Financial services is one of the UK’s leading business sectors, however, with a likely shift in national leadership approaching at some point this year, major change could be afoot. But what would a political change mean for financial services public policy and what does the future hold for the professionals working within this field?

Free market policies

The growth of technology and the rapidly changing world in which we live have already led to significant changes within the financial services public policy arena in recent years. The upcoming election is only likely to ramp up this transformation. Until now, Conservative policies towards financial services have generally encouraged free market trends to come to the fore, however, a change of government is likely to lead to a more regulated and controlled environment. While it’s too early to make any concrete predictions, if the incumbent government were to turn its fortunes around and reverse the 27-point deficit seen in the polls, it would represent potentially the largest and most sudden political comeback in history. As we outlined in a recent blog, it’s highly likely that we will see a Labour government take power by the end of 2024 and that means change is coming within financial services public policy.

The Labour Party’s vision for the financial services sector was laid out in its 'Financing Growth’ plans, published in January of this year. The proposal elaborated on the party’s plans to support businesses and workers to boost earnings and pledges major support for the wider FS sector.

Labour’s vision

The review outlines the Party’s aim to develop a broader financial landscape that is more conducive to growth and aims to reinforce the domestic industry’s position as a global leader, which represents a move away from the more progressive, stable approach laid out by previous Labour governments. That’s not to say that it is anti-growth; This approach has been instrumental in driving business investment and promoting economic expansion, as evidenced by the average GDP growth rate of 2.5% seen between 1997 and 2010

The proposal also goes into detail, and allays fears in some quarters, about how the UK will cement its position as a champion for innovation, entrepreneurship and developing greater long-term investment, whilst simultaneously ensuring financial security for all UK citizens. This is, obviously, a bold ask, but one that Sir Kier Starmer’s likely future government feels confident in delivering.

Some of the other changes proposed include reductions to corporate tax, an introduction of a National Investment Bank with £250bn in lending power, and greater support for SMEs and workers, amongst many others. Crucially, the paper also outlines plans for developing a leading eco-friendly economy, whilst also setting a precedent for other nations to achieve net zero greenhouse gas emissions by 2050, which is clearly a hot topic at the moment.

Aside from the climate goals, the single biggest holistic shift outlined by Labour is the significant increase in public spending, particularly within health and education which will be funded by increased tax revenues and increased borrowing. These investments will be coupled with new spending on infrastructure, including the potential expansion of the London Underground, new schools and hospitals, and a rollout of new internet connectivity measures, designed to improve the country’s economic foundation. Outside of these borders, the party has also outlined its intentions to boost trade and investment with a wider range of nations, notably China and India, to stimulate further growth.

Financial services public policy skills requirements

As we can see, change is almost guaranteed. But what will the potential shift in leadership mean for financial services public policy specialists, and for their skills requirements?

As ever for public policy professionals, flexibility is key – while the day-to-day demands of jobs in this field are unlikely to shift too dramatically, the wider environment will, and specialists will need to adapt to survive, let alone thrive.

However, outside of the need to adapt, one of the more interesting aspects of Labour’s plans is the aim to ‘embrace innovation and fintech as the future of financial services.’ Although policy professionals operating in this sector will be well-versed in financial technology, the party is committing to a technological overhaul of the FS industry.

The paper states that “We must adopt a coordinated strategy to embrace new technology, enable a pro-innovation regulatory framework, and create the right conditions to support innovation and growth in the financial services sector.’ Of particular focus, perhaps unsurprisingly, is AI; with Labour planning to ‘set international standards for the use of artificial intelligence (AI) in financial services’; ‘deliver the next phase of open banking to unlock the potential for increased competition in retail payments’; ‘embrace the potential of open finance to improve financial wellbeing’; ‘advance ongoing work to create a UK central bank digital currency’; ‘make the UK a global hub for securities tokenisation; and ‘establish a regulatory sandbox to test financial products to reach underserved communities’. It’s probably unlikely that all of these facets will be achievable, however, the intentions underline the growing focus placed on fintech and highlight why all public policy professionals will need to factor this area into their future skills development plans. 

It’s impossible to predict the future, but we will likely see a change of government in the coming months, which will lead to a subsequent shift in policy approach. Policy professionals will be used to operating in transforming environments, however, this year may well hold the potential for the biggest political and policy shift in decades.

If you are looking to secure your next financial services public policy role, speak to our expert team who can help you navigate this changing environment.

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