Policy recommendations

The financial and related professional services industry is an engine of the whole UK economy. Across every part of the UK it is investing in communities, supporting employment and helping people to make progress in their lives. Working together, government – whether national, regional, local or devolved – and the industry can make an even greater contribution to growth and prosperity.

The UK’s role as a leading global financial centre creates a unique opportunity for the industry to unleash faster growth across the entire country. The following recommendations identify four key areas where policymakers at every level can make meaningful changes to help unlock the potential of financial and related professional services.

1) Devolution

TheCityUK believes that greater decentralisation of power has the potential to boost growth and prosperity in every region and nation of the UK. We have been pleased that following the July 2024 general election the UK government made a clear commitment to the further expansion and strengthening of the metro mayor model to many more parts of England, as called for in our ‘Enabling Growth Across the UK 2023’ report. We were delighted to see this support taking form when in May 2024 two new mayors took office, in the East Midlands and York & North Yorkshire and we support the creation of new mayors in Hull and East Yorkshire and Greater Lincolnshire from May 2025. We also welcome the greater flexibility being indicated by the government in offering additional powers to existing local authorities, while acknowledging that some larger and more strategic responsibilities will more often sit most naturally with a large combined authority.

The previously announced trailblazer devolution deals for the West Midlands and Greater Manchester also reflected several long-standing TheCityUK positions such as further devolution of education funding and an increased role for regional leaders in trade promotion. We welcome the acknowledgement by the re-formed Ministry for Housing, Communities and Local Government that a single funding settlement for a region is a more effective policy driver than competitive bidding pots. We welcome the proposals that over time the UK government will develop this model for more English regions.

While the increased level of devolution currently being offered to some English regions is welcome, we have long believed that, wherever possible, there should be greater consistency in the powers offered to each area, to create a clearer climate in which business can thrive. Currently, a major business operating in one part of the country can engage with their local mayor on key issues such as skills policy and trade promotion, in a way which a major business operating in another area cannot. This inconsistency across different areas leads to a confusion and lack of clarity, especially for investors from overseas. We therefore welcome the announcement in the King’s Speech 2024 that the government will legislate to put a “more ambitious standardised devolution framework into legislation”.

In the long term, ongoing lack of consistency risks creating further challenges for those areas without the strong strategic presence of a combined authority or the focal point of an elected mayor. Fewer powers and the lack of associated organisational infrastructure make it more challenging for those authorities not covered by a deeper devolution deal to deliver the kind of coordination and leadership required to maximise growth. TheCityUK therefore welcomes the indications that greater powers will be available to local councils without the automatic necessity of a combined authority deal.

As devolved authorities grow and develop there will be a need to invest in and support the development of great civic leadership through organisational and personal development, as well as the sharing of knowledge and best practice.

The UK government should:

• Continue its plans to roll out the metro mayor and combined authority model to all English regions that want it, while simultaneously devolving greater powers for existing mayoral combined and local authorities.
• Deliver its long-term goal of a consistent devolution settlement across all English regions and sensible alignment with the UK nations, with clarity for business on the powers devolved leaders have.
• Actively explore how metro mayors can take strategic responsibility for major infrastructure projects to overcome obstacles to prompt delivery such as delays in the planning system and localised supply chains.
• Use the trailblazer devolution deals for the West Midlands, Greater Manchester and most recently the North East as a pilot for the move away from multiple funding pots and competitive bidding processes in favour of a single financial settlement for an area.
• Ensure that the new Council of the Regions and Nations effectively governs the interactions between mayors and other devolved leaders and Westminster and Whitehall.
• Strengthen the corporate memory of regional, devolved and local government by creating a new Leadership Academy, bringing in the best expertise from leaders around the world, and from business to support political leaders and their staff in personal and policy development with a clear focus on how policymakers can work with industry to drive growth.

Devolved leaders should:

• Make business central to the development of their Local Growth Plans and Spatial Frameworks. Plans should include clear metrics and identify specific ways in which businesses from key industries, including financial and related professional services, can contribute to the area’s vision for economic growth in the region.
• Develop an industry-specific strategy for financial and related professional services, reflecting the industry’s role as an engine for growth in the wider economy. This should include a plan for helping link capital with projects in the area currently seeking investment.
• Ensure that every sector of the economy, especially in services, is fully represented in both business engagement forums and their work in promoting the area overseas.

