Reeves to unveil City skills compact for AI retraining of financial workers

Chancellor Rachel Reeves will announce a new City skills compact on Tuesday, aimed at retraining thousands of financial sector workers for the AI revolution. This initiative will involve major firms like Barclays and Lloyds committing to enhance workers' skills amid growing concerns over job security in the financial services.

Skills Compact to Address AI Job Security

The new compact is designed to tackle fears of mass redundancies in the City, particularly among back-office staff whose roles are at risk due to advancements in AI. Nearly 20 initial signatories, including the London Stock Exchange and Fidelity, will create rolling three-year plans to train their UK employees in critical skills essential for the future.

This compact represents the most significant sector-wide skills strategy since the 1960s, according to Claire Tunley, chief executive of the Financial Services Skills Commission. She noted, “It’s very significant. I don’t think we’ve seen the likes of this in a generation.”

Commitments from Major Financial Institutions

Each participating firm will oversee the development of their internal training programs, with progress reported annually to the Treasury and the Financial Services Skills Commission. At least one senior executive at each firm will be responsible for ensuring compliance with the skills development commitments.

• Initial signatories include:
• London Stock Exchange
• Nationwide Building Society
• Fidelity
• Yorkshire Building Society
• Lloyd’s of London
• Online bank Zopa

These firms will track the upskilling of their employees in five key areas, with a mandatory focus on AI. Training will be conducted during working hours and will not include graduates or apprentices in the training counts.

Impact of AI on the Financial Sector

The AI boom has raised alarms about job security within the City. Research from Morgan Stanley suggests that AI could threaten over 200,000 banking jobs in Europe by 2030, accounting for about 10% of roles in the industry.

In May, Standard Chartered announced 7,000 job cuts attributed partly to AI, a move that sparked controversy when CEO Bill Winters referred to it as “replacing, in some cases, lower-value human capital.”

Despite the potential for job losses, Tunley emphasized the need for firms to invest in their workforce to remain competitive. “We need the capabilities. And if we don’t build them, we are going to be held back with innovation, with growth, competitiveness,” she stated.

With the current 17 compact signatories already covering approximately half a million City workers, Tunley hopes to see broader participation across the industry.