveness of the UK as a whole and as a leading international financial centre, financing Britain’s future. Disruption continues to modify the skills and behaviours we need across our whole workforce and this challenge cannot – and should not – be solved by recruitment or migration alone.
It is crucial that the government ensures a significant pipeline of highly skilled UK talent, especially tech talent, entering the workforce over the next decade. This should include existing workers being upskilled and reskilled as well as more young people leaving school, college or university with STEM qualifications.
This should also involve an ambitious and forward-looking strategy, underpinned by business needs and Labour Market Information to build skills that position the UK at the forefront of emerging technologies.
2. Put employers at the heart of the skills system
- Skills England must be employer-led, taking a sectoral perspective at a national level, working with existing industry-led bodies.
There is currently no formal mechanism for Financial Services employers to engage with government on the sector’s future skills agenda. This lack of employer voice is a weakness that must be addressed.
A future Skills England, working with existing industry bodies, could enable sector skills deals with the industry, containing flexibilities and co-investment that tackle the skill shortages which impede growth. The new body must take a flexible, differentiated approach that can meet not just the needs of individual sectors, but also national and regional requirements.
We stand ready to work with the government on this issue, as do our members, many of whom are large financial services employers, each committed to addressing the skills challenge.
3. Increase the availability of training
- Significantly increase the numbers of people securing high-level qualifications, particularly in critical skills shortage areas such as tech, data, AI and sustainability. Importantly, we need to see an increase in the availability of courses and incentives that will attract individuals and businesses.
Skills are integral to business success and a driver of competitive advantage and growth. Over the last two decades, the proportion of high skilled roles (managerial and professional roles) in financial services has increased from 50% to 70%. In the next decade this will increase to 80%.
Technology promises to remake our economy once again with financial services at the leading edge of every opportunity and challenge. AI promises to change not just business models but every organisation; requiring us to also upskill and reskill every role.
UK businesses are experiencing shortages of skilled workers, which is impacting on growth, innovation, and competitiveness. Building a pipeline of highly skilled workers is essential to position the UK for strong economic growth. This pipeline needs to come from reskilling the existing workforce as well as early talent.
4. Addressing the skills gap: Encourage re-skilling, and ensure skills remain relevant
- Funding from the growth and skills levy should be used to fund high-level, professional development training. This should be supported by existing accredited and industry-supported qualifications, aligned to chartered professional qualifications.
Investment in skills has not kept pace with changing needs and this has been held back by a rigid and inflexible levy. This means that the financial services sector already has a significant skills and capability gap.
Research by EY estimates that at least 16% of the UK financial services workforce (equivalent to 160,000 workers) requires upskilling, with an estimated 8% proficiency shortfall across all skills, including the 13 Future Skills identified by FSSC.
Firms in the sector need to address this challenge by reskilling, upskilling, increasing learning and building talent pipelines. By the end of 2025, we need to see improved workforce inclusion and diversity, and a rebalancing of demographics, particularly around age and gender.
The sector must continue to take the lead in tackling these issues. Nonetheless, reforms to the apprenticeship system could accelerate the pace of progress.
5. Ensure alignment of skills at national and regional level
- Regional skills-based activity must complement the national context, to ensure issues are addressed through interventions and investments that respond to regional conditions and priorities.
Jobs in financial services are located across the UK with two thirds of roles located outside London. Edinburgh, Glasgow, Leeds, Birmingham, Manchester, Bristol, Cardiff, Belfast and Swindon, for example, host significant regional clusters.
Building up the skills of people across the UK and strengthening existing and emerging regional clusters will require broad dialogue and collective effort. The sector must commit to working together – as well as with government, education providers, and others – to implement these recommendations effectively.
For example, many UK employers have operations across all UK nations and regions, yet a significant number struggle to roll out apprenticeship programmes UK-wide owing to the differing systems in multiple jurisdictions. The fragmentation of skills initiatives creates a barrier to coordinated upskilling and reskilling activity at scale.
Strong civic leadership can support our industry to finance Britain’s future. However, there has been an inconsistent approach to the devolution of powers across the UK. A major business operating in Manchester or Birmingham can engage with their local mayor on skills policy in a way that counterparts in other regions cannot. A coordinated national approach is essential, and must be supported by collaborative, decentralised, regional frameworks.
To address these concerns, we need to see a boost in the availability of skills across the regions through strategic collaborations between employers, education providers, and regional governments.
Note to Editors:
About the Financial Services Skills Commission:
The Financial Services Skills Commission is an independent, non-partisan, member led body, representing the UK financial services sector on skills. We work directly with the sector and advocate for innovative collaboration to ensure that businesses have the talent and skills they need for the future.
For further information please contact:
- Claire Tunley, CEO, FSSC
claire.tunley@financialservicesskills.org
- Gregg Hutchings, Programme Director
gregg.hutchings@financialservicesskills.org
- Press office
