Billions could be added to regional economies by tackling skills gaps
New research suggests that addressing skills gaps within the financial, professional and business services (FPBS) sector could boost its yearly output to levels 12% larger than those observed today, equivalent to £38bn annually by 2038, with much of these gains helping to support regional levelling-up across the UK.
The report, ‘Skills for future success’, from the Professional & Business Services Council and the Financial Services Skills Commission, found almost one-third of sector employers reporting skills shortages resulting in vacancies, with thousands of critical roles in areas like data and technology going unfilled.
These trends have been accelerated by the COVID-19 pandemic, with automation, digitisation, globalisation and changing workforce demographics all contributing to the challenge. This has resulted in new skills needs, encompassing technology, interpersonal skills and industry knowledge.
The report calls for employers, Government, and education providers to seize new opportunities for the upskilling and reskilling of the UK workforce. It also suggests more detailed skills forecasting is necessary to understand the specific skills and scale required for emerging areas like low carbon services. Failure to act could leave the UK losing out to its global competitors.
The research, supported by Capgemini, City of London Corporation, PwC, and TheCityUK, also found firms reporting increased operating costs and staff workload as a result of skills challenges.
These trends are significant as financial, professional and business services are a major employer and recruiter – providing 5.5 million jobs across the UK and hiring nearly 20% of graduates entering the UK labour market each year. Almost three quarters (73%) of FPBS jobs are located outside London and the sector accounts for one in seven of all jobs outside the capital.
The report finds that many regional firms face more acute skills challenges, especially SMEs that struggle to recruit highly skilled employees and lack strong collaborations between employers, local government, and education providers. On the other hand, trends show an increasing regional presence, with 43% of surveyed employers planning to increase their presence in strategic hubs across the UK.
While some businesses and education providers are rising to meet the skills challenges, more action is needed to ensure the sector, regions and nations are prepared for the future.
The report recommends an eight-point plan, focused on deepening the pool of talent in the regions and nations and benefiting firms of all sizes:
- Building a lifelong learning culture across the sector
- Increasing the supply of tech skills and digital literacy across the sector and wider economy
- Ensuring that efforts to build a skilled workforce are underpinned by a commitment to diversity and inclusion
- Enhancing strategic workforce planning capabilities across the sector to identify future skills needs
- Supporting mid-career retraining through an employer-led skills brokerage service and clearer pathways into the sector
- Attracting and retaining highly skilled talent across the regions through strengthening the talent pipeline and locating senior roles in regions
- Boosting the availability of skills across the regions through strategic collaborations between employers, education providers, and regional government
- Developing regional centres of specialisation, building on clusters that already exist
Mark Hoban, Chair of the Financial Services Skills Commission, said: “Urgent action is needed to build an enduring skills culture across the UK and build a sustainable pipeline of high-level skills. Not only is this vital to delivering on the government’s aims on levelling-up, doing so is essential to developing the digital expertise we need to drive forward industry’s priorities such as improved customer outcomes, realising the full benefits of investment in digitisation and fostering far greater diversity and inclusion in our industry.”
Dr Alan Belfield, Business Chair of the Professional & Business Services Council, said: “The pandemic has accelerated trends like digitisation, globalisation, changing workforce demographics and the drive to achieve Net Zero. The Financial, Professional and Business Services sector must meet evolving client and customer needs if it is to seize new opportunities and remain globally competitive. The ability of firms, employees, and education providers across the UK to develop the relevant skills is vital to the long-term success of the sector and to supporting the levelling up agenda.”
Lord Grimstone, Minister for Investment, said: “Tackling the skills gap is a key part of our levelling up agenda, which will boost productivity, create jobs and open up opportunity right across the UK.
“It’s encouraging to see that numerous employers are growing their regional presence, and through our lifetime skills guarantee and Plan for Jobs we will ensure every part of the UK can drive up skills and build back better from the pandemic.”
Paul Margetts, Managing Director of Capgemini in the UK, said: “The need for companies to nurture and secure digital talent to support the next evolution of business transformation is now critical. It must be a key focus if we are to address the growing skills gap. At Capgemini, we are committed to embedding a culture of learning and upskilling through strategic partnerships and programmes that offer exciting and varied long-term careers in the technology industry, and support future growth across all industries. Our focus remains on building a diverse talent pool that can set the standard for the future of the digital world we now live in.”
Policy Chair at the City of London Corporation, Catherine McGuinness, said: “As we emerge from the pandemic, and look at ways to boost our recovery, businesses across the country will need to ensure that they are positioned to recruit staff equipped with the skills for the future. We must work together to build back better by preparing the nation’s workforce for the jobs of tomorrow.
“The barriers businesses across the country face to achieve this are not small, with some regions dealing with greater challenges than others. It is therefore vital that fast and decisive action is taken now to ensure that the UK remains world-leading in the financial and professional services sector, with inclusivity, sustainability and innovation at its core.”
Kevin Ellis, Chairman and Senior Partner at PwC UK, said: “Investing in skills and training not only helps attract and retain people, it is also key to improving social mobility, which will grow the talent pool nationwide. In my own firm we’ve seen how working together with local communities and universities can move the dial on accessing and developing skills and talent. A skilled and diverse workforce right across the UK is crucial to boosting productivity and economic growth, and will deliver a knock-on benefit for other sectors.”
Miles Celic, Chief Executive Officer, TheCityUK, said: “We urge government, business, educators, and others to use this report as a roadmap to creating a sustainable pipeline of high-level skills. We need to make sure we can find and develop talent wherever it may be. It is also essential to strengthen regional business clusters if we are to maintain and enhance the UK’s broader international competitiveness and global financial services leadership.”