2) People

Attracting, developing and re-skilling talent remains a critical factor to the success of the UK’s financial and related professional services industry. Clear and practical strategies that reflect local needs and are developed in partnership with employers are key to meeting this demand. At a national level, we welcome the creation of Skills England, which reflects our long-standing position that there needs to be greater mapping of, and planning for, the UK’s future skills needs. We were pleased that the most recent trailblazer devolution deals reflected previous calls by TheCityUK for a greater employer voice in mapping and planning for local skills needs. We supported the proposals for the national rollout of local skills plans in the Skills and Post-16 Education Act and the further devolution of post-16 education resources and career advice responsibilities in the recent deeper devolution deals for some areas. We were pleased that the UK government has now indicated that further devolution of responsibilities of local skills and education will be devolved to mayoral combined and local authorities in the near future, as we called for in our ‘Enabling growth across the UK’ report 2023.

TheCityUK is working with partners and the industry to identify, highlight and address crucial skills challenges. Initiatives such as the Yorkshire and The Humber Financial and Professional Services Skills Commission, currently being led by Yorkshire Building Society with support from TheCityUK, City of London Corporation and the Financial Services Skills Commission (FSSC), help to engage business in specific local challenges and solutions. This reflects the shift towards much greater local involvement in mapping and responding to skills needs, which TheCityUK has long advocated for. Local and regional policymakers and business leaders are best placed to identify the skills that are needed in their areas, particularly when they have clusters in niche areas of industry such as specific forms of FinTech or LawTech. These local actors are best able to engage with local schools and university hubs to ensure that young people can engage with industries in their area at the earliest possible moment in their educational journey. The financial and related professional services industry has beneficial and critical partnerships with Britain’s world-leading universities, which allow it to fund and learn from innovative new projects. It also values the critical role of technical and vocational education such as apprenticeships.

At a national level we believe that there is now huge scope to improve the impact of the Apprenticeship Levy through greater flexibility. We welcomed the announcement by the UK government in March 2024 that firms will now be able to transfer a much greater percentage of their levy funds to small businesses and charities, something we called for in our ‘Enabling growth across the UK 2023’ report. Although we remain completely supportive of the principle of the Apprenticeship Levy, we feel that further flexibility, for example in the length of time given to complete courses and spend funds, and in the use of new techniques such as blended learning, as well as different qualifications, will radically improve its impact on the lives and opportunities of individual apprentices and on the growth and productivity of UK businesses. The transition to a broader Growth and Skills Levy will better equip industry to re-skill employees for the jobs of the future, in particular those associated with the green transition.

The UK government should:

• Deliver the promised reform of the Apprenticeship Levy to give employers the flexibility to re-train and up-skill the broadest possible workforce.
• Ensure that Skills England makes business central to the design of the new Growth and Skills Levy, in particular when considering what qualifications and training will qualify for levy support.
• Expand clear and transparent routes for employers to be involved in curriculum and qualification design and delivery.
• Ensure national policies on skills and mobility provide regional clusters with the skills they need to grow and that Skills England and the Migration Advisory Committee take account of Local Growth plans when forming and implementing policy.

Devolved leaders should:

• Bring together the widest possible employer network to contribute to their skills strategies and use their convening power to reflect this in the Local Skills Improvement Plan. This will ensure that these plans reflect the needs of the regional economy.
• Ensure that plans for mapping and addressing skills needs align closely with the wider vision for economic growth, including creating capacity for training and re-skilling in growth sectors.
• Use their convening power to connect schools, colleges and universities to engage employers in all areas of the education process, for instance in areas such as curriculum and course design.

3) Growth

We welcome the government’s commitment to ensuring that financial and related professional services can thrive in every region and nation of the UK, including the plan to grow regional financial centres. To achieve this, the industry will need to continue its partnership with government at all levels to match investment with demand and connect people, places and opportunities.

Connectivity between centres of economic growth, either digitally or through transport links, remains a key driver of future opportunity. The ability of the whole financial and related professional services ecosystem to connect and grow supports greater growth across all industries.

This practical infrastructure should be matched by investment into how the machinery of government at all levels can best support growth in partnership with industry. With many mayoral combined authorities now entering their third terms, there are often many programmes, systems and funding streams that business can take advantage of. This is in addition to the support offered by the UK government, local authorities and arm’s length bodies. Collating and coordinating these resources would maximise the positive impact they have on business. This would allow maximum benefit to be derived from the enhanced role for some mayoral combined authorities granted in the most recent trailblazer devolution deals. It could also provide more convenient conduits into businesses for those in central government seeking to promote opportunities – for instance in connecting firms seeking investment with overseas investors.

