SMEs warn soaring apprentice wage costs are making programmes unsustainable
Managing directors say a 66% rise in the apprenticeship national living wage in two years is forcing SMEs to cut or cancel schemes.
SMEs are warning that rapid increases to the apprenticeship national living wage are making it increasingly difficult to sustain training programmes, with many employers cancelling or scaling back schemes. The concerns follow a 66% rise in the apprentice rate in just two years, rising from £6 per hour in 2023 to £10 in 2025.
The pressure comes amid wider cost increases linked to recent tax and wage changes. Business leaders argue that the cumulative impact has contributed to some of the highest levels of closures in three decades, with apprenticeship programmes emerging as one of the most affected areas. The number of apprenticeship places has already fallen sharply, with 170,000 fewer in 2024 compared with 2014.
Chris Houston, managing director of Tadweld, said apprenticeships had long been viewed as an investment, with trainees spending much of their time in training or at college.
He explained: “In 2023 the minimum wage for an apprentice welder was £6/hour. Whilst that may seem low, apprentices attend college one day per week and we pay them for that time too.
“They’re in training for most of the time they are with us, working alongside a skilled fabricator, so we’ve always seen apprentices as an investment rather than an employee able to produce high volumes of work.
“However, in 2024 the apprentice NLW increased to £7.50/hour, and then in 2025 it increased to £10/hour. That’s a staggering 66% increase in 2 years. In 2026, NMW for under 18’s will increase again to £10.85 which makes offering apprenticeships exceptionally expensive.”
Although training costs are supported through the Apprenticeship Levy, employers argue that policymakers have overlooked the significant employment and supervision expenses carried by businesses. They say the sharp increases have undermined affordability, particularly for SMEs.
Alan Pickering, managing director of Unison in Scarborough, said recent changes had forced the firm to suspend its long-running scheme.
Related
Seven in 10 junior staff struggle to train new starters on similar pay – IRIS Software Group
21% of parents have taken short notice annual leave to care for an ill child, MetLife UK finds
32% of pay rises worth 4% or more, IDR finds
More than half want to retire by 60 but only 28% expect to, survey finds
More than a third of employers leave benefits take-up to staff, GRiD finds
One in six workers turn down pay rises due to tax concerns – Standard Life
25% of Brits are happy to contribute to workplace gifts, finds thortful
Fix Auto UK welcomes first apprentices in Manchester Metropolitan scheme
Nearly two thirds of graduates working outside their field regret degree choice – Careerminds
Estu secures seven ‘Strong’ Ofsted ratings
Stonebridge Mortgage Network adviser recruitment service saved members £498,000
