Big companies use apprenticeships to cut costs, according to report

Low-skilled jobs are being reclassified as apprenticeships by companies in a bid to gain subsidies for training workers, according to a report from the think tank Reform.

The centre-right think tank says companies are repackaging existing roles since an apprenticeship levy was introduced to incentivise their use. Reform says 40% of government-approved apprenticeship standards would not meet the traditional definition of an apprenticeship.

Companies with a payroll worth more than £3m now have to pay 0.5% of the total salary amount into an HMRC ‘digital account’ which can be ‘spent’ on apprenticeship delivery training through government-registered providers. Employers can claim back 90% of the cost of training.

Offering an apprenticeship enables employers to pay less than the national minimum wage. Minimum rates for apprentices range from £3.70 and hour to £7.38 per hour.

The government has previously said that apprenticeships have to be skilled roles, requiring substantial and sustained training of at least 12 months, leading to full competency and providing the apprentice with transferrable skills in the occupation.

However, large companies have been using the scheme to advertise low-skilled roles such as serving coffees and making fast food.

The report claims that some employers are using the opportunity to offer high quality apprenticeships, but others are simply using the system as a way to reduce costs.

Airline pilot apprenticeships unveiled by UK government

The UK government announced today an expansion of the higher apprenticeships scheme to include sectors such as aviation, low carbon engineering, legal services and space engineering.

In the second round of the GBP25m higher apprenticeships initiative the government will support the development of 4,230 new placements to help people train to become commercial airline pilots, lawyers, accountants and engineers.

Higher apprenticeships allow people to pursue degree-level study while working in their chosen industry. One of the benefits of the scheme is widening participation, ensuring that opportunities are not limited to the privileged and also helping to “break down the doors of professions that are not representative of the society in which we live,” Business Secretary Vince Cable commented.

According to the Department for Business, Innovation and Skills, higher apprenticeships enable the government to drive economic growth by targeting specific sectors where advanced skills gaps have been identified.

Employers such as British Airways, Siemens, Centrica, Unilever, PricewaterhouseCoopers and the UK Space Agency are involved in the scheme.

Neil Carberry, the CBI’s director for Employment and Skills, welcomed the new higher apprenticeships as a way of guarding against future skills shortages in key sectors. He also remarked that higher apprenticeships can be a very good route to a successful career, as participants can build higher level skills while learning on-the-job with an employer.