Written evidence submitted by the ADS Group (STM0016)
About ADS:
ADS is the trade association for the UK’s aerospace, defence, security, and space industries, representing more than 1,600 members. We work with those sectors to secure the UK’s advantage, enhance our international positioning as a go-to destination for innovation, and deliver on sustainable leadership goals. Whether representing industry, connecting our members with business opportunities, or driving forward innovation and growth, ADS is at the forefront of an array of activities, events and programmes. ADS members are the custodians of a world-leading advanced engineering and services workforce, fuelling UK prosperity, and providing more than 443,000 jobs to the UK each year.
For the purposes of this consultation, ADS will be responding as a representative body for aerospace manufacturers, that is to say civil aircraft (non-defence).
The aerospace sector is facing a number of challenges in relation to skills. In the first instance, it is important to note that aerospace is a highly specialised sector requiring a wide variety of technical skills, from traditional roles in welding to future skills across artificial intelligence and robotics. The aerospace industry is also international by nature, with the UK genuinely world-leading in wing and engine production, in particular.
Worldwide, aerospace is a sector constrained not by demand, but by supply. The global aircraft order backlog is at a record high, while demand continues to grow. While increased deliveries this year give cautious optimism, a number of challenges must be addressed to ensure the sustainability of future aerospace production and sector growth. These challenges include comparatively low rates of technology adoption relative to other sectors, difficulties with access to finance and a need to improve supply chain resilience, as well as geopolitical challenges around the world and, of course, skills shortages.
Looking to the future, the Industrial Strategy sets out a welcome commitment to secure the UK’s advantage in aerospace over the coming decades to 2050. This is embodied by a powerful commitment to target greater UK content on the next generation of single-aisle aircraft and increase the UK’s global market share by value from 10% to 15% by 2050.
Taken together, there are two distinct skills gaps. First, there is a volume gap, that is to say not enough people are entering the sector. Second, there is a proficiency gap with rising demand for advanced knowledge at every level of occupation. For example, where once the sector may have needed manual workers, it now needs people able to operate advanced machinery, understand automation and data analytics, make decisions and prompt machines in real time.
That means a transformation is occurring across the aerospace sector, affecting not just the skills requirements expected of those entering the sector, but also in relation to reskilling and upskilling the existing workforce too. This is compounded by a significant retirement cliff-edge, with 29% of the global aerospace and space workforce over the age of 55, according to PwC. This risks a significant loss in tacit knowledge, experience and technical leadership over the next decade.
As the aerospace industry moves from aluminium to composite materials and towards sustainable fuels, the skills landscape must keep pace to align with sector demands. Early decisions around the next generation of single-aisle aircraft are being made now, and the UK’s competitiveness in a global field will be determined by the availability of skills in emerging technologies such as alternative fuel systems, material sciences, cyber and digital, robotics, data analytics and artificial intelligence.
Critical to plugging the volume gap will be keeping new and existing talent in the UK. Currently, the skills pipeline required by the aerospace sector is threatened by emigration to countries with better pay and tax regimes. A supportive ecosystem is required to retain talent, including clear career paths, national pride in industrial roles and a future-proofed skills system. Similarly, the higher education system has become too reliant on international students who pay higher tuition fees but leave the UK after graduating. While the number of international students continues to rise, domestic participation is declining to the detriment of the UK’s industrial base.
At an earlier stage, industry and government must do more to get young people interested in aerospace and manufacturing careers. Manufacturing is still often seen by school-age groups as a dirty job, putting off students who may otherwise have an interest in advanced manufacturing. Overcoming this outdated stereotype will help plug the volume gap and reposition the aerospace sector as an attractive pathway in the future.
There is a great deal of overlap between the skills needs of manufacturers in different transport sectors, all of which require skills in engineering, welding and robotics, for example. That means aerospace is competing with automotive, shipbuilding and more for the same pool of talent. However, the transport manufacturing sector is also now competing with the technology sector for talent, which claims a near-monopoly on future skills around artificial intelligence, quantum computing, programming and more.
This is a real challenge for the aerospace industry. Unlike the technology sector, aerospace companies have to onboard the cost of manufacturing. This means they run on thin margins and tight working capital; as a result, wages cannot be as generous, and conditions cannot be as flexible. Many small and medium-sized enterprises (SMEs) also lack access to finance, undermining companies’ abilities to invest in training and workforce preparation.
While there is significant overlap between the skills needs of transport manufacturers, it is uncommon for workers in other sectors to transition into aerospace due to the number of accreditations and certifications required. However, aerospace engineers are highly valued by other sectors, especially in high-performance automotive where expertise in materials and aerodynamics is prized. This presents a challenge for aerospace whereby the transfer of workers between and outside manufacturing sectors is largely one-sided.
