Enginuity, the skills body dedicated to closing the skills gap in engineering and manufacturing, is urging the UK Government to take decisive steps in the Budget to restore the affordability of apprenticeships.
Recent years have seen a dramatic decline in apprenticeship starts, with 170,000 fewer places available in 2024 than in 2014.
The former Sector Skills Council, Enginuity carries out regular SME Snapshots, monitoring the real time issues affecting small and medium sized business in engineering and manufacturing.
The latest snapshot showed that the greatest pressure on the bottom line comes from employment costs with issues on the cost of apprenticeships and recent increases in National Insurance Contributions.
Chief Executive Ann Watson said:
“High employment costs are now the largest factor driving inflationary pressures and undermining the UK's labour market. This week’s unemployment figures may well reflect just that.
“The skills system must work for the majority—especially SMEs—who are fighting to survive. When it becomes too expensive to invest in the skills of the future, we jeopardise not only businesses but also the prosperity and innovation of our country.”
“This is a direct result of soaring employment costs, including a 66% increase in the National Living Wage for apprentices over just two years, alongside additional increases to National Insurance for the existing workforce.
“It is absolutely right for apprentices to be paid fairly but for the first 18-24 months of the apprenticeship they are effectively in training and the cost differential between an apprentice and some experienced workers is now so small that we may see many employers replacing their normal apprentice intake for those with more experience.
“For small and medium-sized enterprises (SMEs), the backbone of UK manufacturing, these costs have become unsustainable, forcing many to cancel or downsize their apprenticeship programmes.”
Chris Houston, Managing Director of Tadweld, a leading steel fabrication and engineering company, said:
“In 2023 the minimum wage for an apprentice welder was £6/hour. Whilst that may seem low, apprentices attend college one day per week and we pay them for that time too. They’re in training for most of the time they are with us, working alongside a skilled fabricator, so we’ve always seen apprentices as an investment rather than an employee able to produce high volumes of work.
“In 2024 the apprentice NLW increased to £7.50/hour, and then in 2025 it increased to £10/hour. That’s a staggering 66% increase in 2 years. It makes offering apprenticeships exceptionally expensive.”
Enginuity says the most recent increases in minimum wage have made it “cripplingly expensive” for businesses to train apprentices.
