• A third (32%) of engineering SMEs face a skills shortage amongst their employees
  • Just one in 20 (5%) plan to hire an apprentice to address this
  • Cost (45%), red tape (24%) and time (10%) cited as biggest barriers to hiring apprentices 

The skills shortage in the UK is becoming an increasingly acute problem in many industries, particularly for UK SMEs. New research from Close Brothers has found nearly a third of engineering SMEs (32%) feel their workforce does not have the skills the business needs. Additionally, over three-fifths (68%) do not believe they will be able to find suitable recruits to address this, due to a skills shortage in either their industry (55%) or region (14%).

The engineering sector is one of the hardest hit, with Engineering UK recommending that the UK needs to double the number of advanced apprenticeships in the sector. Their research also shows engineering companies will need to recruit around 56,000 engineering technicians per year between 2012 and 2022, with a current annual shortfall of 30,000.

Worryingly, the survey found that over two thirds (67%) do not have an apprenticeship programme in place and almost two fifths (38%) don’t plan to start one. Of those engineering firms that wanted to hire an apprentice, the biggest reason for not doing so was cost (45%), red tape (24%) or lack of time needed for training (10%).

According to recent reports, SME bottom lines are being squeezed by a number of macro-economic issues, further affecting their ability to hire apprentices. The strong pound continues to affect exports, while speculation around rate rises is causing uncertainty around borrowing. With the Bank of England’s decision to keep interest rates at 0.5% for the 80th month in a row, speculation continued on when exactly the rise will come. Alongside this, the hope of a radical overhaul of business rates was dampened by speculation that it may be slipping down the government’s agenda. All of which recent reports say are negatively impacting growth and thus engineering SME’s ability to spend on hiring.

Stephen Hodges, CEO, Close Brothers Banking Division commented: “Our data shows a worrying trend amongst SMEs, including British engineering firms. Despite a clear need for more skilled workers, hiring apprentices to address this simply isn’t possible for the majority of companies. This is only made worse when macro-issues also impact on their ability to grow and meet their ambitions. We see the issues of cost, red tape and a lack of time also affecting many aspects of growth amongst the thousands of engineers we work with. Our SME Apprentice Programme is designed to tackle these issues. It’s our hope that this programme can be used as a model across different sectors to provide other SMEs with the support they need in order to achieve their ambitions.”

The Close Brothers SME Apprentice Programme is part of the company’s long established commitment to supporting small and medium sized enterprises. With the support of the University of Sheffield AMRC Training Centre the programme will help SMEs recruit and train a new generation of advanced engineering workers. The scheme helps pay for 20 apprentices in the Sheffield area to learn new skills at the AMRC Training Centre. Close Brothers funds half of the new recruits’ wages during the first year and a quarter in the second, meaning participating SME manufacturers won’t have to bear the full cost of employing the apprentices, until they are actively contributing to the bottom line.