The CityUK Conference 2018: Economic Secretary speech
Economic Secretary to the Treasury, John Glen speaks at the CityUK Conference 2018.
Ladies and gentleman – it is a pleasure to address you all this morning.
It has been six months since I took the helm as Economic Secretary.
In that time, I have visited the regions – from the City and beyond.
I have dived into the issues: from FinTech, green finance, sanctions, insurance, retail finance, bank lending, to financial stability.
So I know that how we treat financial services – arguably our most valuable economic resource…
…during this critical time for our country…
…will come to define us in the years ahead.
Because financial services is the plumbing of our economy…
…it generates wealth, creates jobs up and down the country – and provides the tax revenue to support our vital public services.
So when I hear murmurs that we want to pull up the drawbridge and retreat inwards…
…nothing could be further from the truth.
As tempting as it is in times of uncertainty to batten down the hatches…
…this is not in the interest of our hyper-global, deeply inter-connected financial services ecosystem.
To my mind, the sector does not need to make a bid for continuing relevance…
…because its value is beyond any doubt. We are acutely aware…
…of its standing as a lighthouse of British enterprise…
…which will continue to guide us – Brexit and beyond…
…and project a bold, confident, and global Britain to the world.
The commercial instincts of this country have been honed and sharpened over centuries…
…and I have faith that as we prepare to leave the European Union…
…those instincts will prevail.
Whilst the exact configurations of the future relationship are not yet clear…
…I want to reassure you that this government is working tirelessly to secure the best deal for this country…
…and as the City Minister, I am committed to my patch – and remain an evangelist, an advocate, and an ally – for the industry as a whole.
This morning, I will set out my three-part vision for the financial services industry.
Firstly, how I see the City will come to be reframed and redefined…
…secondly, how a skilled workforce will ensure we are ready to make the most of the innovation that defines our economy…
…and finally, how we will remain a global economic citizen.
Although the walls of Roman London have stood for centuries – nothing actually stands still in the City.
The City has changed beyond recognition…
…as has its workforce…
…and the markets it serves.
And it has grown stronger as it weathered plague, fire, and blitz…
…and navigated the ebb and flow of its fortunes.
It has always remained a constant source of growth…
…and secured the UK’s position as the current largest net exporter of financial services in the world.
And the statistics bear repeating: financial services gave us a £72.1 billion tax take in 2016/17…
…that represents the entirety of the transport and defence budgets.
Putting it another way, the tax take from financial services accounts for 71% of the total NHS England budget.
So politicians of all colours need to acknowledge that this is achieved because we have a competitive tax regime – balancing incentives and obligations…
…and a financial services industry which forms the bedrock of economic growth.
It is in our national interest to ensure that we capitalise on the strengths of the sector…
…and spread the thinking, the talent, and the wealth across the country.
Which brings me to the first part of my three-pronged vision for financial services.
I can envision a world where the “City” is no longer understood as a monolithic entity bounded by the physical geography of the Square Mile…
…but something else entirely…
…a world where the City of London remains, and prospers as a hub…
…but with spokes that spread across the regions of this country.
Our children can come to know and aspire to work in the City (or rather, Cities)…
…of Manchester, of Liverpool, of Bristol or of Edinburgh.
Because our economy is the sum of its parts…
…and these parts must work in tandem.
2.2 million people work in the financial and related professional services sectors…
…and 2/3rd of those jobs are outside of London.
Pockets of prosperity across the country are already forming our many future Cities.
Look at Birmingham – employing nearly 50,000 people in financial services…
…and the location of the headquarters of Al Rayna Bank plc, Britain’s first sharia compliant retail bank.
Take Manchester, which KPMG ranked as the most cost effective European city to operate a business.
The onus is on firms to continue this strong, organic growth: up, down and across the country.
Because all over this country is where our brightest minds lie…
…many of whom are looking for a place to bring their skills to the table…
…in what is a rapidly shifting economy.
Just as the Big Bang saw London transform into what it is today …
…we find ourselves at the coalface of a sector facing transformation.
Whether it be the advent of robotics and the near-infinite potential of AI…
… the disintermediation of finance …
…or the growth in big data enabling firms to better target their innovations…
…the industry is changing once again beyond recognition.
As it transforms at an unprecedented rate – so will its workforce.
Which brings me to the second part of my vision.
And that is one of a financial services ecosystem…
…which elevates the skills of its workforce to the status of an asset…
… something to invest in, to grow, and to leverage.