The UK government should also work to support devolved and regional leaders in attracting investment, allowing them to draw on expertise and opportunities that currently exist at a national level. Building on the Harrington Review, policymakers should make attracting foreign direct investment a key part of both national and area-specific growth plans and ensure that devolved leaders and officials have sufficient support to achieve this.

The UK government should:

• Ensure it includes devolved leaders and agencies in its planning for trade promotion, including foreign delegations and pitches for investment.
• Link the international trade strategies of the Department for Business & Trade (DBT) to Local Growth Plans and priorities to ensure a consistent focus.
• Build on the recommendations of the Harrington Review to give clear points of contact within DBT for those combined and local authorities developing their own strategies for overseas promotion of their areas.
• Conduct a thorough assessment of how the increased trade promotion role given to the Mayors of the West Midlands and Greater Manchester in the trailblazer deals have been used and what lessons can be learned for other areas, and for the wider UK government.
• Continue the location of new government facilities in key hubs outside of London. Decisions on location should pay due attention to regional economic strategies, ensuring where possible that public sector investment can generate a wider private sector growth and encourage thriving clusters.

Devolved leaders should:

• Ensure their region has a single ‘front door’ for business services and support. This should include signposting to both regional or national initiatives and funding, as well as those available from the UK government or other organisations such as the British Business Bank.
• Continue to work with the UK government to improve transport connectivity in their area, allowing regional and national hubs to thrive in partnership.
• Continue to partner with the government to improve digital infrastructure, in particular the rollout of 5G.

4) Encouraging growth through planning reform

New investment requires projects ready to make the best use of capital. We know that one of the obstacles to moving ahead with new opportunities is the UK’s planning system.

The financial and related professional services industry is involved with the planning system at all stages. On the wholesale side the industry provides capital, professional advice, and insurance which are essential to getting major projects built. The industry also makes a real difference to families and small businesses by helping them save for the future, buy homes and invest in improvements, and invest in a business and manage risk. We are keen to see a sensible review of the planning system that provides business with certainty and consistency.

The success of any future planning system will depend upon fundamental reform. We therefore hope that central government will deliver this reform by prioritising action in the following areas:

• Resource. Local planning authorities are under resourced and unable to handle the number of planning applications. They have been particularly impacted by the depletion of experienced planning officers, which will take time to rebuild. We welcome the announcement by the Chancellor of the Exchequer in July 2024 that funding would be available for 300 additional planning officers, but would urge the government to further consider what resource a national planning system requires and provide fund and support to deliver this.
• Predictability. A lack of consistency between (and within) local planning authorities has been identified by parts of the financial and related professional services industry as a key issue with the current planning system. The lack of fixed rules and case-by-case approach, according to sets of complex and often contradictory policies and case law, creates uncertainty for developers and investors and particularly acts as a deterrent for foreign direct investment into the UK. We hope that the proposed review of the National Planning Policy Framework will be used to create greater consistency between planning authorities and create a firmer foundation for investors.
• Efficiency. The process for negotiating Section 106 agreements can be protracted and overly complex. Lengthy Section 106 agreements negotiations are identified to be an important reason for planning application time limits being extended, with agreements normally taking longer than 10 weeks to be negotiated. Addressing this issue is a key way in which the government can tackle the backlog and get spades in the ground.

The UK government should:

• Prioritise adequately resourcing local planning authorities to ensure they can robustly determine all applications at pace.
• Use the new National Planning Policy Framework and other reforms to provide greater predictability in and consistency between decisions made by local planning authorities. This could include reforming the structure and objectives of local plans and the introduction of a zonal land use planning system (where land would be zoned either as development land or non-development land), to provide a simple set of development control rules and give greater certainty to developers on how land can be used.1
• Introduce a model for a Section 106 agreement to ensure greater consistency and speed up the process.

Devolved leaders should:

• Explore how they can work with local planning authorities to enhance capacity to process applications that are significant to their strategy for the wider area.
• Act as a convenor and coordinator to bring together resources and impetus from local and national government to push through economically significant projects, including key infrastructure developments.