LPC rejects call to raise apprentice wage by £1

The Low Pay Commission (LPC) has recommended to the government an increase of 2.6% to £2.80 in the Apprentice Rate. This 7p rise applies to all apprentices in year one of an apprenticeship, and 16-18 year old apprentices in any year of an apprenticeship.

Currently, apprentices are entitled an hourly wage of £2.73 if they are aged 16 to 18 or aged 19+ and in their first year.

The call to increase the minimum wage came with an LPC rejection of Business Secretary Vince Cable’s proposal to give apprentices a pay rise of more than £1. He called for the apprentice minimum wage to be on par with the non-apprenticeship minimum for 16 and 17-year-olds, currently at £3.79 per hour, but this has been labelled as too expensive.

In its report the LPC said: “You asked us to consider this option as part of a broader review to see whether the structure of the apprentice rate could be simplified in order to improve compliance, and also to consider whether the apprentice rate should continue to be applied to higher levels of apprenticeship.

“We recommend that the apprentice rate should not apply to higher apprenticeships. But in terms of other possible structural changes, we believe there would be significant risks in a merger with the 16 to 17-year-old rate. It would mean an unprecedentedly large increase in the value of the rate, of between 39 and 88 per cent.

“It would affect over 90,000 and possibly as many as 200,000 apprentices — up to a quarter of all apprentices — with significant impact in low-paying sectors that provide many apprenticeships and are of particular value to low-skilled 16 to 17-year-olds.

“The cost to employers would be at least £160m each year and could be much more. That would be around half the total cost of the recommended increase in the adult rate, and at a time when there are other funding pressures on employers in England from possible mandatory cash contributions to training. We discuss these and other concerns in our main report.”