The Labour government launched their ten year plan for the Professional and Business Services (PBS) sector last month [23rd June].
This formed part of their wider Modern Industrial Strategy which also saw the announcement of plans to boost areas such as the UK’s creative industries, the digital and technologies sector, and clean energy.
The plan for the Professional and Business Services sector, which includes areas such as accounting, legal firms, IT specialists, and consultancy, revolves around the government’s ambition to remain at the forefront of the commercial opportunities offered by new technology.
This is to ensure that the UK remains a key global player in these industries, aiming to “be the world’s most trusted adviser to global industry, with the most dynamic and productive PBS sector” by 2035.
Global and domestic significance
Jonathan Reynolds, Secretary of State for Business and Trade wrote that professional and business services are “vital to enabling wider national prosperity”. Having contributed £300 billion to the UK economy in 2024, this plan makes it clear that the professional and business services sector is “at the heart” of the government’s industrial strategy.
The government is keen to point out the significance of the professional and business services sector across the whole of the UK. The country hosts the “Big Four” advisory services firms (Deloitte, KPMG, Ernst & Young, and PricewaterhouseCoopers) alongside seven of the largest 20 legal services firms.
However, the plan stresses that PBS are significant across the country. Over half of jobs in the sector are located outside London and the South East, with hubs in cities like Manchester, Liverpool, Edinburgh and Glasgow.
The professional and business services sector is expected to grow by £322 billion in gross value added to the economy by 2035 – an increase of 113 per cent. As such, the government has stated they will increase their annual investment in the business sector from £35 billion to £65 billion by 2035. This is to keep up with the sector’s fast-growing nature to ensure competitiveness on the global stage.
The sector is also becoming increasingly important to the government’s net zero ambitions, with the new 10-year plan outlining how professional and business services will act in alignment with the clean energy industry and support ESG programmes across the economy.
The impact of AI
Artificial intelligence (AI) features prominently throughout the plan, with Reynolds stating: “PBS are now at inflection point”. While AI and technological evolutions offer ways of improving productivity, they can also disrupt established business models.
The government is aiming to work with industry during this reshaping to ensure the UK’s continued dynamism and innovation.
According to experts, AI systems able to automate a wide variety of economically valuable tasks could be here by 2030. This requires the government to reinforce the professional and business services sector so that the UK can be the most trusted adviser to global industry by 2035.
The ten year plan aims to incorporate AI into new, technology-led business models, stating: “We want the UK to be an AI maker, not just an AI taker”.
The government has committed to a four part plan to achieve these goals.
1. Ease, speed, and long-term stability
To achieve long-term stability, the professional and business services plan focuses on increasing technology adoption and innovation, and developing a highly skilled workforce.
Building on digital fields to expand growth and higher levels of AI adoption while also addressing gaps between larger firms and the rest of the sector will encourage long-term growth and evolution. 38 per cent of businesses in the sector have already adopted AI into their processes, but the adoption gap is widening between large firms and the rest of the sector.
The plan dedicates £150 million to support five programmes encouraging innovation and the adoption of technology. Alongside this, the government will appoint an AI Champion for the professional and business services sector this summer to deliver the government’s AI Opportunities Action Plan published in January this year.
To create high quality, well-paid jobs across the country, the plan prioritises staff reskilling, especially in specialist areas such as digital technologies, climate transition, and cybersecurity.
The sector pays 21.4 per cent above the average wage yet has 17 per cent of the UK’s vacancies. The ten year plan focuses on developing a workforce with the necessary skills to make the most of the new opportunities afforded by technological developments.
The government also hopes to ensure greater ease in transferring these skills abroad, heping the UK to enter new markets and grow exports.
This will include renewing focus on negotiating mutual Recognition of Professional Qualifications (RPQ) agreements. RPQs enable UK-qualified professionals in regulated sectors to have a smooth route in getting their qualifications recognised in Switzerland, and vice-versa.
The government also aims to provide international leadership in setting standards and regulations, creating more demand for UK services.
Within the UK itself, the ten year plan seeks to improve business growth, enabling access to growth finance in all UK regions.
This will be achieved by increased early-stage support for businesses which will help them raise capital and attract investment, improving both the ease and speed of business growth.
2. Supporting frontier industries
The focus here is on growth, prioritising those frontier industries with pioneering and world-leading potential. The plan outlines ways in which accountancy, audit and tax, legal services, and management consultancy can make the most of the new opportunities afforded by this focus.
The growing need for green infrastructure projects is an example of this opportunity for sector growth, tying the plan in with the government’s net zero agenda.
An estimated $3.7 trillion will be spent per year on global infrastructure programmes up to 2030. As a result, the UK’s strategies for infrastructure and decarbonisation will open up new avenues for professional and business services to advise and consult within other growing industries to create a more streamlined and interconnected green economy.
The accountancy, audit, and tax sector contributed £33.3 billion to the UK’s gross value added (GVA) last year. However, firms outside of London and the South East face difficulties in staff retention and traditional methods of accounting are also becoming increasingly automated, particularly with AI causing a reduction in entry level positions.
The ten year plan focuses on expanding ways in which these businesses can provide a broader provision of services while also aiming to attract and retain more talent, ensuring AI is used as a tool to drive growth and innovation, opening doors to more jobs, rather than closing them.
Demand for consultancy is continuing to grow across the UK and the rest of the world. In this sector the focus remains on upskilling workers to embrace new areas in climate transition, digital, and AI so that the UK will continue to be a global leader.
3. Realising the UK’s economic potential
Here again, the government is focused on the potential for growth, making the most of regional potential across the UK is described as a “core objective” of the government’s industrial strategy.
The plan hones in on creating the ideal local conditions for business growth, launching five new professional and business services hubs as “centres of national excellence”.
They will be located in Liverpool City Region, Greater Manchester, West Yorkshire, the West Midlands, and the Edinburgh-Glasgow Central Belt in Scotland.
These locations have been identified as having the greatest potential for PBS growth, also tying in with the government’s reiteration of PBS being vital throughout the country as a whole.
The government will build on the inherent strengths within each region while also delivering technology adoption and innovation programmes across the regions.
Alongside this, the plan includes embedding professional and business services as a recognised career path from an early age, acting as a further mode of boosting the workforce.
4. Partnership with industry
The ten year plan was created in conjunction with The Professional and Business Services Council (PBSC), the sector’s leading representative body. It will continue to work with the government to deliver the full professional and business services plan across the UK, supporting voluntary initiatives such as a “regional secondment scheme” in PBS Hub locations. This is all in a bid to ensure growth and sustainability.
To help with the implementation of the plan over the next ten years, the government aims to develop a proposal for the creation of an Office for Professional and Business Services which will both oversee and develop the programme.
The plan will be monitored by tracking the five core economic indicators of productivity growth: GVA, labour market outcomes, business investments, trade exports, and the number of new, large “home grown” businesses.
Final Thoughts
It is clear that “growth, growth, growth” is at the heart of this ten year plan.
While the PBS sector is undoubtedly fast-growing, the continued delivery of growth requires a vast amount of upskilling, innovation, and adaptation. It is promising that the key concerns of AI and the climate crisis are placed at the heart of the plan, showing the government’s commitment to evolving with the modern world rather than resisting change.
Pairing this with a holistic approach to growth, focusing on the depth and breadth of the UK, will ensure that, if successful, the plan will carry the whole of the UK forward into the evolving 21st century.
