Business Must Take the Lead to Avoid a Skills Emergency

Wales has a compelling reason to take a lead for the UK in new skills provision processes following the Westminster Government’s white paper on immigration and visa provision.

The UK Government plans to restrict visas to those with degree-level qualifications or higher, although exemption details are still pending.

Wales has numerous skilled job vacancies that don't require degree or equivalent qualification, such as welders, electrical installers, mechanical fitters, maintenance engineers and production operatives.

The push to upskill, especially for NEET individuals, is beneficial both regionally and nationally to reduce spending and boost productivity.

We would urge the Westminster Government against further restricting the supply of imported skilled labour until such time that between industry and education, we have generated enough home-grown talent to a sufficient level.

Industry must maintain productivity and indeed grow, in order for Wales and the UK to prosper.

The race to net zero in Wales is still considered a priority and will necessitate hundreds of welders, installers, civil engineers and electrical supply technicians.

Skill shortages are problematic, with many jobs not requiring degree-level entrants, therefore not qualifying for visas. Even with more vocational trainees, reaching workplace proficiency can take up to four years. Reducing apprenticeship duration and quality isn't a long-term fix. Building a sustainable, skilled workforce is necessary before current supply diminishes further, especially with many skilled workers retiring in the next five years.

Recent figures show an expectation that the number of apprentices in Wales is expected to fall by more than 6,000 during the current academic year.

According to the Cebr report, this is projected to result in a £50.3 million impact on the Welsh economy. If this issue is not addressed, it could lead to an estimated long-term economic loss ranging from £158.7 million to £215.7 million. The report further estimates that this decrease has already led to the loss of 87 full-time equivalent positions among training providers and their subcontractors, resulting in a total salary loss of £2.42 million.

Across the UK things are even more bleak. Apprenticeship starts in SMEs have dropped by nearly 50% since 2016/17 because the system isn’t accessible for them — putting the future of the early talent pipeline and social mobility at risk (CIPD).

These figures are enough to make anyone’s heart heavy.

Many small organisations struggle to allocate sufficient resources to fully utilise the Apprenticeship funding available and may find it daunting to undertake additional responsibilities.

Over 90% of UK manufacturing organisations are SMEs, according to The Manufacturer (2024). The sector represents 9% of UK employment and 13% of turnover, while only constituting 5% of businesses (House of Commons, 2024).

The Government must consult and engage with SMEs during policy-making to ensure that regulations and policy developments are effective for them as well. SMEs should be active participants in co-designing policies either directly with the government or through intermediaries like Enginuity.

Failing to do so poses significant risks, and the economic impact could be substantial. The design, implementation, and effects of the apprenticeship levy in England exemplify the negative consequences of excluding SMEs from policy design and implementing policies that do not address their needs.

As the ‘sector connector’ Enginuity’s hour has come, as we are perfectly placed to play a major role. We are an amplifier for the thousands of SMEs across Wales and the UK, and in constant contact with major trade bodies, multi-nationals and government departments.

We are ready to host a series of consultations to ensure that the ensuing policy changes work and that this time governments get it right.