Economic Secretary on the importance of the south-west’s financial services sector
'The south-west has a vibrant financial services cluster', says Economic Secretary to the Treasury, Andrea Leadsom.
Good morning – it’s great to be here in Bristol today.
Now, although my title is often shortened to “City Minister”, that’s a bit misleading! My job is certainly not just about the City of London. It is about promoting financial services across the UK, and making this country a world financial powerhouse.
It’s a fundamental part of this government’s long term economic plan to support a competitive financial services sector throughout Britain.
I was in Birmingham a few months ago and saw the trading floor that Deutsche Bank had actually opened up there. It was really impressive, and what was even more impressive is that they explained to me their reasons for setting up there – and that is because of the exceptional talent pool available locally.
And here’s the truth – financial services is about far more than the City of London. Some of our most talented people are sensible enough to want to live and work in Britans’s more beautiful regions.
So I’m looking forward to seeing the contribution that the financial and related professional services industry makes to the economy here in the south-west.
And I’d like to hear your thoughts on what else we can do to attract more firms to the south-west, and to help you succeed even further.
Financial services are a hugely important industry for Britain. The sector accounts for over a tenth of our economy.
As you know, the south-west has a vibrant financial services cluster. It plays host to a large cluster of financial, accounting, legal and management consultancy firms. It also houses the support functions of a diverse range of businesses, including building societies and insurers.
And this provides tangible benefits to the region – and a serious source of jobs for the people who live in the south-west. 150,000 people are directly employed in the sector, which makes for 6.3% of regional employment.
In Bristol alone, this amounts to 30,800 jobs, 12.8% of employment, and over a quarter of the local economy.
And as the regional economy grows, Bristol’s financial sector stands to reap the rewards.
The region’s impressive skills base – a result of three leading universities based here – and convenient transport links, make the south-west an increasingly attractive prospect for investors.
And we as a government are pulling out the stops to boost jobs and growth in Bristol and the south-west.
- we’ve cut tax for over 2.2 million people
- we’ve accelerated £89 million of improvements on the M4/M5
- we’ve invested £8.2 million in Dyson at Malmesbury
- we’ve committed £4.3 million to get electric trains on the Great Western Main Line
- we’ve opened 583 more academies and 13 free schools
And our policies are already bearing fruit, since 2010:
- employment is up by 115,000 in the south-west
- unemployment down by 36,000
- almost 228,000 apprenticeships started
- 99,000 more small businesses
- over 1,800 loans, lending almost £10m to businesses in the south-west
We believe that the future is even brighter.
Just last month, the government announced a six point long-term economic plan for the south-west.
This plan includes, amongst other things, providing business with superfast broadband, a regular cross Bristol rail service, and support for a host of other transport improvement schemes to provide new or improved access to key economic sites.
That will bring people to the region, and set up opportunities for your businesses to make the most of. Because the businesses coming here will require banking, legal, accounting, advisory services – all services that your firms provide.
So we are incentivising growth in the region. And we are also incentivising growth for the financial services sector.
Do you remember when Metro Bank opened its doors, and said it was the first new high street bank in over a hundred years?
I think that allowing financial services to be a bit of a closed shop was deeply unhealthy. So all of this government’s policies have been geared towards increasing competition and choice in the financial services sector. Because that is good for your firms, and good for your customers.
For example, we’ve made it easier for challenger banks to enter the market and access credit data and innovations like PAYM.
We have introduced powers to help new, and challenger banks lend to small businesses and compete with older, established banks for custom.
We’ve created two new stronger regulators, the Financial Conduct Authority and the Prudential Regulatory authority which are better able to tackle anti-competitive behaviour.
We’ve created the Financial Services Trade and Investment Board, to identify trade and investment priorities and to help UK firms pursue these vigorously across the globe.
And we’ve supported the growth of financial technology – fintech for short.
The benefits of fintech are fourfold.
First, this is technology which makes life easier for the customer.
Second, fintech helps banks offer new services, which is a great way of attracting customers.
Third, it is one of the most innovative and rapidly growing sectors in the UK.
And finally, it’s a classic example of an activity which can thrive anywhere in the UK.
Fintech is the future. Every year brings with it innovations which are literally game changing. The export potential is huge. So it’s our ambition to make Britain the world leader in fintech.
I’ve used the word “customer” a few times already – because I strongly believe that actually it is all about the customer.
We want to empower consumers to take control of their personal finances and make responsible financial decisions.
We have already made it much easier for customers to switch accounts, and to pick the services that work best for them.
And my challenge to industry is: there’s a big market out there for simple financial products, which are clear, easy to understand, demystify financial services, and engage the customer.
Tap that market and you have some superb opportunities.
The industry is changing in other respects too.
High standards of behaviour are critical to winning back some of the public trust and international reputation which was lost during the crisis and the subsequent banking scandals.
I was visiting an Islamic bank the other day (Al Rayan) – and they were very proud to tell me that 87% of the applications for fixed-term deposit accounts were from non-Muslim customers; customers who wanted to bank ethically.
Not just “does this bank lend responsibly?” but “do they lend locally?” and “do they help small businesses?”
Essentially, customers want assurance that being a leading financial centre brings tangible benefits to the “real” economy.
That, I think, will be a big part of the future of financial services. Get it right and you can have a fantastic selling point.
So the future is exciting – and Bristol is ideally situated to be a part of it.
It’s not just London we want to see benefit, but other hubs such as Bristol are just as important.
It’s only by working together that government and industry can cement the UK’s position as a global centre for financial services.
We should be really ambitious here. So I look forward to hearing your views on what more can be done to increase competition, and to support firms looking to set up and expand their operations in Bristol.