The 2025 Autumn Budget, delivered by Rachel Reeves on behalf of the Labour Party, introduces a number of changes that will directly affect UK garment and textile manufacturing. For factories operating under ATMF, the changes bring both challenges and opportunities. Here’s what to expect — and how factories might respond.
📈 Rising Labour Costs: A Big Impact on Wages
- The Budget increases statutory wages: the new minimum for age 21+ (the National Living Wage) rises by 4.1% to £12.71/hr, while for ages 18–20 the National Minimum Wage rises by 8.5% to £10.85/hr. For younger workers (16–17) and apprentices, a 6.0% raise moves the rate to £8.00/hr. LinkedIn+2House of Commons Library+2
- For many factories, this will translate into a noticeable increase in payroll costs as soon as April 2026. If your business depends on labour-intensive processes — for example garment stitching, finishing, manual sorting — this will compress margins unless offset elsewhere.
Factories should prepare: review staffing budgets now, consider productivity improvements, and renegotiate contracts that assume previous wage levels.
⚙️ Cost Pressure Meets Mixed Investment, Tumult for Manufacturers
- From one angle, there are reasons for cautious optimism: the Budget extends capital allowances for leased equipment and backs greater investment in apprenticeships for SMEs. This could help manufacturers update machinery, adopt efficient workflows, and bring in skilled younger staff at mitigated cost. Make UK+1
- On the downside: some tax reliefs are tightening (e.g. changes to reliefs related to capital costs), and other measures — such as restrictions on salary-sacrifice tax advantages — may further pile pressure on factory overheads. LinkedIn+2Make UK+2
The upshot: factories investing in automation, training or equipment upgrades may offset wage increases — but those relying heavily on manual labour may struggle unless they adapt.
👩🎓 Apprenticeships and Youth Hiring: A Strategic Opportunity
- As the Budget makes apprenticeships for under-25s fully funded (for eligible SMEs), this offers a potential lifeline for factories seeking to manage labour costs while building a skilled workforce. LinkedIn+1
- For garment manufacturers — an age-old industry needing both craftsmanship and scalable labour — this could be a strategic moment to recruit apprentices, train them in modern manufacturing practices, and evolve operations without overstretching budgets.
If leveraged well, this might mark the start of a shift: from low-margin, labour-heavy operations to more efficient, resilient manufacturing models grounded in skills development.
🧵 Tariff Changes & Industry Competition: Leveling the Field (But With Caveats)
- One of the Budget’s declarations (as presented by ATMF) is the planned scrapping of the customs duty “de minimis” waiver for goods under £135 by March 2029. That means many low-value imports will now be subject to duty — helping protect UK-based manufacturers from undercutting by overseas low-cost producers. LinkedIn
- In principle, this is good news for local factories: it enhances competitiveness, encourages on-shoring, and supports “buy British / make British” sentiment.
However — success depends on factories being ready. To seize this opportunity, manufacturers must ensure compliance, quality, timely delivery, and transparency — especially as consumer expectations and ethical sourcing demands rise.
🧩 The Bigger Picture: What ATMF Members Should Do Now
For members of ATMF, the Budget isn’t simply a regulatory update — it’s a signal to act.
- Run a cost-impact audit: update wage models, forecast 2026/27 budgets, and plan for increased labour costs.
- Explore automation and improved workflows — take advantage of capital allowances and equipment leasing incentives to raise productivity.
- Leverage apprenticeship funding — recruit and train younger workers under subsidised schemes, reducing risk and long-term costs.
- Prepare for increased demand for UK-made goods — with tariff changes, consumers and retailers may prefer UK factories; factories that can deliver quality and reliability quickly may gain new contracts.
- Promote transparency and compliance — with increased scrutiny (e.g. under potential new regulation or a new “fair-work” monitoring agency), ethical manufacturing practices could become a strong competitive differentiator.
📰 What It Means for the Future of UK Garment Manufacturing
This Budget marks a turning point. For too long, UK garment factories have faced pressure from cheap imports, overseas labour arbitrage, and razor-thin margins. By raising labour costs — and at the same time offering tax/investment incentives and curbs on low-value imports — the government is effectively reshaping the playing field in favour of domestic manufacturing.
The message to ATMF members is clear: this is not a moment to cut corners or try to ride out rising costs. It’s a moment to modernise, professionalise, and invest in long-term resilience — in people, in machinery, in transparency, and in quality. Factories that can pivot now have a chance to rebuild UK garment manufacturing as ethical, sustainable, and competitive.