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.