UK small firms cite government policy as barrier to apprenticeships

Key facts

• Bowers & Jones, a UK manufacturing firm, reports a significant increase in operating costs since 2020.
• The company cites government policies, including minimum wage hikes and increased employer National Insurance contributions, as major cost drivers.
• The cost of training an apprentice is estimated to exceed £100,000 over four to five years.
• This financial burden makes it more economical for the company to hire fully qualified staff.
• The situation conflicts with government goals to boost youth employment and technical training.

Small businesses in Britain are struggling with a "cost of business" crisis, with government policies significantly increasing operational expenses and hindering the ability to hire apprentices. Bowers & Jones, a manufacturer of precision equipment for the steel industry, reports that its variable operating costs have risen from £36 to nearly £56 per hour since 2020, driven by doubled energy costs, increased labor expenses due to minimum wage hikes and inflation, and rising transport costs.

Jane Somerville, the leader of Bowers & Jones, stated that the cumulative cost of training an apprentice over four to five years now exceeds £100,000, making it more financially viable to hire already qualified individuals. This situation directly contradicts the government's stated aim of increasing youth employment and technical training pathways.

The British Chambers of Commerce has highlighted that domestic policy decisions alone have increased the average small firm's cost base by approximately 70% over the past decade, with a quarter of that rise occurring since the 2024 Budget. This budget, led by former Chancellor Rachel Reeves, included a £25 billion increase in employer National Insurance contributions, alongside other measures like minimum wage hikes and new workers' rights laws.

Somerville is calling for government intervention to help fund training for engineering companies, suggesting that such support would enable firms like hers to take on apprentices and prevent young people from becoming 'Neets' (Not in Employment, Education, or Training).