But announcements made by chancellor Rachel Reeves in parliament yesterday (26 November) also included a wide range of relevant points for industry, including measures designed to reduce the skills gap, cut manufacturing costs and promote green hydrogen. Here are some key reactions from across engineering.
Apprenticeship funding ‘a major step in closing the skills gap’
Few issues are as persistent or as fundamentally important as the skills gap. Many in industry therefore welcomed the chancellor’s announcement of funding to make training for under-25 apprenticeships completely free for small and medium-sized enterprises (SMEs), supported by £725m from the Growth and Skills Levy.
A lack of technical skills must be addressed to deliver clean growth and net zero, said IMechE head of policy Matt Rooney. “Fully funded SME apprenticeships for eligible people under 25 is a major step in closing the technical skills gap, but the government’s implementation of sector skills plans should also involve continuous and wide engagement with the engineering community, to ensure that the right training is delivered in the right places and regularly updated in line with technological change.”
Free training for under-25s will provide “much-needed relief”, said Mark Gray, UK and Ireland manager for collaborative robot firm Universal Robots. “As UK manufacturers continue to face immense challenges with the rising costs of resources and widening skills gaps, these reforms are a lifeline for many. National Insurance increases earlier this year squeezed SME budgets and made it more challenging to recruit the apprentices much needed to drive growth.
“As the industry evolves and accelerates automation and adoption of new technologies, it’s more important than ever that the next generation is equipped with technical skills and the confidence to drive future growth in the industry – and ultimately achieve what the UK's Industrial Strategy set out to do.”
Energy support could cut ‘eye-watering’ electricity prices
Organisations representing many companies also welcomed Reeves’ commitment to slash industrial electricity prices. Steps include the British Industrial Competitiveness Scheme, which is designed to support thousands of businesses from 2027 by cutting electricity costs by around £35-40 per megawatt-hour.
The chancellor should be “commended for her personal intervention to kickstart the consultation on the business energy support scheme, which is vital if we are to address the UK’s eye-watering and uncompetitive industrial energy prices,” said Stephen Phipson, CEO of manufacturers’ organisation Make UK. He said that the announced increase to the national living wage, raising it to £12.71, could increase barriers to recruitment and retention of skilled staff, however.
Rooney also welcomed reforms aimed at reducing industrial energy prices, which he said have “stifled growth”.
A welcome boost for green hydrogen
Recent announcements on nuclear energy, including confirmation of plans for the UK’s first small modular reactor power plant in Wylfa, North Wales, were highlighted by Reeves.
Another potential boost for low-carbon energy came as she announced that electricity used to produce hydrogen through electrolysis will be exempt from the Climate Change Levy.
“We’re grateful that the chancellor has taken up our suggestion to remove the Climate Change Levy from the production of green hydrogen, as this will encourage the growth of our innovative clean hydrogen industry and help to maintain our global lead in this cutting-edge technology,” said Jane Cooper, deputy chief executive of trade association RenewableUK.
The chancellor’s commitment to speed up the planning system, including recruiting 350 extra planning officers in England, is also a “timely intervention, which will enable us to roll out vital new clean energy capacity significantly faster, strengthening the UK’s energy security,” Cooper added.
‘More direction’ requested on long-term rail strategy
With a freeze on rail fares already announced for 2026, the budget contained “limited new measures” affecting the rail industry and businesses, according to Railway Industry Association chief executive Darren Caplan. The organisation nonetheless welcomed the government’s commitment to funding major rail projects, including the Docklands Light Railway extension, and continued support for the Transpennine Route Upgrade, HS2, East West Rail and Midlands Rail Hub.
“However, we would like to have seen in this budget more of the government’s plans to encourage innovative funding models in rail – whether private or third-party investment, more direction on its long-term strategy for rail, and an update announcement on Northern Powerhouse Rail, a major scheme which up until recently had general cross-party political support,” Caplan added.
“We urge the government to give more clarity on these issues, to both boost jobs, gross value added and Treasury revenues… and also to ensure the rail supply sector can play its part to efficiently and cost-effectively deliver world-class UK transport infrastructure in the future.”
‘More push than pull’ on electric car adoption
The budget also included a new per-mile levy for plug-in hybrid and electric vehicles (EVs), coming in 2028. “All cars contribute to wear and tear on our roads, so it is only right that our motoring taxes cover EVs via a modest per-mile levy, with extra support to keep EV ownership attractive,” the government’s online budget announcement said.
The government’s approach “is creating more push than pull factors for mass adoption of EVs, which is preventing consumers from making the much-needed transition to cleaner vehicles,” claimed Patrick Matthewson, senior policy manager for energy and the environment at Make UK. “The measures introduced today will dissuade consumers, just as manufacturers are facing increased pressure to make EVs 80% of total sales in 2030.”
EV charging received a boost, however, with the announcement of £200m to support the roll-out of chargepoints around the country. This focus was welcomed by James Bamborough, sustainability and net zero policy manager at the Institution of Engineering and Technology. “For those unable to charge at home, costs are higher and options are limited. Expanding reliable street charging must therefore remain a key priority,” he said.
Want the best engineering stories delivered straight to your inbox? The Professional Engineering newsletter gives you vital updates on the most cutting-edge engineering and exciting new job opportunities. To sign up, click here.
Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.