Labour’s net zero hopes threatened by plunge in factory apprenticeships

Labour's net zero hopes threatened by plunge in factory apprenticeships

Labour’s plan for a net-zero economy powered by wind turbines and electric vehicles (EVs) risks being thwarted by a huge drop in factory apprenticeships, British manufacturers have warned.

If Sir Keir Starmer’s party wins power on Thursday – as polls predict – his manifesto promises to reinvigorate growth and launch an unprecedented construction programme to make the country’s power grid net zero by 2030.

However 27 industry associations have jointly warned the UK faces a shortage of skilled workers needed to make Labour’s proposals happen, which includes investing in a series of gigafactories to accelerate the move away from petrol and diesel cars.

The trade bodies have blamed Britain’s skills shortage on a 41pc drop in the number of people starting manufacturing apprenticeships over the past seven years.

In letters to Jonathan Reynolds, Labour’s shadow business secretary, and Kemi Badenoch, the Conservative Business Secretary, the industry has called for urgent reforms to the way apprenticeships are funded and for an industrial strategy to make training “a national endeavour”.

Kemi Badenoch, the Conservative Business Secretary, has received calls from the industry for urgent reforms to apprenticeships - Wiktor Szymanowicz/Future Publishing

It is the latest sign that Labour’s plan to make the electricity grid carbon-free by 2030 will raise significant challenges.

The letters also warn that current skills shortages will hold back a host of other manufacturing sectors as well.

The signatories include Make UK, the Confederation of British Metalforming, TechUK, the British Coatings Federation and the Food and Drink Federation.

Stephen Phipson, chief executive of Make UK, warned that the recruitment issue at factories posed a particular barrier to Sir Keir’s mission to expedite the roll-out of green energy.

He told The Telegraph: “The net zero transition relies on basic engineering skills – you need technicians to fix the robots that make EVs, you need toolmakers to make the tools that make wind turbines, small modular reactors and carbon capture.

“But what we’re seeing in the country at the moment is a gradual erosion of those skills.

“The Government needs to get a grip.

“This is about the army of basic skills you need – on top of all the clever engineering design and artificial intelligence stuff – without which these things simply cannot happen.”

There are currently around 70,000 vacancies in manufacturing, costing the UK economy billions of pounds in lost output, according to Make UK.

While the industry is also having to compete with other sectors for talent, at least one-third of the roles are also hard to fill because they require skilled workers.

Ideally apprenticeships would help to plug these gaps.

But the number of people entering manufacturing apprenticeships since 2016 has plunged from about 79,000 per year to 46,000 – a drop of 41pc.

Make UK has blamed a lack of proper funding for level 2 and 3 apprenticeships in manufacturing and engineering roles, leaving colleges that want to offer them short-changed.

While the true cost of a three-year training course is estimated to be around £36,000, providers only receive £26,000 from the Institute for Apprenticeships and Technical Education, a government-funded body.

At the same time, Make UK says the scope of apprenticeship funding has broadened in recent years to include cheaper courses at workplaces such as estate agents and hairdressers.

This means many colleges now opt to offer these instead of more expensive manufacturing schemes, which require specialist equipment.

Cash for apprenticeships comes from a pot funded by the “apprenticeship levy”, a tax on companies with annual pay bills of more than £3m introduced by former chancellor George Osborne.

George Osbourne, former chancellor, introduced the 'apprenticeship levy', a tax on companies with annual pay bills of more than £3m - Julian Simmonds

However many firms say the current system is a bureaucratic nightmare and needs reform.

The shortage of apprenticeships has prompted some companies such as engineering giant Rolls-Royce to invest in opening their own “skills academies”.

But Mr Phipson warned this was not an option for many of the small- to medium-sized businesses that underpin the UK economy.

In their letter to Labour and the Conservatives, the manufacturing associations warn: “A shortage of skills is now a critical issue for many companies in the sector, not just affecting their growth but the ability to maintain daily operations and fulfil contracts.

“This must now be a national endeavour and begin with a fundamental review of the apprentice levy and wider vocational training system.”

They claimed that boosting manufacturing’s broader contribution to the economy from 10pc to 15pc would add £142bn to the UK economy by the end of the next decade.

The associations added: “The lack of a comprehensive, independent, industrial strategy is the UK’s Achilles heel.”

Should Labour win power this week, the party has vowed to establish a new industrial strategy council for Britain that will be enshrined in law, bolstered by a “green prosperity plan” that will pump £24bn into green technologies and infrastructure over the next parliament.

It has also vowed to reform apprenticeship funding without setting out details on how it will do so.

As well as skills shortages, the head of the Confederation of British Industry has warned that the grid also needs upgrading to hit net zero goals.

Rain Newton-Smith said that tens of billions of pounds of investment in a greener electricity grid are being blocked by “Nimbies” – campaigners against construction, known by the acronym for “not in my back yard”.

“Recent attempts to expand and upgrade it [the grid] have run up against Nimbyism,” she said.

“This matters. Tens of billions of pounds of net zero investment hinge on the grid. Without that, there’s no net zero, no green growth.”

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