ADS’ answer to this question has been covered in part by our response to Question one. However, it should be noted that industry strongly welcomes reform of the Apprenticeship Levy and the transition to a new Growth and Skills Levy. As reform progresses, the Levy must be a skills investment mechanism rather than a de-facto tax on employers. Greater flexibility must also be embedded to support broader training formats, especially for SMEs and Mid-tier companies who struggle to fund training with such tight margins. Similarly, reform should enable companies to use levy funds towards travel, subsistence or accommodation.
It should be noted that industry is keen to support more apprenticeships. Aerospace employers provide high-quality apprenticeships that often offer jobs for life, social mobility, early independence and productive, focused training. However, apprenticeships are not enough on their own. Many advanced roles, especially in engineering and research and development (R&D) require full-time academic study to postgraduate level.
That is why higher education must become a more attractive and financially viable option for students interested in engineering and technical courses. UK students face an average student loan debt in excess of £45,000 with scant opportunity to earn during study periods. At a postgraduate level, there has been a 25% drop in the number of UK students taking PhDs over the last five years, eroding the UK’s world-leading science base and post-doctorate support for aerospace programmes. Noting that UK nationals are needed to work on sensitive projects for security reasons, owing to overlaps between aerospace and defence, the Government should introduce loan forgiveness schemes to make PhDs more attractive. Certain universities could also be selected to champion aerospace- and defence-related research projects.
ADS would also recommend that companies should be permitted to use levy funds towards offsetting student loans if graduates enter and remain in UK industry. This model could apply particularly in fields where the UK has a strategic advantage, such as propulsion, AI, data and materials.
Technology is already having a transformative impact on the skills mix required by aerospace companies. As outlined in response to Question one, there is a proficiency gap across the aerospace sector with rising demand for knowledge at every level of occupation. Where once aerospace manufacturers may have needed manual workers, they now require people who can operate advanced machinery, understand automation and data analytics, make decisions and prompt machines in real time. Critically, that is a challenge for the existing workforce, not just the workforce of tomorrow.
The aerospace sector understands that reaching net zero is a critical objective over the coming decades, working hand-in-hand with technological advancements to make the next generation of aircraft more fuel-efficient. Increasing UK content on the next generation of single-aisle aircraft, as demanded by the Industrial Strategy, will have an impact on the skills mix required by industry over the coming decades. As the aerospace sector develops entirely new platforms for the first time in several decades, we will see increased demand for skills in materials, aerodynamics, propulsion, quantum technologies, artificial intelligence, novel fuels, low carbon manufacturing and more. Aerospace companies are already responding well to this imperative but support from government to maximise the attractiveness of the sector will be required to sustain progress.
Hydrogen is one area where skills development is necessary and urgently required. If the UK can capture just 10% of the global cross-sector demand for hydrogen technology, it could contribute £46 billion to the economy each year by 2050, offering a significant dividend to the UK economy. To meet this challenge, 29,000 direct jobs will be needed using a mix of new and existing skills. Given the long-term nature of aerospace product cycles, time and funding is required now to develop the required standards and regulations for skills. In the first instance, government and industry should work together to scope and identify the high-level knowledge and skills required. Against this, an occupational standard should be developed in parallel with a curriculum tailored to the needs of employers across the aerospace sector.
As outlined previously, aerospace companies run on thin margins and tight working capital. This limits their availability to invest in training. Finding the time is also a challenge as employees have to be removed from their day-job to undertake further training; given the global backlog to which the aerospace industry is working, this may be hard to justify at present.
Issues with accessing finance have been a persistent barrier to upskilling existing workforces. Owing to the capital intensive nature of aerospace programmes, with significant up-front costs and extended timescales for making a return, industry has long struggled to attract lenders willing to onboard that risk. This is a particularly acute problem for SMEs which do not have the cashflow to invest heavily at inflection points such as this.
With that said, the UK aerospace industry will have to upskill at a rate not seen before to prepare for the next generation of aircraft production. That is why the Government must support long-term investment in UK-based skills for the strategic capabilities in which the UK excels. To facilitate this, clear reskilling and upskilling pathways should be established to allow employees to transition into emerging areas such as AI, automation and digital manufacturing. ADS would also support the development of short courses, certifications, modular learning and digital bootcamps, not just formal qualifications.
To this end, ADS welcomes commitments in the Industrial Strategy to establish a targeted upskilling and reskilling programme for advanced manufacturing, as well as a pilot recruitment and workforce transition programme, though government must specify that it will include aerospace. It is notable that the Government is investing £625 million in construction skills and offering support to the UK rail and maritime sectors. While welcome, the aerospace sector must not be overlooked as a critical enabler of economic growth – and as a sector that will make significant investment decisions over the course of this Parliament in relation to the next generation of narrowbody aircraft.
Across the aerospace sector, there is rising demand for skills and depth of knowledge at every level of occupation. However, aerospace engineers are in particularly high demand owing to a lack of science, technology, engineering and mathematics graduates entering the sector. A lack of digital skills will become particularly acute in the coming years, especially in AI, machine learning, coding and digital analysis. This challenge is compounded by intense competition, not just amongst peer industries in advanced manufacturing, but also the technology sector, which is inherently attractive to new entrants.
