Press Story

Lawyers, accountants and other professionals face ‘double disruption’ from increased automation and potential Brexit challenges, according to a new report.

IPPR North’s report “Business Skills 2040” explores how the Financial and Professional Services (FPS) sector – which includes financial services, insurance, accountancy and legal services – is faring in the North of England.

While many of the challenges are not unique to the North, government plans to build a Northern Powerhouse highlight the sector as a key enabler in its aims, the report notes.

It adds that the sector performs a crucial role in underpinning the success of the four key planks of its plans for the North – the four ‘prime economic capabilities’ of advanced manufacturing, health, digital and energy.

The FPS sector in the North is mixed in terms of its strengths in these areas: so while northern firms are highly competitive in bidding for work in the advancing manufacturing sector, the North’s energy sector is highly reliant on the capital’s FPS firms to services its needs.

London ‘shop window for North’

The report also debunks two myths about the relationship between London and the North’s FPS sectors.

The idea of ‘northshoring’ – with London taking the top jobs and the North merely performing back office functions - is largely untrue, the report finds.

While the capital has a higher proportion of senior jobs, the North is home to many top jobs and the headquarters of key firms like Virgin Money, the Cooperative and Tesco Bank.

Likewise, the perception among many in the North that London sucks up much of the work is untrue. Most FPS firms in the North service accounts within their own regions, rather than globally.

And where international work is won by the North, London’s global hub status tends to help, not hinder, northern firms win global business.

Manchester and Leeds dominate

But within the North, there is growing evidence that Manchester and Leeds are dominating.

Leeds City Region accounts for 25.2% of all northern PBS employment, the report finds – with specialisms in rental and leasing activities, financial service activities and activities auxiliary to these. It is growing disproportionately to nationwide trends in these areas.

Meanwhile, Greater Manchester accounts for 23.9% of all northern PBS employment. It specialises in insurance, legal and accounting services and is also growing disproportionately.

‘Double disruption’

But IPPR North warns of a ‘double disruption’ challenge facing the sector.

Increased automation – such as greater use of accountancy software and offshoring of routine legal work – poses a substantial jobs challenge, the report warns. It recommends businesses focus on emerging growth areas, such as offering strategic business advice.

For government, the report recommends that its Financial and Professional Services Council takes on a North subcommittee.

It also calls for the sector – and the North’s £300bn economy as a whole – to be heard during Brexit negotiations, as previously called for by IPPR North.

Luke Raikes, research fellow, IPPR North, said:

“There is lots to be cheerful about for this important and growing sector in the North.

“But it also faces a ‘double disruption’ challenge – with many routine jobs being stripped away by automation, and the Brexit vote adding yet more uncertainty.

“Businesses should focus today on ensuring employees have the skills to transition to tomorrow’s jobs, and government should make sure this vital sector, and the North as a whole, is considered during Brexit."