The CityUK Conference 2018: Economic Secretary speech
Economic Secretary to the Treasury, John Glen speaks at the CityUK Conference 2018.
Ladies and gentleman 鈥� 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 鈥� 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 鈥� arguably our most valuable economic resource鈥�
鈥uring this critical time for our country鈥�
鈥ill come to define us in the years ahead.
Because financial services is the plumbing of our economy鈥�
鈥t generates wealth, creates jobs up and down the country 鈥� 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鈥�
鈥othing could be further from the truth.
As tempting as it is in times of uncertainty to batten down the hatches鈥�
鈥his 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鈥�
鈥ecause its value is beyond any doubt. We are acutely aware鈥�
鈥f its standing as a lighthouse of British enterprise鈥�
鈥hich will continue to guide us 鈥� Brexit and beyond鈥�
鈥nd project a bold, confident, and global Britain to the world.
The commercial instincts of this country have been honed and sharpened over centuries鈥�
鈥nd I have faith that as we prepare to leave the European Union鈥�
鈥hose instincts will prevail.
Whilst the exact configurations of the future relationship are not yet clear鈥�
鈥 want to reassure you that this government is working tirelessly to secure the best deal for this country鈥�
鈥nd as the City Minister, I am committed to my patch 鈥� and remain an evangelist, an advocate, and an ally 鈥� 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鈥�
鈥econdly, how a skilled workforce will ensure we are ready to make the most of the innovation that defines our economy鈥�
鈥nd finally, how we will remain a global economic citizen.
Although the walls of Roman London have stood for centuries 鈥� nothing actually stands still in the City.
The City has changed beyond recognition鈥�
鈥s has its workforce鈥�
鈥nd the markets it serves.
And it has grown stronger as it weathered plague, fire, and blitz鈥�
鈥nd navigated the ebb and flow of its fortunes.
It has always remained a constant source of growth鈥�
鈥nd secured the UK鈥檚 position as the current largest net exporter of financial services in the world.
And the statistics bear repeating: financial services gave us a 拢72.1 billion tax take in 2016/17鈥�
鈥hat 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 鈥� balancing incentives and obligations鈥�
鈥nd 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鈥�
鈥nd 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 鈥淐ity鈥� is no longer understood as a monolithic entity bounded by the physical geography of the Square Mile鈥�
鈥ut something else entirely鈥�
鈥 world where the City of London remains, and prospers as a hub鈥�
鈥ut 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)鈥�
鈥f Manchester, of Liverpool, of Bristol or of Edinburgh.
Because our economy is the sum of its parts鈥�
鈥nd these parts must work in tandem.
2.2 million people work in the financial and related professional services sectors鈥�
鈥nd 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 鈥� employing nearly 50,000 people in financial services鈥�
鈥nd the location of the headquarters of Al Rayna Bank plc, Britain鈥檚 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鈥�
鈥any of whom are looking for a place to bring their skills to the table鈥�
鈥n what is a rapidly shifting economy.
Just as the Big Bang saw London transform into what it is today 鈥�
鈥e find ourselves at the coalface of a sector facing transformation.
Whether it be the advent of robotics and the near-infinite potential of AI鈥�
鈥� the disintermediation of finance 鈥�
鈥r the growth in big data enabling firms to better target their innovations鈥�
鈥he industry is changing once again beyond recognition.
As it transforms at an unprecedented rate 鈥� so will its workforce.
Which brings me to the second part of my vision.
And that is one of a financial services ecosystem鈥�
鈥hich elevates the skills of its workforce to the status of an asset鈥�
鈥� something to invest in, to grow, and to leverage.
UK financial services firms already have a competitive advantage鈥�
鈥ith 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 鈥� more now than ever before鈥�
鈥s 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鈥檚 innovation and growth strategy is a drive to cement a robust supply of skills 鈥� designed for our brave new world.
Addressing the skills challenge needs to start in our schools鈥�
鈥ecause the industry鈥檚 future technicians, traders, IT and robotic specialists鈥�
鈥re 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鈥檙e investing over 拢500 million a year in our new T-Level technical qualifications鈥�
鈥nd with the help of the CBI and the TUC we are establishing a new National Retraining Scheme鈥�
鈥o help adults faced with the consequences of technological change to re-train throughout their working lives.
And the government鈥檚 reforms to apprenticeships will ensure training is tailored to the sector for the long run鈥�
鈥s 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鈥�
鈥� 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鈥�
鈥nd 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鈥�
鈥e 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鈥�
鈥hich is keeping the UK firmly in place as a global economic citizen.
To attract the freshest talent and the most disruptive thinkers鈥�
鈥e 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鈥�
鈥hile developing our home-grown talent of the future.
It鈥檚 about striking that equilibrium between the two groups.
I congratulate The CityUK for their thought leadership and continued engagement on the issue鈥�
鈥nd on the publication of the report on the 鈥淯K鈥檚 future immigration system and access to talent鈥�.
One thing that struck me in reading the report was the volume of short term business travel between the UK and EU 鈥� 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鈥�
鈥� 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鈥�
鈥� and the skills they bring to bear.
At the core of my vision are the people鈥�
鈥hose who innovate, take the risks, and sharpen the UK鈥檚 cutting edge鈥�
鈥hese are the people that must be at the heart of the government鈥檚 plan for the sector 鈥� 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鈥�
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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鈥檚 favourite philosophers, argued in his 1982 magnum opus, 鈥楾he Spirit of Democratic Capitalism鈥欌��
鈥ur 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鈥�
鈥nd I look forward to working with you all as we enter this exciting time in our history.
Thank you very much.