The Government has announced that it will increase the minimum training allowances for young people to £40 per week - up from £30 for 16 year olds and £35 for those aged 17 and over. ⁽¹⁾ This puts the spotlight on the 23 Training and Enterprise Councils (TECs) in England and Wales that set rates at the minimum. A survey of 1998/9 rates shows that 32% of TECs fail to enhance the minimum whilst, in Scotland, almost all Local Enterprise Companies (LECs) set minimum rates above the Government’s threshold.

The latest increase in minimum allowances represents the only significant uprating that has occured in the last decade. Over the 21 years since youth training allowances were introduced, their real value has plunged. To keep pace with inflation, the allowance for 17 year olds should be set to at least £84 to match inflation and to stay level-pegged with the young workers’ earnings, it should be nearly £109 per week.

A survey carried out by the Unemployment Unit & Youthaid reveals that 32% of all TECs/CCTEs do not set weekly rates any higher than the Government minimum. In these areas young people with trainee status on Work Based Training for Young People receive just £30 if they are aged 16 and £35 if they are 17 or above. ⁽²⁾ This contrasts with Scotland where every LEC pays above the minimum rate for 16 year olds and only 2 out of 22 LECs set a rate of less than £40.

From September TECs will be required to set a minimum allowance of £40 for 16 year and 17 year olds. DfEE has allocated £13 million for raising the training allowance and for the retention and achievement bonuses for the most disadvantaged trainees which are due to start in September. ⁽³⁾ The minimum allowances are set nationally by the DfEE and apply to trainees with trainee status.

However, training providers can chose to pay those with trainee status more than the national minimum – but can usually only afford what their TEC or LEC contract permits. As is shown in the table, almost 70% TECs and all LECs require higher allowances to be paid to these trainees. Trainees with employed status are paid a wage which is normally higher than the minimum allowance.

But this will change from September when the majority of TECs and LECs will have to set higher levels. Of the 94 TECs and LECs that we have surveyed, 36 will have to set higher rates than at present. The 30 that currently set rates at £40 will subsequently only be paying the new minimum. With additional funding from the Government, TECs and LECs should now face considerable pressure – not simply to set higher rates – but to fully fund them too.

The record of the London TECs is particularly poor. Five out of seven TECs pay the absolute minimum: Focus Central London, London East, North London, North West London and Solotec setting the lowest rates possible. West London TEC has a minimum allowance of £35 for both 16 and 17 year olds and Aztec sets a minimum of £45. Other TECs which have not set a level above the national minimum allowance include Wakefield, Lincolnshire, Cambstec, Essex, Northumberland and County Durham.

A sample of TECs’ minimum rates was last surveyed for the period 1996/97 and the latest data shows that only 3 out of 14 have implemented any increase. ⁽⁴⁾ Four TECs, Greater Nottingham, Leicestershire, Bolton and Bury and Greater Peterborough, which set an allowance of £40 at the time of the previous survey have not increased the allowance. North Derbyshire has slightly increased the level to £42 for 16 year olds and £44 for those aged 17 and above. In Hertfordshire the minimum allowance is now £45 whilst Bedfordshire and Staffordshire have not increased the minimum level from £45.

Northamptonshire TEC set the highest allowance for both 16 and 17 year olds at £55. Milton Keynes and North Bucks TEC have an allowance of £55 for 17 year olds and £50 for 16 year olds. Fife Enterprise and the Glasgow Development Agency in Scotland and LAWTEC (Lancashire West) in England has an allowance of £50 for both 16 and 17 year olds. Leeds TEC set an allowance of £50 for 17 year olds and £40 for 16 year olds.

It is disturbing that in some areas trainees endorsed as having special training needs are paid less than their peers who also have trainee status but are not endorsed. In some areas TECs and LECs gave a higher figure for the minimum allowance in their area but, when questioned further, admitted that they paid trainees with special training needs at a reduced rate. The justification for paying these young people less was that they were less attractive to employers.

However some young people with trainee status are not working for employers and in some cases do not even have placements with an employer. Paying young people with special training needs less than their peers is potentially discriminatory as their expenses are no less than other trainees who have trainee status. In some cases they may face additional costs. The vast majority of TECs and LECs made no differential between those with special training needs and those without such needs. Northamptonshire TEC, which sets the highest rates - at £55 - does not pay those with special training needs any less than other trainees.

Whilst the latest hike in basic rates is a significant step forward, the effect of the last Government’s long term freeze means the minimum payment represents barely half its real value. Our analysis of allowance values shows that they have dwindled when compared with the earnings of under-18 year olds or price inflation.

The minimum allowances were frozen at £29.50 (for those aged 16) in 1989. By early 1997, the previous Government had to increase this by 50 pence - to eliminate the embarrassing effect of Income Support levels rising above the YT minimum – and it has remained at £30 since. A £35 rate for those aged 17+ was first introduced in 1986 and was never uprated.

However, when youth training started in 1978 (with the Youth Opportunities Programme) the allowance for participants was £19.50 per week. If payments had matched average earnings for 16 and 17 year olds, it would now pay £81.70 for 16 year olds and £108.60 for 17 year olds.

The previous Government argued that youth training allowances were not meant to be a substitute for benefits - so the comparison with wage levels for 16 and 17 year olds is very relevant. But even if the allowances had kept pace with the Retail Prices Index (RPI) - and therefore benefit levels - the allowance would be valued at £65.90 and £84.50 for the two respective age categories.

(1) DfEE Press Notice, 19/99, released 18/199

(2) Telephone survey carried out in February 1999

(3) TEC/CCTE Interim Planning Guidance, DfEE, 3/2/99

(4) see Working Brief, no.85, page 14.

* indicates those TECs setting the minimum for either age groups

* this table shows only a sample of TECs for which comparable data is available