The apprentice minimum wage must be reviewed

There is increasing evidence that the apprentice minimum wage is acting as a barrier to the qualifications acting as powerful engine of social mobility they can be. With the success and growth of apprenticeships in recent years, this raises important questions.

Apprenticeships and technical education play a special role in our education system, often offering a second chance, a route back into training or retraining to get back into employment. Given they are a critical rung on the ‘ladder of opportunity’ (in Rob Halfon’s words), we need to take this evidence seriously, avoiding the sort of social media outrage that accompanied Jonathan Gullis, MP’s  advertisement for an apprentice communications officer.

Twitter thundered its indignation at a salary of £12,285 a year and yes, it feels very low, especially as the median average income in Stoke-on-Trent where the role is based is about £24,000. However, the apprentice minimum wage of £4.81 per hour means Gullis is actually paying about £4,000 a year more than required.

That doesn’t excuse that the salary is too low. If the apprenticeship was in more expensive cities like Manchester or London, it would be unliveable without independent wealth or the bank of mum and dad, ruling out low-income families, adults wanting to do an apprenticeship, and many of the very people who would benefit most from an apprenticeship. So yes, apprentices aren’t the finished article and are still training, but we can’t make quality training inaccessible for the less-well off.

I’ve heard personally from apprentices (prior to the cost-of-living crisis) about the financial pressures they feel. One was an inspiring young carer who loved her apprenticeship but struggled financially as a result of doing it. She told stories of fellow apprentices who had dropped out of their apprenticeship as they couldn’t rely on family financial support. Just travelling to their place of work was proving financially crippling, let alone affording food and somewhere to live.

The case for change is clear. It cannot be right that a single parent in their thirties looking to get back into employment is presented with living on £4.81 an hour if they train, or £9.50 if they just get even the lowest-skill job. Getting rid of the apprentice minimum wage and instead aligning apprentice wages from the start with the government’s national minimum wage (while keeping £4.81 for under-18s) would strip out red tape for businesses and see apprenticeships remain a rung on the ladder of opportunity.

The social mobility commission is already picking up warning signs that apprenticeships are becoming inaccessible to those from disadvantaged backgrounds. And the new education secretary and former apprentice, Gillian Keegan already expressed concern about those from disadvantaged backgrounds being “squeezed out” when she was skills minister a few years ago.

Some will say that the UK already tends to pay apprentices higher than other countries – and there is evidence to suggest this is true. They then argue that giving apprentices a living wage would create too much of a burden on employers, and that’s where we differ.

Employers I meet worry about not being able to spend enough of their apprenticeship levy, and they’re desperate to fill their skills gaps. It doesn’t strike me that they are looking to cut corners on investing in talent – quite the opposite. Indeed, many forward-thinking employers already pay above the apprentice minimum wage.

For smaller firms where cash flow is a real issue and wage bills tend to be a greater proportion of a firm’s cost base, bringing back the £3,000 government cash incentive Rishi Sunak rolled out as Chancellor during the pandemic would address this immediately. The incentive was hugely effective and a cost-effective intervention with 195,590 claims made over nearly two years, nearly 80 per cent of them for apprentices aged 16 to 24.

With such incentives in place, the case to pay apprentices a living wage is powerful. If we want apprenticeships to be prestigious and sought after, sticking with such a low minimum wage sends the wrong signal – especially considering higher education has easy access to student finance, maintenance support, and often subsidised accommodation too.

If employers and government want to fill skills gaps, why quibble over a few thousand pounds per year for an apprentice given the huge impact a liveable wage would have?