Learners are turning down apprenticeships as families cannot afford to miss out on vital benefits payments.
An investigation by FE Week has found families lose child benefit and child tax credits, if a young dependent person takes up an apprenticeship, with the national apprentice minimum wage rate of £2.50 an hour.
Although the minimum wage, which is due to rise to £2.60 from October 1, is designed to offer a pay which is greater than money received in benefits, some families face being left more than £150 out of pocket.
This startling reality has proved a barrier for entry, forcing them to make the difficult decision to pull the plug on an apprenticeship – causing the young person to miss out on work experience – in favour of a college-based programme.
Patrick McLeod, head of business engagement at Filton College, said a learner turned their back on an apprenticeship, due to be paid £2.50-per-hour for working 30-hours-a-week, after it proved too costly for the family.
Mr McLeod said the mother was told she would lose her £60-per-week in child tax credits, child benefit of £20-per-week and £159-a-month in child support allowance. Taking into account the minimum wage whilst on an apprenticeship, that left her £179 out of pocket per month.
…mothers “won’t let” a family member do an apprenticeship”
Mr McLeod said: “It’s a lot of money to lose a month. The learner turned down the apprenticeship and did a full-time college-based course. It was a shame because they had the chance to get employment experience.”
He also believes it could have a far wider impact, adding: “I’m sure it has and will put people off apprenticeships. There might be many people who have looked into it themselves, made their decision not to do one and not told us about it.”
FE Week understands this is just one of a number of similar cases affecting families. One senior staff member at a London college said they are aware of three cases where mothers “won’t let” a family member do an apprenticeship.
The staff member, who asked to remain anonymous, said: “Parents need to be made aware of the opportunities. They can only see benefits disappearing.”
The National Apprenticeship Service (NAS) said employers often pay more than the minimum wage, but they are aware of benefit issues.
A statement from NAS said: “(We have) been made aware that this is an issue for some apprentices and their families.
“Although the minimum wage for apprentices is £2.50 an hour, employers often pay more, and the average apprentice pay is £170 take home pay per week.”
Lynne Sedgmore CBE, executive director of 157 Group, said they are “fully behind apprenticeships” and the benefits they bring to learners.
However, she also added: “In a well-planned apprenticeship programme, both the employer and young person reap substantial benefits, which is why we have been shocked to learn some providers are employing young people as apprentices for just 16 hours per week at the minimum wage of £2.50 per hour.
“This results in a loss of child benefit and child tax credits so hard-working families are losing money, while young people lose valuable work experience.”
A spokesman for HM Revenue & Customs (HMRC) said child tax credit and child benefit cease when a young person takes on a waged apprenticeship.
He said: “Yes that would be true in all cases. It is only when a young person continues in full time, non-advanced education or unwaged training that we treat them as dependent on their parents.”