HMRC not doing enough to stop illegal unpaid internships, says pay watchdog
Annual report of Low Pay Commission calls for action where an intern is doing the work of a paid employee
Nick Clegg, who recently admitted that his father had helped get him an internship at a Finnish bank. Photograph: Oli Scarff/Getty Images
The Low Pay Commission has criticised HM Revenue & Customs for lax enforcement of minimum wage laws and the payment of interns.
The LPC's annual report, which this year focused on the position of young people in the labour market, recommended that HMRC needed to take stronger action on unpaid internships.
The LPC wanted to see "effective [legal] enforcement" from HMRC, who are responsible for ensuring that interns are paid the minimum wage if their placements can be considered to be work.
The report also called for better understanding of the law. "We recommend that the government takes steps to raise awareness of the rules applying to payment of the national minimum wage for those undertaking internships, all other forms of work experience and volunteering opportunities. In addition we recommend that these rules are effectively enforced by HMRC," it said.
The report comes two days after Nick Clegg highlighted the growing problem of internships in a report on social mobility.
The deputy prime minister admitted that his father had helped him into an internship at a Finnish bank and get a first leg-up into politics.
Senior Tories were also embarrassed when it was reported that they hadauctioned off internships for thousands of pounds to raise money for the party at their annual gala ball in February.
In the report the LPC rebuffed calls from the British Chamber of Commerce and the Chartered Institute of Personnel and Development that internships be given a legal exception from the minimum wage or be paid at a lower apprentice rate of £2.50 an hour. However, the expansion of internships has not been welcomed by all in the business community.
Submissions to the report reveal that representative bodies from the hospitality, pubs, and sport and leisure sectors expressed concern that internships amounted to unpaid work and were "undermining the minimum wage and placing employers in invidious positions".
A submission from the Trades Union Congress criticised current guidance on the issue as weak while internship campaign groups called for job postings for internships to be banned.
The report reveals a growing gap between the wages of under-21s and the rest of the adult working population.
The report's authors admit that this generational wage inequality is being caused in part by employers taking increasing advantage of lower minimum wage rates for those aged under 21.
In effect, lower minimum wage levels for the young were dragging general wage levels, an effect which has been exacerbated by the recession and massive youth unemployment.
According to the report, the percentage of younger workers being paid below the adult minimum wage rate has almost doubled in the last six years to 30%.
A survey from the campaigning group Interns Anonymous revealed that 50% of internships lasted one to three months and 82% did not lead on to further employment.
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