Industrial strategy: four changes to boost professional services
Industrial strategy: four changes to boost professional services
As the UK government publishes its Industrial Strategy, it has marked professional and business services as a critical pillar of economic growth, outlining four main changes that it says will deliver on its ambition to create the world’s most trusted advisory sector by 2035.
Reform of the business environment; encouraging expansion into new areas of business; the creation of professional and business services hubs; and partnerships between government and industry. These four measures make up the heart of the UK government’s plan to boost professional and business services (PBS) as part of its Industrial Strategy, which was released this week (23 June).
The plan sets out the government’s ambition to create the most trusted PBS sector in the world by 2035, encouraging global entities to come to the UK for modern PBS services. Accountancy, audit and tax advice are all critical elements of this, as outlined in the government’s plan for the sector.
The plan marks the first time the PBS sector has been included in any industrial policy, demonstrating the importance of the sector as both a growth sector in its own right, and its role in enabling wider economic growth. It encourages more collaboration between government and the sector to increase dynamism, competitiveness and productivity, with skills, tech and new markets at its heart.
The four pillars of the plan involve a number of smaller measures designed to deliver a more dynamic environment for PBS firms, ultimately creating a sector ahead of the curve when it comes to technology adoption and services tailored to modern business needs.
1) Reforms for increased growth and competitiveness
Following extensive consultation on measures to improve the environment for businesses, the government has settled on five elements required to deliver more stability and ease of operation for businesses:
More technology adoption
For technology, the government is to launch a technology adoption programme for high-growth SMEs in the PBS sector, initially piloted across the north of England. It will be modelled after the Made Smarter Adoption programme for the manufacturing sector. More R&D funding will also go into the PBS sector as part of the government’s plan, alongside making R&D tax credit claims more straightforward. The government will also invest £12m into data sharing and infrastructure initiatives from April 2026.
It will also appoint an AI Champion for the PBS sector, alongside a Trade Digitalisation Taskforce to make trade easier for PBS firms and their clients.
A skilled, inclusive and mobile workforce
The Growth and Skills levy will be utilised to create more apprenticeship options, including shorter and more flexible courses. Short courses on digital and AI skills will also be offered through the levy, with collaboration between PBS firms, Skills England and higher education institutions.
Crucially, Level 7 Apprenticeship funding will continue from January 2026; the loss of this funding has been a critical policy issue for ICAEW. The Professional and Business Services Council (PBSC) will act as a conduit between industry and government by engaging with Skills England on skills strategy. The Innovate UK AI Skills hub will also expand into the PBS sector.
Global opportunities for PBS firms
There is a great focus from the government on delivering mutual recognition of professional qualifications and including services within any free trade agreements (FTA) with other jurisdictions. This includes the EU, where the UK has set up ‘dialogues’ on short-term business mobility and mutual recognition of qualifications. “We will continue to seek favourable temporary business mobility commitments with key trading partners to address such barriers and widen UK professionals’ opportunities overseas.”
Improved access to finance
In addition to the increase in British Business Bank funding, regional PBS hubs will support national and regional demand and priorities within the PBS sector.
International leadership on standards and regulation
The focus of this is the Money Laundering Regulations (MLR). Before the end of the year, HM Treasury will bring forward changes to the MLR to improve their effectiveness, alongside more technology adoption to streamline checks and processes. This includes steps to encourage more digital identity verification.
2) New areas of work
There are two measures within this section that are most relevant to accountants and auditors:
Audit and corporate governance reform
The government is going ahead with audit and corporate governance reform, largely in line with ICAEW recommendations on how to proceed. The FRC will transition into a new regulator and there will be an updated regulatory framework for corporate reporting.
Regulatory scrutiny will extend to audits of the largest unlisted businesses. Measures will be introduced to protect against conflicts of interest at firms and build audit quality. The measures will be outlined in future government communications. The government will also look at reducing or removing requirements on smaller existing PIE audits.
The Department for Business and Trade (DBT) will bring together business and professional bodies along with regulators and government to review regulation to ensure it is ‘proportional and effective’.
“In developing plans for the revamped audit regulator and in its ongoing role working with the FRC, the Government will ensure it takes a proportionate and balanced approach, stressing its ‘improvement regulator’ role alongside its enforcement of standards as a means to ensure quality audit,” the government states in the plan. “We want to see the audit profession working alongside the regulator to help build capacity and capability in firms to participate in the growing market for PIE audit.”
A sustainability reporting and assurance framework
The government is about to consult on a new UK Sustainability Reporting Standards (UK SRS), based on standards issued by the International Sustainability Standards Board (ISSB). This will determine whether there will be voluntary UK SRS, with mandatory standards for ‘economically significant entities’.
There will also be a consultation on a proposal for a voluntary registration regime for sustainability assurance providers. This would allow auditors and non-auditors to register as providers.
3) Regional services hubs
The PBS hubs have been discussed across the overall package of measures, playing a critical role in delivering on the government’s plans. Six hubs will be created in Edinburgh and Glasgow, West Yorkshire, Greater Manchester, Liverpool City, West Midlands and Greater London. The hubs will provide:
- a technology adoption programme for PSB SMEs;
- trade and investment promotion into PBS;
- sector-specific careers advice; and
- an innovation programme for the sector.
4) Partnership with the sector
The government proposes the creation of the Office for Professional and Business Services in Whitehall to implement the sector plan and develop it further, in conjunction with the PBSC. The PBSC will be given a remit to act as a “champion for the sector at home and abroad”. The PBSC will also be tasked with working with the government to monitor and evaluate relevant policy delivery when it comes to the Industrial Strategy, including an annual report on the sector.
Iain Wright, ICAEW’s Chief Policy and Communications Officer, is also Industry Chair of the PBSC. He welcomed the publication of the Industrial Strategy as an important moment in resetting collaboration between business and government. In particular, he said, it was great to see the PBS sector at the heart of the strategy.
“Professional and business services are the backbone of the UK economy – supporting one in seven jobs across the UK, contributing over £300bn each year to our country and through their expert and trusted advice enabling all parts of the economy to shine, grow and thrive,” he said. The PBSC worked with the government to develop the sector plan. “Our ambition is bold: to ensure the UK is the world’s most trusted adviser for professional and business services and solidify our position as the second largest exporter of services in the global economy,” said Wright. Targeted support for tech adoption, smarter regulation, trade, skills and access to finance should deliver a more innovative and competitive sector, Wright added. “As PBSC Industry Chair, I strongly welcome this renewed partnership and see today’s launch as the start of a long-term collaboration between business and government to turn this vision into reality.”
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