Financial Services Growth and Development Board minutes: January 2025

Attendees and apologies

 

• John Swinney, First Minister
• Kate Forbes, Deputy First Minister and Cabinet Secretary for Economy & Gaelic
• Sue Dawe, SFE
• Sandy Begbie, SFE
• Alastair Ross, ABI
• Arleen Arnott, KPMG
• Jason Windsor, Abrdn
• Vida Rudkin, Morgan Stanley
• Al Denholm, SNIB
• Louisa Knox, Shepherd and Wedderburn
• Fraser Wilson, PWC
• Judith Cruickshank, RBS
• Jackie Lieper, LBG
• Scott Walker, BlackRock
• Nicola Anderson, FinTech Scotland
• Nick McGruer, FCA

Guests

• Chris Hayward, City of London Corporation (COL)
• Anastasia Nishnianidz, City of London Corporation (COL)
• Sarah Pritchard, Financial Conduct Authority (FCA)
• Neville Prentice, Skills Development Scotland (SDS)
• Claire Tunley, Financial Services Skills Commission (FSSC)
• Omar Shaikh, GEFI

Apologies

• Gerry Mallon, Tesco Bank
• Andy Curran, Phoenix Group 
• Barry O’Dwyer, Royal London 
• Angus MacPherson, Noble Group 
• Alastair King, City of London

Scottish Government

• Kim Mackay
• Andrew Hogg
• Jason Dashti
• Borbala Szilagyi

Items and actions

Items and actions

Welcome (item 1)

Sue Dawe opened the meeting and welcomed members, including Jason Windsor from Abrdn as a new member, and guests noting apologies from those not present.

The First Minister highlighted the importance of FISGAD as a forum for engagement and that he was pleased to see investment and skills on today’s agenda. He outlined the steps Scottish Government has taken to address the recommendations made by the Investor Panel and the importance off the Scottish National Investment Bank (SNIB) as an institution and its role in realising the government’s priorities on investment.

FM discussed the Scottish Government (SG) Budget published in December 2024 and the Tax Strategy, which provides clarity and certainty over government’s tax policies.

FM welcomed the discussion on skills, and the need to identify the right interventions and initiatives to support a skills pipeline for the changing needs of the economy and referenced his participation at SFE’s annual awards in October 2024, which demonstrated the strength and potential of the financial services (FS) sector.

Actions and updates from previous meetings (item 2)

Sue Dawe provided an update on actions from previous meetings:

• convene a separate group to explore options to address unbanked population in Scotland including offer of bank account to all school leavers. Sandy Begbie met with the Cabinet Secretary for Education and Skills in September 2024 who gave her support for the pilot in 2 council areas of Scotland. The group is working with banks with support from the Financial Conduct Authority (FCA)
• cabinet Secretary to provide an update on public reform work at a future meeting.  This will be covered at a future meeting of FISGAD

• SG to engage with the Association of British Insurers (ABI) to explore the approaches and models identified in the IDF’s report in more detail and work with selected FISGAD members to consider options that will deliver maximum benefit for Scotland. Taking place later today
• SG officials to explore engagement opportunities with Scottish Financial Enterprise (SFE) and FISGAD members to continue dialogue and more in depth discussions that will support DFM’s responsibilities focusing on investment.  This is progressing with officials liaising with SFE to maintain dialogue.

Investment landscape (item 3) 

Sandy Begbie opened the discussion with an overview of the City of London Corporation (COLC) and SFE Investment summit planned for October 2025. The summit will focus on three key areas (financial services, energy and renewables, life sciences) and will showcase Scotland with case studies from firms who have already invested here. They will work with all partners, including SG, to identify potential engagements with investors.  It is also an opportunity to showcase the university sector, and the Lord Mayor of London (LMOL) will use his international visits to promote the event.

Chris Hayward reiterated the LMOL’s commitment to promoting the event.

FM noted that it is critical from SG’s perspective to encourage and attract investment into Scotland. The Investor Panel has influenced our approach to investment.

