Chancellor to Unveil Financial Services Skills Compact
Chancellor Rachel Reeves is set to announce a new City 'skills compact' that will commit major financial firms such as Barclays and Lloyds to retraining thousands of workers for the AI revolution. The initiative will be launched on Tuesday during what is expected to be Reeves's final Mansion House speech to City bosses before a potential change in government.
The government-backed programme aims to help employees 'keep pace' with significant technological changes that have sparked fears of mass redundancies. Nearly 20 initial signatories, including the London Stock Exchange, Nationwide building society, and asset manager Fidelity, will begin drafting rolling three-year plans to train and certify their UK staff in up to five critical skills, with AI being a mandatory focus.
Accountability and Reporting Structure
Each firm's progress will be reported annually to the Treasury and the Financial Services Skills Commission. At least one senior executive at each company will oversee the internal programmes. The compact is designed to keep the UK's financial sector competitive amid rapid technological advancements that could otherwise threaten a large portion of the workforce.
The UK's financial and related professional services industry accounts for about 11% of total economic output and employs approximately 2.5 million people, according to TheCityUK.
Significance of the Initiative
Claire Tunley, chief executive of the Financial Services Skills Commission, described the compact as the most notable sector-wide skills strategy since the construction industry launched its training board in the 1960s. 'It's very significant. I don't think we've seen the likes of this in a generation,' she said. Tunley noted that while skills gaps are not new, 'what's different is the scale and speed that we're seeing change happen, driven by Gen[erative] AI. This is throwing up a lot of challenges for employers.'
AI Threat to Jobs
The AI boom has raised concerns over job security for City workers, particularly back-office staff who perform processing and oversight tasks that AI can automate. Research by Morgan Stanley last year estimated that AI could put more than 200,000 European banking jobs at risk by 2030, about 10% of industry roles. Standard Chartered made headlines in May by announcing 7,000 job cuts, partly due to AI, with CEO Bill Winters apologising after describing the move as 'replacing, in some cases, lower-value human capital.'
Standard Chartered is a founding signatory of the scheme, along with Yorkshire Building Society, Lloyd's of London, and online bank Zopa. Only UK-based workers are covered by the commitments.
Upskilling Over Job Losses
Tunley emphasised that while the compact may offset some AI-related job losses, the primary goal is to build capabilities. 'We need the capabilities. And if we don't build them, we are going to be held back with innovation, with growth, competitiveness … and we've proven that investing in upskilling your existing workforce is the fastest and most efficient way to get the skills you need.'
Each signatory will start gathering data for the first reporting deadline in November, confirming which key skills they will track and upskill. At least one skill must be AI, with training delivered through professional courses, qualifications, certificates, or digital learning. All training must occur during working hours, and firms cannot count graduates or apprentices within their targets.
The current 17 signatories cover about half a million City workers, and Tunley hopes the entire City will follow suit. 'This is where the economy is going, whether we like it or not,' she said.
