Bridging the skills gap to secure Britain’s industrial future

15 May, 2025

Britain’s manufacturing sector is facing an acute skills crisis that threatens its economic stability and global competitiveness. Despite being the world’s sixth-largest economy, the UK lags behind in adopting advanced manufacturing technologies, ranking 24th in global robot density. A lack of skilled workers is a significant barrier to progress, and the decline in apprenticeship numbers has only worsened the situation. Addressing this problem requires a strategic, long-term commitment from both government and industry to ensure that the workforce has the necessary expertise to apply emerging technologies effectively.

For the past five months, Make UK’s Industrial Strategy and Skills Commission has worked with employers, educators, and policymakers to devise a plan to overhaul the vocational training landscape. The Commission has called for a ‘Skills Covenant’—a formal agreement between industry and government to increase investment in training and upskilling. This would be a crucial step in ensuring that Britain can close the skills gap, attract investment, and strengthen its industrial base. By prioritising practical applications of new technologies, businesses can ensure that workers are equipped with the skills needed to implement automation, artificial intelligence, and other emerging innovations effectively.

Funding is at the heart of this issue. The Commission has identified significant sums of money that could be redirected towards skills training. It points to £800 million from unspent employer contributions to the Growth and Skills Levy—currently reallocated by the Treasury elsewhere—and £650 million raised annually from the Immigration Skills Charge. If these funds were ringfenced, they could finance the training of 40,000 new engineers, a move that would go a long way towards tackling the estimated shortfall of 55,000 engineers that is costing the UK economy £6 billion each year. This investment would ensure that workers are not just trained in theory but are able to apply their skills in real-world industrial settings.

The Skills Covenant

The Skills Covenant would not only ensure greater financial investment in training but also introduce measures to strengthen the link between industry and education. The proposal includes a workforce exchange allowing manufacturers to second employees to educational institutions to help train the next generation. In addition, an electronic work skills passport would enable employees to track their qualifications throughout their careers, improving the transferability of skills across sectors and ensuring that acquired expertise can be practically applied in different industrial contexts.

A major obstacle to progress is the declining number of educational providers offering technical courses. Many institutions have abandoned these courses due to high costs, leaving a gap in training provision. The Commission has urged the government to adjust funding bands to reflect the real cost of delivering high-value courses, particularly in engineering. The funding allocated for Level 3 engineering and technician apprenticeships, for example, currently stands at £27,000 but should be raised to £35,000 to meet actual costs. There is also a call for training providers to be allowed to use levy funds for capital investment in equipment and machinery, making it easier to set up engineering and manufacturing courses. Access to modern, industry-standard equipment is crucial to ensuring that trainees can immediately apply their learning in practical settings.