BUSINESSNEWS
BRIDGING THE SKILLS GAP IN UK ENGINEERING
The latest UK data highlights 170,000 Engineer vacancies are unfilled, up from 90,000 just a few years back. Projections show both a continuation and worrying acceleration of this upward trend, with unfilled vacancies projected to rise above 250,000 within the next 5 years.
SO WHAT’S BEHIND THE NUMBERS, AND WHO’S DRIVING THIS? Much has been documented regarding the supply of skilled engineers to industry. From early stage academia involvement in STEM subjects, increased University graduate programmes through to the retraining/ upskilling within the current active workforce. Much has been done and continues to be done to improve numbers in these areas. However, successes gained in these areas are overshadowed by the one single overwhelming issue: the baseline reduction of Engineers leaving the workforce.
ENGINEERS LEAVING THE WORKFORCE This is not just an engineering but rather symptomatic of today’s wider workforce. However the demographic of certified engineers is already heavily skewed toward the more mature age group. So a problem that’s simply been stored up and become more acute, more quickly than most areas of the workforce. It’s only recently become truly visible, manifesting itself as an ever-decreasing pool of skilled engineer
talent needing to fill an ever increasing number of vacancies. Sound familiar?
SO WHAT’S THE ANSWER? Firstly, we need to change! But not just a small change. We need to think BIG and differently. As business leaders, we need to target staff retention as a key metric, we truly need to “walk-the-walk” on inclusivity and operational flexibility, we need to constantly challenge ourselves and our teams to become more social as an enterprise and create more meaningful and engaging work experience. But equally, there is another way where employers alone DON’T have to shoulder ALL of the responsibility?
A COMMUNITY OF SKILLS ON DEMAND FOR INDUSTRY As a business lead, you will have a core team of full-time employees to operationalise your business. This is the basis for success. However imagine a parallel work-force, operating alongside your business in those times of peak demand, supplying that special skill-set, on-demand, just for a week (or so) to solve your “burning” short-term issue and then when the “gig” is complete, they leave and you’re not left carrying unnecessary fixed overhead nor recurring costs. Would you take it? Taking the “lift” away from employers and “democratising the future workspace” would provide a new national freelance talent pool of the very best engineers that simply wouldn’t otherwise be available and would have left the industry! Your local action would affect diversity and inclusion at a national level. Now that’s a BIG change. The model for this new way to work is already built. Would you like to help us all change convention? For those interested to know more, please feel free to check out www.giganeer.com
SPRING STATEMENT AND TAX RISES There has been a lot in the press made of the squeeze on household spending and the Chancellor was under much pressure to help with this when he approached the dispatch box on 23 March. His increase of the primary threshold for National Insurance is meant to be his key answer to that issue, but it is worth noting that from a business perspective this increasing threshold is not being mirrored to the secondary threshold for National Insurance and hence the 1.25% increase to Employers’ National Insurance is going ahead in full. When this is combined with the 1.25% increase in dividend tax from April 2022, and the 6% increase in corporation tax from 2023, a business owner’s take-home pay may be over 10% lower than 2021/22 as a result of tax alone, and of course that is without the effects of inflationary rises that may not be fully passed on in the selling price. Those with large staffing costs will be hit hardest, as the 1.25% extra National Insurance applies across
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the payroll bill. Businesses were promised some continuing attractive tax reliefs on investment in plant and machinery going forwards, but details were light with the Chancellor going away to investigate how best to manage this. I was also somewhat concerned by the comment about making the tax system ‘simpler, fairer, and more efficient’. This to me was at least a hint that the government could move ahead with the long awaited reforms to capital gains tax and inheritance tax, as arguably the bits of the tax legislation that could be perceived to be ‘complex and unfair’ would be the reliefs to these taxes which business owners benefit from. Although the Spring Statement was never meant to be a budget, there was little in there to help concerned business owners get through the next 12 months, with business taxation being simply another inflationary pressure to add to the long list of other inflationary pressures currently out there.
MAKING THE MOST OF THE APPRENTICESHIP LEVY Any business with a payroll of £3million or more will be contributing each month to an apprenticeship ‘levy pot’. The pot is available to all businesses, whether levy payers or not. If you are a small business and don’t pay the levy, you can still use apprenticeship funding to significantly reduce the amount it costs you to train apprentices. Apprenticeships are a fantastic way to develop inexperienced new employees quickly, or to provide development to more experienced or older staff (there is no age limit for apprenticeships). If you take into account the current incentive payments (see below) it could cost you nothing to train your apprentices, and you may well be better off. If you’re a levy payer, you will contribute 0.5% of your payroll above £3million to the pot, and the government then tops this up by a further 10%. That money is for you to use, provided it’s to pay for apprenticeship training; if you haven’t used it within a couple of years, it gets returned to the Treasury. If you spend more than your levy pot on apprenticeships, the Treasury will then ‘match-fund’ any further training, meaning you still won’t pay the full cost of the apprenticeship.
INCENTIVE PAYMENTS In case that’s not enough of an incentive, the government is encouraging take-up of apprentices with two different incentive schemes. The first is an ongoing incentive, which pays a bonus if you employ apprentices who are aged 16-18. Secondly, as part of the Covid recovery programme a recruitment incentive was introduced, which is now in its third iteration; this pays you an additional £3000 for each apprentice you recruit before 31 March 2022. It’s an opportunity to make use of money that is frequently returned to the Treasury unused, and is really not to be missed. If you have no need to spend your levy (for example, all your employees are highly qualified or there are no suitable apprenticeships for your industry) you can transfer up to 25% of your levy funding to another business, which could be in your supply chain, or for a business in an industry that you want to support. Any business can apply through the ‘pledge page’ for funds to pay for apprenticeships. Further information about hiring an apprentice can be found here.
www.gov.uk/employing-an-apprentice/ get-funding
May/June 2022
