5th Report - Engine for growth: securing skills for transport manufacturing

Key findings

• Transport manufacturing employs over 350,000 people directly and contributed £30.9 billion gross value added in 2024, but faces critical skills shortages: 50,000 unfilled vacancies in UK manufacturing with 75% of manufacturers struggling to recruit due to lack of technical skills, costing £5 billion in lost output.
• Three overlapping challenges: volume gap (insufficient entrants), proficiency gap (rising demand for advanced automation, AI, digitalisation skills), and retirement cliff-edge (29% of aerospace workforce over 55), risking loss of tacit knowledge within the decade.
• Apprenticeship levy is fundamentally restructured; new Growth and Skills Levy has industry support but constraints remain: £30.9bn in levy funds expire unspent, rules prevent spending across UK nations, and inflexibility prevents capital investment in training infrastructure.
• Government prioritises under-22s for apprenticeships, removing level 7 funding for over-22s; this risks jeopardising supply of experienced workers despite alternative programmes (STEM returners, Mission Automotive) existing outside the levy.
• Poor perceptions of manufacturing careers among young people, insufficient education-to-industry pipeline, and barriers to worker mobility between roles persist despite recognised value of transferable skills across sectors.

Recommendations

• Secretary of State for Transport should meet regularly with counterparts in Business and Trade, Education and Skills, Work and Pensions, Energy Security and Net Zero, and Cabinet Office, plus regional mayors, to coordinate on leveraging legislation and procurement for British manufacturing growth.
• Extend unspent apprenticeship levy expiry window from 2 to 3 years; consult on allowing levy funding for capital expenditure on training infrastructure (without disadvantaging SME supply chains).
• Create mechanisms for larger manufacturers to pass levy funding down supply chains to SMEs; consult on permitting manufacturers with UK-wide operations to spend levy funding in all UK nations, not England only.
• Re-introduce funding for level 7 apprenticeships for people aged 22+ within the eight Modern Industrial Strategy growth sectors to maintain supply of experienced, highly skilled workers.
• Skills England should work with transport manufacturers to ensure apprenticeship standards continuously reflect technological change, sector-specific skills shortages, and emerging requirements (automation, AI, net zero).
• Skills England to consult on a 'competency passport' enabling worker mobility between roles; review support for modular/part-time apprenticeships accessible to those with caring responsibilities or returning from career breaks.
• Manufacturers receiving levy funding or apprenticeship support must report annually to Skills England on uptake of flexible training options; consider making further levy releases contingent on employers meeting own diversity targets.
• Department for Transport should report on progress towards the Government's target of 35% women representation in advanced manufacturing by 2035.
• Government should expedite response to public procurement consultation and go as far as possible to support British manufacturer procurement in bus and rail services.

Key actors

Ruth Cadbury, Lilian Greenwood, Secretary of State for Transport, ADS Group, SMMT (Society of Motor Manufacturers & Traders), Skills England, Department for Work and Pensions, Department for Business and Trade