To the Professional and Business Services (PBS) sector.
The PBS sector is one of the largest and most successful sectors in the UK. From accountants to architects, lawyers to engineers, recruitment to advertising, admin to consultants – our PBS sector delivers crucial advice and support services that enable businesses, both large and small, and in every region, to become more productive, profitable and competitive. The professionalism demonstrated in every corner of the sector is what makes it world renowned and a vital pillar of UK prosperity.
The sector has a strong track record for growth. From 2000 to 2019, growth in PBS has been significant and outperformed that of the UK economy as a whole. The PBS sector generated £217 billion of Gross Value Added in 2020, which was 12% of the UK total. The sector represents 1-in-7 jobs across the country with two-thirds of those jobs outside of London and the South East.
Internationally, the sector has also excelled. Since 2000, exports of PBS have grown from £28bn to roughly £111bn in 2019. PBS businesses now provide a third of the UK’s total services exports and the UK is second only to the US as the greatest exporter of PBS in the world.
The sector has overcome adversity in the past, but none has proved to be greater than the COVID-19 pandemic. Economic activity in the sector as a whole fell by 20% last year, before recovering to being down 7%. Although many have adapted to new and innovative ways of delivering their services and supported their clients through this adversity, the sector has nevertheless suffered, with business generation and the health and wellbeing of its employees being truly tested.
However, through the determination and tenacity demonstrated by the UK’s businesses and citizens, coupled with the success of the government’s vaccination programme, there is reason to be optimistic. Our plan for growth sets out how government will build back better, supporting economic growth in the UK post Covid through the three pillars of infrastructure, innovation and skills.
We know that skills and talent are the foundation of the PBS sector. They go to the heart of the professionalism that the sector is world-renowned for. To maintain this standing, PBS businesses need to be able to attract and support talent from a wide range of backgrounds and importantly understand how businesses are evolving and what skills will be required in the future.
Work is underway to meet this challenge. We have just introduced the Professional Qualifications (PQ) Bill to Parliament on 12 May. This will establish an effective regulatory framework to support our regulated professions to attract and retain the skills they need to deliver the vital services on which we rely, whilst giving them the independence to ensure our high professional standards are maintained.
I also welcome the PBS and Financial Services Regions and Nations Future Skills Research that the sector is leading and look forward to the findings to be published in June. Building on the seismic technological shifts that we have seen in the sector through material advances in areas such as LawTech, with the right skills and talent the sector will be ideally positioned to support the country in building back better.
Eight out of the top ten firms on the Social Mobility Employer Index are PBS firms but we recognise that more can be done. The government commissioned Soci0-economic Diversity Taskforce, led by City of London Corporation, will provide much needed evidence on what we can do to progress and retain talent across all backgrounds.
The PBS Council (PBSC) that I co-chair is a great demonstration of how government and industry can work together. By combining the efforts of professional bodies, trade associations and individual businesses, each in their own unique way rooted in the professionalism of the sector, the Council has worked in partnership with government to help address the challenges we have faced and look to seize the opportunities that are in front of us. Through its dedicated working groups, it will provide a pivotal role in supporting many of the plan for growth objectives, such as levelling up, supporting a Global Britain and delivering Net Zero.
While London is an important national and global hub, the sector is represented throughout the nations and regions of the UK. The sector’s presence in leading regional centres, such as Birmingham, Manchester, Leeds and Edinburgh, will be critical to supporting local businesses and economic growth.
In response to the COVID-19 pandemic the sector has successfully increased its use of digital tools and adopted more flexible models that offer an opportunity to further spread the value, jobs and expertise that the PBS sector can bring to a local economy. The sector has already supported many other businesses to adapt to these new ways of working and with many PBS firms looking to become more location agnostic, the sector has a fantastic opportunity to become a leader in this space.
Government also has an ambitious plan to bolster the Department of International Trade’s presence across the UK, ensuring that every region and nation feels the tangible benefits of our trade agenda. The recently created Office for Investment also has levelling up at the core of its mission; unlocking projects which are strategically important for the UK.
The PBS sector and its exports are vital for Global Britain. Industry representatives have and will continue to play an important role in advising government on the UK’s new independent trade policy and ensuring that policies develop in line with the needs of the sector. This includes the ongoing Free Trade Agreements with our trading partners that now cover almost £891 billion of trade, the development of our refreshed Export Strategy, and role-modelling the benefits of free and fair trade at the World Trade Organization. The sector also plays a vital role in providing the specialist advice and support essential to businesses of all sectors across the UK to trade overseas.Where businesses face challenges around transitioning to our new position outside of the EU, the PBS Council and the trade and professional bodies in particular, have provided vital support and guidance to their members and clients. The sector’s views have also enabled government to focus transition guidance on the areas which matter most to businesses. For instance, government recently published enhanced guidance on business travel to EU Member States to provide a better understanding of the visa and work permit routes available.
Looking beyond transition, export growth and trade promotion will be key priorities for government and sector cooperation.
Our professions and professionalism are a national asset that are critical to our service exports. They set a global gold standard and a reason for others to do business with the UK. The PQ Bill will facilitate the recognition of professional qualifications to meet the needs of all parts of the UK as well as support our professionals to deliver services in overseas markets. We will therefore continue to seek reciprocal recognition arrangements with international partners as part of our ambitious global trade agenda and equip regulators with the ability to pursue recognition arrangements where they can’t do so already.
This government recognises that our regulators and devolved administrations must have the autonomy to set the standard required to practise in the UK, ensuring quality and public safety. I am committed to giving them the freedom to do so but will also support them in securing these recognition arrangements when needed, including through guidance published this week.
Finally, the government’s proposed reforms to audit and corporate governance will also help the UK remain a premier global centre for investment by further boosting confidence in PBS businesses and their work.
Government has set ambitious Net-Zero goals and PBS is vital to achieving them. Businesses, large and small, need support in making their business processes more environmentally friendly, in identifying sustainable investment opportunities and in reporting on their net-zero commitments. This is part of the future for the PBS sector.
Many have already answered this call either by developing environmental services, reducing their own carbon footprint or signing up to pledges like the Race to Zero. The Advertising Association for example has launched Ad Net Zero with the aim of achieving net zero carbon emissions in advertising by the end of 2030.
Government has acted as well. Among other things, we recently published a consultation on proposals for Climate-Related Financial Disclosures. With COP26 taking place later this year, the UK can share its experience with the rest of the world.
The PBSC has been fundamental in ensuring the sector’s interests are heard and understood. My industry co-chair Nick Owen, UK Chair of Deloitte, is stepping down soon, and I want to thank him for the work he and the Council have delivered over the past few years. Nick has been a truly great leader and his energy and enthusiasm have contributed massively to the Council’s work.
The scene is set for recovery and growth. Together, we can ensure the continued success of the PBS sector throughout the UK and in the world. I therefore look forward to continuing our partnership with the new PBSC Chair Alan Belfield, Chair of ARUP, to agree new milestones and deliver our shared priorities, focussed on those areas which will help deliver growth and prosperity not only to the PBS sector but to the UK economy as a whole.
Very best wishes
Lord Gerry Grimstone, Minister for Investment