Business Secretary Vince Cable has promised “tough new measures” to tackle employers who pay apprentices below the legal minimum, up 3p to £2.68 an hour from October.
Dr Cable’s announcement came after a Low Pay Commission report indicated 27 per cent of all apprentices, and more than 40 per cent of apprentices aged 16 and 17, could be receiving less than they were entitled to.
He described the evidence as “worrying” and said that the government was working on “tough new measures” to tackle non-compliance issues “across the board”.
The Department for Business, Innovation and Skills (BIS), said it would prosecute and name and shame employers who flouted the law.
The commission reported a “significant increase” since 2011 in the number of underpaid apprentices, and recommended a freeze in the apprentice rate, saying: “There is no point in raising the legal floor under apprentice pay if it is not in practice observed.”
It suggested that the government instead focus on raising awareness among employers and enforce the existing rate.
However, Dr Cable said the apprentice rate would rise in line with youth rates.
Poorly paid positions undermine the quality and the standing of the apprenticeship brand”
“Apprenticeships are at the heart of our goal to support a stronger economy, so it is important to continue to make them attractive to young people,” he said.
The national minimum wage would rise 12p an hour to £6.31 for adults, and lift 5p to £5.03 for 18 to 20-year-olds.
A BIS spokesperson said further measures to ensure minimum wage workers were paid correctly included a communications campaign targeting both employers and apprentices.
But FE sector figures warned the new measures needed to be tougher.
Shadow Skills Minister Gordon Marsden said: “Poorly paid positions undermine the quality and the standing of the apprenticeship brand.
“BIS has a responsibility in identifying the sectors where these practices are taking place and warning them this simply will not be tolerated.
“We also need to see ministers pushing for far more robust action from HMRC to stamp out non-compliance.”
The University and Colleges Union echoed National Union of Students president Liam Burns, who congratulated Dr Cable for increasing the apprentice rate.
But Mr Burns added: “The minimum wage for apprentices is still half the national minimum wage and needs to be increased to make apprenticeships affordable.
“I’m deeply concerned by reports that some employers are failing to meet even these low pay requirements.” He said that ministers needed to enforce the law.
Three employers have been prosecuted for failing to pay the minimum wage since its introduction in 1999, although there have been no cases since 2010.
Meanwhile, just one employer has been singled out under a ‘naming and shaming’ policy introduced in 2011.