Reeves to launch City ‘skills compact’ committing firms to retrain staff in AI

Chancellor Rachel Reeves is to announce a new City “skills compact” that will commit firms such as Barclays and Lloyds to retraining thousands of financial sector workers for the AI revolution.The financial services skills compact will be launched on Tuesday, during what is likely to be Reeves’s final Mansion House speech to City bosses before Andy Burnham’s expected takeover of No 10. The government-backed initiative will commit employers to improving workers’ skills and helping them “keep pace” with significant technological changes that have prompted fears of mass redundancies.In the coming weeks, nearly 20 initial signatories, including the London Stock Exchange, Nationwide building society and the asset manager Fidelity, will start drafting rolling three-year plans aimed at training and certifying their UK staff in up to five critical skills – including AI – that they believe are essential to future-proofing their jobs.Their progress will then be reported to the Treasury and Financial Services Skills Commission each year, with at least one senior executive at each firm overseeing their internal programmes.The compact is intended to help the UK’s lucrative financial sector, which is an important part of the government’s industrial strategy, stay competitive amid rapid development in key technologies that could otherwise threaten swathes of the financial and professional services workforce.The UK’s financial and related professional services industry accounts for about 11% of total economic output and employs about 2.5 million people, according to the industry body TheCityUK.Clare Tunley, who has been helping spearhead the compact as chief executive of the Financial Services and Skills Commission, said it was the most notable sector-wide skills strategy deployed since the construction industry launched its training board in the 1960s. “It’s very significant,” she said. “I don’t think we’ve seen the likes of this in a generation.”Skills gaps are not a new issue for the City, Tunley said, but “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.”The boom in AI has prompted fears over job security for City workers, in particular back office staff who do the kind of processing and oversight work that AI platforms claim to be able to automate.Research released by the Wall Street bank Morgan Stanley last year estimated that AI would put more than 200,000 European banking jobs at risk by 2030, about 10% of industry roles across the continent. Standard Chartered made waves in May by announcing 7,000 job cuts, in part owing to AI, with its boss, Bill Winters, forced to apologise after describing the move as “replacing, in some cases, lower-value human capital”.Standard Chartered is one of the founding signatories of the scheme, alongside Yorkshire building society, the insurance and reinsurance marketplace Lloyd’s of London, and the online bank Zopa.Only UK-based workers are covered by the commitments.skip past newsletter promotionafter newsletter promotionWhile some AI-related job losses may end up being offset by the skills compact, Tunley said that was not the main reason firms were throwing their weight behind the government-backed programme.“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, when they will also confirm which key skills they will start tracking and up-skilling across their workforce. At least one of those skills must be AI, with workers to be trained through professional courses, qualifications, certificates or digital learning. All of the training must take place during working hours, and firms cannot count graduates or apprentices within their training targets.The current 17 compact 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.