Financial services has been largely overlooked by the ‘levelling up’ agenda and the government needs to rectify this, cross-party MPS have said.
Some 79 per cent of the UK’s population want to see the jobs and investment provided by the financial services industry to be further spread out across the whole country, with 73 per cent saying it is “too concentrated” in London, according to a report by the All-Party Parliamentary Group for Financial Markets and Services.
The vast majority of the population - 93 per cent - believe that financial services is important to the UK economy overall, and 81 per cent think the industry has an important role to play in levelling up.
However, the group is calling for government action to boost financial services outside London.
The group said: "Despite the financial services sector being one of the UK’s largest employers and contributing around ten per cent of its total economic output, the industry has been largely overlooked in the government’s plans for levelling up."
The actions asked for by the APPG for Financial Markets and Services include:
- Giving financial regulators such as the FCA a new objective for delivering economic growth for all regions in the UK
- Providing incentives for major banks to create and relocate senior roles in cities outside London
- Expanding the role of the government’s office for investment to focus on unlocking new private sector investment in regions around the country, particularly from pension funds
- Working with local councils and bodies such as Citizens Advice to offer banking alongside public advice in communities where bank branches have shut or are at risk of closure
- Making future devolution deals
- Creating new cross-sector bodies to represent the industry in cities outside of London to reflect the growing importance of financial services to their economies.
Chair of the APPG for financial markets and services, Bim Afolami, said the allocation of public funds is critical to the success of levelling up across the UK, but the fundamental need for economic regeneration and rejuvenation must be led by the private sector.
“For the private sector to lead it will need financial services to play their part. They are critical to the effective working of the “real” economy,” he added.
Afolami said to the business owner, financial services provides the insurance necessary for the office building, the equity required to fund the expansion into new markets, the overdraft to manage the cashflow during a tough month.
“Financial services are crucial,” he said.
“Yet in the government’s white paper on levelling up, although financial capital was cited as one of the six essential capitals (human, intangible, financial, physical, social and institutional) that must come together for places to thrive and grow, the paper did not specify how the government sees the role of the financial services sector.”
But a HM Treasury spokesperson said the financial services sector "plays a crucial role in levelling up opportunity" in towns and cities across the UK - with two thirds of the 2.3mn jobs it supports based outside of London.
“The government has committed to deliver ambitious reform of the sector, to ensure that it keeps delivering for people across the UK, and continues to be one of the most open, well-regulated and technology advanced markets in the world," the spokesperson said.
“The Financial Services and Markets Bill, which is due for report stage in the commons shortly, already introduces new secondary objectives for the FCA and PRA which will, for the first time give the regulators a legal basis for advancing growth and international competitiveness across all regions of the UK”