My Lords, I congratulate the noble Lord, Lord Leitch, on his presentation today and his excellent report. I should like to talk about the skills issue in the sector in which I have worked all my life, insurance and financial services. I have been very actively involved in training and the improvement of standards in my industry. I have held senior positions with the Chartered Insurance Institute and the British Insurance Brokers’ Association. I have also been a visiting lecturer on insurance subjects.
We have a very successful and world-class insurance and financial services industry which brings considerable benefits to this country. We need, however, to look ahead to keep our premier position. We cannot assume in these fast-moving, globalised financial markets that the UK’s pre-eminence will be maintained. Improved skills are a vital component in ensuring that this competitive advantage remains.
Over the past four months I have visited India, the United Arab Emirates and Bahrain to look at their insurance and financial services markets, and I believe that we should be more involved in those countries. The Leitch report offers a vision of the future which shows that the UK risks facing a skills deficit in the context of international competition.
My concern is that a belief in the excellence of the UK financial services industry makes it easy to assume that all in the financial services skills world is rosy. A recent survey of its members undertaken by the Chartered Insurance Institute (CII), a leading professional body with more than 90,000 members within the financial services and insurance sector, sheds an interesting but rather worrying light on the issue of skills.
The CII survey found that 71 per cent of financial services employers perceive a shortage of technical skills while 63 per cent also believe that the demand for professional qualifications will increase over the next five years. More worryingly, 46 per cent of the CII’s members thought that new entrants were not as well equipped as entrants a decade ago, and 55 per cent of respondents felt that, unless action is taken to address this, the UK will fall back by 2020. This concern should be put in context. The same survey showed that awareness of the issues facing the sector is high—90 per cent believe that there is a direct correlation between the level of investment in training and the profitability of a company, and 94 per cent of employers agree that technical skills are critical in maintaining the competitiveness of UK financial services providers.
I take comfort from that last statistic; there is recognition of the future danger. The key thing is to ensure that the education needs of the industry, both in training of new entrants and in continuing professional development throughout careers, are identified and met by the industry in consultation with educational bodies, trade associations, employers and individuals themselves. That is the task ahead.
I cite the CII survey identifying the problem. It is gratifying to see that the CII is developing imaginative solutions. For example, the CII’s Faculty of Broking, in association with the British Insurance Brokers’ Association and a leading insurance company, have developed the concept of a broker academy which provides a one-stop-shop providing training, education and professional qualifications.
Another identified area of specific need is the vital area of insurance claims, a specialist discipline which is often neglected. The CII has established a research project to look at the future of claims, and this will identify the skills that practitioners will need.
The Leitch report talks a lot about employer-led solutions, a direction which I strongly support. This can be done by an organisation setting up a structured programme for the staff which includes classroom and on-the-job training, mentoring and appropriate appraisals. Every encouragement and assistance should be given to staff to study for professional examinations. Excellent courses are available from the Chartered Insurance Institute and the British Insurance Brokers’ Association.
In addition to improving and maintaining our expertise in London we need to build and promote better skills in other parts of the country and establish regional centres of excellence which will give us breadth of expertise.
Lastly, there are major challenges across all sectors in the UK in facing up to the fierce blast of international competition and skills. Improving skills can play a vital part in ensuring that UK business is flexible and has adequate capability to face the future with confidence and with a highly skilled, flexible and confident workforce. I hope that this debate will play a useful part in setting us down that road.