APPRENTICESHIPS
Short-term pressure, long-term risk: the skills challenge reshaping UK business
With two-thirds of firms facing skills shortages and recruitment becoming a challenge across almost every sector, businesses are being pushed into short-term thinking. Patrick Milnes, Head of Policy for People and Work at the BCC, explores why that poses a longer-term risk- and how employers can respond.
Patrick Milnes
For many businesses, skills policy can feel like something that happens to them rather than for them. Announcements are made in Westminster, initiatives are launched with unfamiliar acronyms, and meanwhile employers are left dealing with the day-to-day reality of vacancies they can’ t fill, rising costs and a workforce under constant pressure.
But behind the headlines, the skills challenge facing UK business is both acute and structural- and, according to Patrick Milnes, Head of Policy for People and Work at the British Chambers of Commerce, it is shaping competitiveness in ways that many firms are only just beginning to recognise.
National BCC data paints a stark picture. Around two-thirds of businesses report skills shortages, Patrick explains. And this rises to four in five manufacturers, while three-quarters say recruitment itself has become a major challenge, regardless of role or sector. That shortage is playing out against a backdrop of intense cost pressures, including higher National Insurance contributions, rising wage floors, persistent energy costs and wider economic uncertainty.
In that environment, it is unsurprising that investment in training and people is often one of the first things to be paused.
“ In the short term, that’ s understandable,” Patrick says.“ Businesses are having to make tough choices just to stay
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MATTERS operational. But the long-term impact on the labour market is significant.”
The problem, he argues, is that businesses are being forced into short-term thinking at precisely the moment when the skills system requires longer horizons. Employers need time and confidence to ask what skills they will need not just this year, but five or ten years from now. Instead, many are focused on surviving the next quarter.
That tension runs through much of the current skills debate. Government rhetoric continues to emphasise growth and productivity, yet businesses often struggle to see how policy decisions translate into tangible support on the ground. While the latest budgets may have avoided major new cost shocks, for many, including Patrick, it also did little to actively unlock investment or rebuild confidence.
Within the skills system itself, change is coming but not at a pace that matches the scale of the challenge. New apprenticeship reforms, including shorter modular units launching this year, are designed to make training more flexible and accessible. For employers needing“ quick wins” in upskilling, that is a positive step.
However, Patrick is clear that apprenticeships alone are not a‘ silver bullet.’
“ We need to look at the whole pipeline,” he says.“ Not just people in work now, but young people coming out of education. Are they actually work-ready?”
Many employers report gaps in what are often described as“ core skills”. Things like communication, initiative, and the ability to take ownership of tasks. Historically, those skills were often developed through entry-level roles in sectors such as hospitality, retail or basic office administration. But many of those roles are disappearing.
And automation and AI are accelerating that shift at an even faster rate. Entrylevel office jobs- once the first rung on the ladder- are increasingly being automated, while AI is being used by larger organisations as an efficiency tool to remove lower-level roles altogether. The result is a steeper leap into employment, particularly for young people without prior experience.
For Patrick, it is creating a paradox. Employers want people who can“ hit the ground running”, but the traditional pathways that allowed people to build that readiness are narrowing.
For businesses, waiting for the system to fix itself is not a strategy. Those that engage early with skills policy- through apprenticeships, work placements, or local training providers- are increasingly gaining a competitive edge. They are shaping talent pipelines rather than competing for an ever-shrinking pool, and they are better positioned to adapt as roles evolve.
This is where the chamber network becomes critical, Patrick insists. Navigating the growing patchwork of skills schemes, employment support programmes and policy changes can feel daunting, particularly for SMEs with limited time and capacity. Chambers provide a practical bridge between national policy and local action, from connecting employers into Local Skills Improvement Plans, to sharing best practice between businesses facing the same challenges.
“ Businesses feeding back what they’ re seeing on the ground is essential,” Milnes says.“ It strengthens our ability to influence government, but it also helps employers learn from each other.”
The skills landscape will remain complex, and uncertainty is unlikely to disappear any time soon. But for businesses willing to engage- rather than opt out- there are opportunities to build resilience, futureproof their workforce and stay competitive in a changing labour market.
For Patrick, in a system under strain, those who understand how it works are often the ones best placed to make it work for them.