National Minimum Wage

National Minimum Wage
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(26 per cent). Other effects were also predominantly financial including reported difficulties in
increasing pay to the right level for older apprentices, and also that the Apprentice Rate was
too low for apprentices to cover their expenses or to reflect their input. Others questioned
the financial benefit to the company of college training. Some regarded the Apprentice Rate
as too high, some as too low. Of those employers experiencing at least one difficulty, most
either did not know what the business had done in response to the impact (39 per cent) or
said the company had absorbed it and taken no action (23 per cent). The remaining responses
were spread between focusing recruitment on particular age groups or levels, adjusting the
funds available, or reducing apprentice numbers or training time available – although each of
these reasons was given by fewer than 10 per cent of those who faced difficulties.
3.76 The researchers found that employers thought the main impact of the Apprentice Rate was
in relation to demand by young people for apprenticeships, although their views varied.
Around half said the Apprentice Rate had made work-based training more attractive to young
people and over a third said it had increased demand for work-based training from young
people. However, around three in ten disagreed with both statements, so the impact was
mixed. More clear cut was the perceived lack of impact on completion rates. Around half of
employers agreed that the introduction of the Apprentice Rate made little difference to the
completion of apprenticeships by young people, whereas one in five disagreed.
3.77 The survey asked employers whether they were aware of the NMW rate for apprentices.
While over two-thirds said they were aware around one-third said they were not. This
ignorance raises a fundamental issue for compliance. We make a recommendation aimed at
raising awareness of the NMW and its rules in Chapter 4. Of those who already knew about
the Apprentice Rate, most had originally found out from a learning or training provider (26 per
cent). Just 5 per cent mentioned HM Revenue & Customs (HMRC), and only 5 per cent the
national training body or government department responsible for apprenticeships. In its
evidence to us the Government advised that apprentices formed 29 per cent of HMRC’s
non-compliant cases. The findings also provided evidence of possible non-compliance with
regard to the training content of apprenticeships. Three in ten employers said they did not
offer any off-the-job training to apprentices; this is contrary to the training specifications
which were coming into effect in England around the time of the survey.
3.78 The research findings suggested that the overall impact of the introduction of the Apprentice
Rate on employers was small. Most of the employers surveyed also expressed no concerns
over the (then forthcoming) increase in October 2011 from £2.50 to £2.60 an hour. The
researchers’ overall conclusion, based on their findings, was that the current rate was about
right because it allowed flexibility on the part of the employer to pay more if they wished to.
They thought that this flexibility would be removed if the rate was set too high. However, this
research, as with the BIS Apprentice Pay Survey, found that a proportion of apprentices were
paid below the Apprentice Rate – around 5 per cent of employers in our commissioned
research said they paid apprentices below the Apprentice Rate. While the BIS survey is the
more robust measure of apprentice pay, the overall evidence from both surveys suggests
that there is some degree of employer ignorance of, or intentional non-compliance with, the
Apprentice Rate and NMW rules for apprentice pay. This may be a factor in explaining the
apparent small impact to date of the introduction of the Apprentice Rate.