One West Midlands manufacturer warns the investment can cost close to £100,000 before a trainee becomes productive
A worker at the Bowers & Jones factory in Bilston(Image: City AM)
Small businesses across Britain are grappling with a mounting cost-of-doing-business crisis. Bowers & Jones, an award-winning manufacturing firm, has told
City AM that increases to the minimum wage have made it unviable for the company to take on apprentices.
When Jane Somerville spearheaded a management buyout of her manufacturing firm and relocated its entire factory across the West Midlands in the midst of the pandemic, she had hoped it would mark the end of a turbulent chapter for the business.
Bowers & Jones, a celebrated producer of precision equipment for the steel industry, had already been battered by Brexit and forced to navigate a labyrinth of regulations and tax legislation to reach its biggest market across the Channel. The cost of importing raw materials had soared, leaving the company with a cost base running “hundreds of thousands of pounds” higher than just a few years previously.
Yet six years later, Somerville’s outgoings have continued to spiral far beyond anything she could have anticipated. While some of that pressure has stemmed from trade barriers imposed by the US and the turbulence of global politics, decisions taken closer to home by the British government have played a significant role, she says.
“The variable cost of operating our factory has gone up from £36 an hour to nearly £56 an hour since we took the business over in 2020,” she tells City AM, as reported by City AM.
“And that’s energy costs doubled, that’s labour costs up because of minimum wages and inflation. The cost of transport significantly increased because of the fuel crisis and everything else around Iran at the minute.
“Everything has gone up,” she says.
Bowers & Jones is one of millions of small businesses that have witnessed their overheads soar in recent years, in what the British Chambers of Commerce has termed a “cost of business” crisis.
According to a newly launched calculator by the lobby group, which measures the financial impact of domestic policy decisions on businesses, the typical small firm has seen its cost base surge by approximately 70 per cent over the past decade as a direct result of UK government decisions – a quarter of which has accumulated since Rachel Reeves’ inaugural Budget in 2024.
Despite vowing to lead the most “pro-business government Britain has ever seen”, the former Chancellor dealt a severe blow to the private sector with a £25bn increase in employer national insurance contributions. Rises to the minimum wage alongside a raft of workers’ rights legislation further inflated the expense of hiring new staff.
While Somerville is keen to take on an apprentice and develop their skills on Bowers & Jones’s specialist machinery, she argues the financial burden has become simply too great to bear.
“[The rise in minimum wage] is a barrier for us to take someone on. That investment over the four years or five years of their apprenticeship, before they can actually be productive to me, is close to, if not over £100,000,” she says. “I’m just better off paying somebody that’s fully qualified.”
Somerville’s grievances highlight how policy choices taken by Keir Starmer and Reeves back in 2024 are now hampering the present government’s efforts to increase youth employment.
Andy Burnham has made tackling the growth of young people not in employment, education or training (Neets) a key mission of his premiership. Since taking office, he has committed to creating fresh technical education pathways for 14-year-olds and elevating apprenticeships to the same status as conventional academic routes.
For that to work, Somerville argues, ministers must help bear more of the financial burden of bringing young people into the workplace and apprenticeship schemes.
“How can [Burnham and Healey] fund training for engineering companies to take somebody out of school, to stop them becoming a Neet, and get them into a technical apprenticeship that doesn’t cost £100,000,” she said.
“That would help me take on at least one or two apprentices – and then I could train them to be ready.”
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