UK financial services firms already have a competitive advantage…
…with access to deep pools of talent and clusters of expertise.
Indeed, the World Economic Forum ranked the UK as 3rd in its capacity to attract talent.
But the skills demanded by the new economy require special ongoing attention.
Computing, quantitative, and technological literacy are called for – more now than ever before…
…as we stand at the cusp of a Fourth Industrial Revolution.
This Revolution will have a profound impact on jobs, the way we work, and the way we choose to work.
So at the heart of the government’s innovation and growth strategy is a drive to cement a robust supply of skills – designed for our brave new world.
Addressing the skills challenge needs to start in our schools…
…because the industry’s future technicians, traders, IT and robotic specialists…
…are currently sitting in a classroom.
This government has invested in underpinning STEM skills, by tripling the number of computer science teachers and increasing maths funding.
We’re investing over £500 million a year in our new T-Level technical qualifications…
…and with the help of the CBI and the TUC we are establishing a new National Retraining Scheme…
…to help adults faced with the consequences of technological change to re-train throughout their working lives.
And the government’s reforms to apprenticeships will ensure training is tailored to the sector for the long run…
…as supporting skills development must go further than plugging short-term gaps.
Through the Financial Services Trade & Investment Board, we are working with industry and academia to develop a blueprint of the skills needed for the FinTech sector…
… charting how we deliver these through university, business school and apprenticeship schemes.
Without an active approach to securing a long-term skills pipeline, the UK will be unable to grasp the opportunities that innovation offers…
…and you as an industry has a clear role to play: assessing the long-term needs of the sector and ensuring the skills base remains world-leading.
But cultivating a domestic pool of skills is one of two pipelines of talent called for by the sector.
And as we prepare to leave the European Union…
…we need to make sure that people across the world can continue to come together, meet, work, and transact in our markets.
This brings me to the final pillar of my vision…
…which is keeping the UK firmly in place as a global economic citizen.
To attract the freshest talent and the most disruptive thinkers…
…we must continue to be a magnet for the global talent which has fuelled the success of financial services in this country.
And now more than ever, being open to the world means keeping the door open for the brightest minds from wherever they come.
That means continuing to be a place which can attract the very best workers from abroad…
…while developing our home-grown talent of the future.
It’s about striking that equilibrium between the two groups.
I congratulate The CityUK for their thought leadership and continued engagement on the issue…
…and on the publication of the report on the “UK’s future immigration system and access to talent”.
One thing that struck me in reading the report was the volume of short term business travel between the UK and EU – and how crucial this was to the provision of services.
We want to ensure that our new partnership with the EU protects the mobility of workers and professionals across the continent…
… whether this is a bank moving a worker between its London and Frankfurt branches, or a consultant visiting a client in Amsterdam.
The report makes it clear that financial and professional service firms need access to international talent.
I cannot conceive of any circumstance in which we would want to impede or prevent the flow of highly skilled, highly paid people.
As the new Home Secretary has said, even though we do need a more sustainable level of net migration, we want to welcome the highly skilled people British businesses need.
We need to continue developing an immigration system that works for the economy.
To this end, the Migration Advisory Committee has been commissioned to report on the role of EU nationals in the labour market, and will report in September.
We want to ensure that our new partnership with the EU protects the mobility of professionals to provide services across the continent.
It is in the interests of both sides that this exchange of talent continues at pace.
A dynamic financial sector should be the beating heart of a free market economy.
And such dynamism is achieved through innovation.
But the key that will unlock this innovation are the people…
… and the skills they bring to bear.
At the core of my vision are the people…
…those who innovate, take the risks, and sharpen the UK’s cutting edge…
…these are the people that must be at the heart of the government’s plan for the sector – and the future direction of the industry.
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Before I leave you this morning, I want to be clear that it is not Brexit that poses the greatest risk to the health of our financial services sector…
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We must show how our free market and financial services create wealth and support our liberal democracy.
As Michael Novak, one of Ronald Reagan’s favourite philosophers, argued in his 1982 magnum opus, ‘The Spirit of Democratic Capitalism’…
…our democracy and pluralistic liberal culture depend on a healthy, free market economy.
I am very proud that I go into bat for such a critical sector of our economy.
Because there is no doubting the resilience, and the raw ambition that will continue to fuel financial services…
…and I look forward to working with you all as we enter this exciting time in our history.
Thank you very much.