However, as outlined, it is not just about skilling people, it is about keeping them in the UK. Aerospace is competing in a global pool for talent, and the UK must up its offer to retain talent, including by restoring clear career paths and national pride in industrial roles, as outlined in response to Question one.
Currently, it does not feel as though different government departments are working well together. While the Industrial Strategy usefully sets the overarching strategic direction, and Skills England is the convening authority, the Department for Education, The Department for Work and Pensions and the Treasury need to work more closely together as the principle interfaces for driving skills. To support this, ADS would like to see a pact between the Department for Business and Trade, the Department for Science, Innovation and Technology, the Ministry of Defence and Skills England. This would create a strategic plan for cross-government work to fix national skills shortages through coordinated action and resource allocation.
ADS would like to take this opportunity to note recent changes which have seen the skills portfolio move from the Department for Education to the Department for Work and Pensions. This ends nearly a decade of education and skills being managed together under one department. ADS has long called for the skills portfolio to extend beyond the remit of the Department for Education given inherent linkages with economic growth and industrial strategy. While this welcome realignment reflects that point, the Department for Education will remain a vital stakeholder in terms of primary and secondary curriculums.
More widely, key to ensuring that transport manufacturers have the right incentives and support will be greater engagement from Skills England, which has been generally lacking so far. In the first instance, transport manufacturers should be involved in Skills England’s employer panels. Nominated sector representatives would champion aerospace’s skills needs and ensure government is working to realise generational opportunities over the coming years. More widely, Skills England’s employer panels should complement existing work by Skills Advisory Panels which bring together employers, skills providers and local stakeholders (Local Enterprise Partnerships and Mayoral Combined Authorities) to resolve skills mismatches at a local level.
In making the Growth and Skills Levy more flexible, the UK Government must ensure that funds raised by the levy can be spent across the whole of the UK, rather than just in England, as is currently the case. This disadvantages companies with a significant UK-wide footprint, especially those in the aerospace sector. At a minimum, Skills England must work with its counterparts in the devolved nations to explore opportunities for further collaboration.
The Industrial Strategy makes some welcome commitments in relation to skills, not least £100 million over three years to support engineering skills in England. ADS also welcomes the establishment of Technical Excellence Colleges, though the Government must take care not to bottleneck skills into certain areas. A new Upskilling and Reskilling Programme will further support the digitisation of the aerospace workforce.
Taken together, the Government’s 2025 reforms mark the most radical skills reset since the 2017 levy launch. Through the Growth & Skills Levy, Skills England stewardship, streamlined apprenticeships, and a construction skills mission, there is unprecedented alignment between policy levers and labour-market need. Industry knows it must capitalise on these reforms by re-shaping levy strategies and steering Skills England’s evidence base.
While welcome, these reforms must address skills gaps around volume and proficiency. Without more people entering the sector at every level, and without increased depth of knowledge, aerospace will not be able to compete with peer industries. That is why levy reform must be accelerated to allow full use of funds across different pathways. Government funding must be aligned with the eight growth-driving sectors identified by the Industrial Strategy, prioritising skills for strategic sectors such as aerospace. Regional hubs and employer-academia partnerships should also be expanded to boost local pipelines and R&D engagement.
The UK has a strategic global advantage in aerospace manufacturing. With half of the world’s aircraft flying on wings made at Airbus’ facility in Wales and a Rolls-Royce engine taking off somewhere in the world every 2.5 seconds, investment in aerospace skills delivers a clear dividend to the UK economy.
Many of the proposals outlined in our responses to previous questions highlight what more the Government could do to grow employment in transport manufacturing. In short, however, the Government must put flexibility at the heart of the new Growth and Skills Levy. Promised flexibility should allow levy funds to be spent in the devolved nations and support travel and subsistence, reflecting the fact that many aerospace companies manufacture in more than one location across the UK. Such a move would also support an expanded search area for candidates.
According to research from the City & Guilds and 5% Club, companies have spent just 55% of their levy funds on average over the last five years. ADS is aware that members have seen millions of pounds of their levy funds expire owing to the current system’s inflexibility. Rectifying this trend is urgent to growing employment in the aerospace sector and upskilling the workforce; otherwise, funds will continue to be wasted while industry continues to suffer from chronic skills shortages.
The expiry window for unspent funds should further be extended to three years with an industry-led marketplace introduced to link manufacturers’ surplus levy to SME suppliers. Full portability of unspent levy contributions across company sites and supply-chain transfers would also deliver flexibility to employers, minimising the return of unspent funds to the Treasury.
Beyond apprenticeships, higher education must become a more attractive and financially viable option for students interested in engineering and technical courses. Loan forgiveness schemes could go some way to address this, while companies should also be able to use their levy funds towards offsetting student loans if graduates enter and remain in UK industry.
Industry knows it has a role to play in correcting perceptions and is working with ADS through the Industries of Choice campaign to do just that. However, there is a role for Government too in supporting that aerospace-specific campaign in line with the support provided to other industries.
September 2025