DFM provided an overview of her role and priorities as Investment Champion.  She is aware that SG needs to be more focused and target engagements to make the connections with opportunities and to streamline our approach. To support this SG will focus on 3 priority areas for investment: offshore wind, housing, key economic infrastructure noting that in March SG is hosting the Global Offshore Wind Forum. 

Sandy shared insight from his recent visit to Boston and highlighted that consistency of policy and alignment, maintaining stability of propositions, the tax landscape, supply chain and talent attraction are very important to investors.

FM noted that there is tax certainty until the 2026 election, which provides consistency of policy and regulatory environment.  There has been consistency in SG policy for offshore wind and renewable energy for the last 18 years.

FM reflected on the different responsibilities for offshore wind, e.g. project planning and consenting is the SG’s responsibility, whilst electricity networks, grid connection, and Contracts for Difference (CfD) sits with the UK Government. Policy consistency and regulatory stability will be important for securing manufacturing opportunities and projects.

FM stated that he recognises SG’s responsibility with decision-making and that this is an ‘activist government’ and invited members to raise issues with government and we will seek to address it.

DFM highlighted that SG has doubled the resource in the consenting team to speed up the process and reduce the average turnaround of applications, however grid connection dates are outwith SG control.

The group raised the following points:

• UK and US current affairs are shifting markets
• the PM has talked a lot about Scotland
• the narrative from DFM and the focus on investment has been helpful and provides specificity and this consistency gives confidence 
• the Investment Summit will help to bring people together, but it is a competitive world, and Scotland must compete for capital - pace of change and certainty is key and we need to be clear on what Scotland is offering
• Scotland would benefit from clear messaging on the proposition on offer to attract investment.

Skills and sector growth strategy (item 4)

Neville Prentice from Skills Development Scotland (SDS) and Claire Tunley from Financial Services Skills Commission (FSSC) joined the meeting.

Sandy Begbie stressed that one of the main reasons firms come to Scotland is the access to talent.  SFE launched the ‘getintofinance’ platform which promotes the FS industry, the skills needed, entry requirements and pathways into FS roles. Young people are trying to navigate multiple pathways, and this platform provides a simpler route and was created in collaboration with firms, charities, universities, colleges, SDS and professional bodies.  It provides a tool for career advisers to easily access information on programmes and apprenticeships. 

FM agreed that education and the school system are fundamentally critical for the prospects of the industry and having these pathways available for young people to see what’s involved in FS is essential.  FM noted the importance of increasing volume of young people in the workforce. International students who could stay in the country after their degree would be of benefit, therefore a Scottish graduate visa could contribute to the Scottish labour market and the economy. FM noted that there is a need to make sure that pathways are straightforward and that we invest in them - if this is not the case, we must do something about it and understanding this is of the highest importance.

Neville Prentice offered to contextualise the conversation on financial services and the skills landscape.  FS is the highest performing sector regarding GVA, with over 2000 FS businesses in Scotland, 130k employees in the sector, with a forecast of growth by 3000 jobs.  The economic output is expected to grow significantly (c9%). 

If Scotland brings in new investment of £230 billion across sectors in the next 10 years, in the fields of energy, buildings, oil and gas decommissioning and housing, 1.1 million people will need to enter the Scottish workforce in the next 10 years. This is more than double of what’s currently in the school system and therefore the need to attract more people into Scotland is clear, and we need to ask whether the curriculum in universities is right to support the needs of the sector.  The apprenticeship system is robust in Scotland, but FS is not recruiting enough through this route.  For comparison, the technology systems sector takes 350 – 400 apprenticeships but in FS it’s around 400. There are 13 frameworks for graduates and FS utilises 6-7 of these frameworks (over 1200 places a year). There is a need to get more modern apprentices in the system and make sure that the FS sector differentiates itself in terms of its offer, ensuring it is attractive in relation to other sectors as there will be a bigger fight for talent. There is also low consumption of people coming through the college system into Financial Services. These routes increase diversity and improve equality. SDS intelligence can be used by all employers to look at labour market trends and match up talent in schools to show students where the opportunities are.

