The £5bn Cost of Missing Skills in UK Manufacturing and Engineering SMEs

Engineering and manufacturing businesses across the UK are struggling to find the skills they need. But what does that mean for individual businesses and the wider economy?

In this episode, Joe Duggett is joined by Kate Young from Enginuity and Sergei Plekhanov and Graham Thom from SQW to discuss the findings and implications of the ‘Mind the Gap’ report, undertaken for Enginuity by SQW supported by Oxford Innovation Advice, which examined the scale and economic impact of skills gaps and shortages among engineering and manufacturing SMEs.

The research estimates that skills challenges cost the sector more than £5 billion each year, equivalent to around 2% of sector output. For an affected SME, the impact could amount to approximately £110,000 in lost value added each year, through effects including lower productivity, increased demands on senior staff and reduced capacity for business development.

The conversation explores the skills businesses most need, from established technical and manual capabilities to growing demand for digital, data and AI skills. It also considers potential responses, including stronger links between employers and training provision, apprenticeships and routes for new and returning workers, greater labour mobility, and the case for more stable, long-term skills policy.

The discussion also considers a potential skills tax credit for SMEs, designed to help address the financial barriers that can prevent smaller businesses from investing in workforce development.

Want to explore the findings further? After listening to the podcast, you can read the full Mind the Gap report here or watch the accompanying webinar here.

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