Members made the following comments:

• firms would benefit from partnering with universities and to continue to invest in training and upskilling within organisations as the needs of the business change 
• more needs to be done by the sector to demystify FS, drive interest and showcase the different roles on offer
• it would be useful to get a better understanding of the extent to which there are supply or demand issues i.e. a lack of applicants or a lack of opportunities. SDS noted that demand is strong for graduate schemes by students. Modern apprenticeship schemes are usually oversubscribed by 5-10% and they are a great pathway for underrepresented groups 
• financial education in school and financial inclusion in the sector opens up a fuller societal opportunity to hopefully move them into employment and to engage fully in financial services.

DFM spoke about working with other sectors to reach the unreachable and economically inactive. Unemployment is low, compared to the rate of 22% economically inactive. There are great employers represented at FISGAD, and it might be possible to tackle it in financial services.

Sandy told the group that SFE are planning to hold a Skills Summit in June will reach out to members with further information in due course.

Claire Tunley spoke about the work of the FSSC on upskilling with over 40 member firms across the UK looking to tackle demographic and technology change.  FS continues to be a great industry with opportunities to grow further.  FS will continue to be a highly skilled sector and demand for skills will get bigger, but types of roles are changing with a shift in expertise and a need to augment skills. Scotland is starting with a highly skilled base but there is a need for mid and lower roles to upskill into higher roles and reskill across industry. Claire agreed with earlier points on the sector not utilising colleges as a pathway into the sector.

Claire stressed that diversity is important. The sector has lost 100k women (since 2002 numbers have decreased from 52% of women to 42% working in the sector) due to changes of roles. Women tend to be in less well-paid roles with less representation in more senior and high-skilled roles. Claire noted that there needs to be a shift to addressing this imbalance to get more women into these roles. In terms of race diversity, the data shows that those from Asian backgrounds are well represented in the FS sector, while those from black backgrounds are not.

Claire commented that governments across the UK need to be more flexible on reskilling and invest in skills when it’s needed. Areas in England looked at skills needs in their regions, so there will be competition for talent in the sector across the UK. FSSC is working with SFE to dial up entries into the sector in Scotland and this will be discussed at the Skills Summit.

Economic update (item 5)

Judith Cruickshank provided an overview of the latest economic data on banking/ sectoral trends, referring to Banking Barometer data, this included:

• employment rates remain very high; however, the prospect of higher NIC and national wage appears to be cooling the position in the job market. Hospitality and construction have been hit hardest
• there is a strong focus on debt stress and there is a modest uptick in lending and working capital
• the agriculture sector is still working on inheritance tax changes. Access to labour, high costs and climate transition also remain challenges for the sector
• independent schools are still working through VAT changes
• the fishing sector is doing well, with higher fish prices and lower fuel costs
• housing sector feeling more positive and welcomed the reinstatement of budget for the affordable housing programme, providing greater funding certainty
• overall defaults are stable and at a lower level than pre-covid, people continue to repay debts as planned, although it is a challenging time
• although consumer confidence has increased, with a turning point in Q4, consumers are generally still less confident about spending, with individuals continuing to hold larger amounts of savings
• there was an increase in mortgage activity towards Q4, but evidence some are now waiting to see if/when interest rates will fall
• vulnerable customers continue to require support, e.g. changing debt terms, personal disclosures, data, and to connect them to resources.

Jackie Leiper concurred with Judith’s points adding that personal finances have been resilient with some exceptions in working families who are struggling. Jackie stated this is due to a combination of both increased mortgage and living costs. However, the housing market holds up very strongly with properties turning over quickly.

FM is aware that people continue to face difficult cost of living pressures – and was conscious that council tax rises could be a concern for some families.  Judith Cruickshank emphasised that council tax payments are one of the first payments people are not paying when faced with a difficulty, and this missed payment has a lot of consequences.

AOB (item 6)

Sue Dawe emphasised the importance of maintaining collaboration and FM stated that it is useful to keep the conversation going on the themes discussed today. FM assured the group that insights from FISGAD will be shared with the appropriate colleagues and officials.