Retail giant Next has suspended a multi-million pound, government-funded apprenticeship scheme after a damning report from education watchdog, Ofsted.

Tory peer and CEO of Next Simon Wolfson has given over half a million pounds to the Conservative party in the last decade, and has been a very vocal supporter of George Osborne’s pledge to create 3million apprenticeships by 2020.

But an investigation by Glasgow-based Firecrest Films, to air on Channel 4 tomorrow night, found that Next’s apprenticeship scheme has been rated ‘inadequate’ by Ofsted, the lowest possible grade.

In a scathing report, Next was heavily criticised for failing to provide sufficient support for apprentices, who can be paid as little as £3.30 an hour. Inspectors found a high drop out rate on Next’s training scheme with few young people graduating to a full-time employment at the end of their apprenticeship.

The government’s Skills Funding Agency has forced Next to suspend taking on new apprentices as a result of the Ofsted report.

But the retailer - which has over 500 stores across the UK and made almost £800m profits last year – is still getting money to train almost 700 apprentices still on its books.

The government has allocated a further £1.4m total payout to Next for training over the course of this academic year, despite receiving the bad Ofsted report in July 2015. Last year, Next was given nearly £1.8m to train apprentices themselves.

Earlier this year, Next boss Simon Wolfson sparked controversy when he claimed that the minimum wage was “enough to live on” and was a fair wage for “a lot” of his staff.

Later in the year, Wolfson, who is worth an estimated £112million, said that the Tories’ proposed ‘living wage’ could drive up inflation.

The Conservatives have made much of their commitment to apprentices. Last month chancellor George Osborne boasted that an apprenticeship levy, due to come into force in 2017, will raise £3bn a year for training.

Over the past five years, the number of apprenticeships has grown by more than three-quarters, to over 440,000 last year. But much of this increase has come in the shape of low-skilled apprenticeships in areas such as retail and hospitality.

Apprentices can be paid as little as £3.30 an hour, less than half the national minimum wage, potentially saving companies such as Next millions of pounds in wages.

Professor Alison Wolf reviewed education policy for the coalition government and says that the very term ‘apprenticeship’ is in danger of being debased as the Tories push to reach their target of 3m apprenticeships by 2020.

“A huge number of these apprenticeships are not in traditional skilled occupations and they’re in areas where it’s really not obvious what it is that they are really gaining by way of specific demanding vocational skills,” says Professor Wolf.

“If you want to get apprenticeship numbers, the way to do it is for them to be cheap and pointless. The point will come when instead of queuing up for apprenticeships, young people will say, 'no way'.”

Alex Harding was a retail apprentice at Next and worked there for a year. When he started he was paid just £2.65, the minimum wage for apprentices at the time, although he was treated “more like an employee than an apprentice.”

Harding, who received around £100 a week, says that he got little one-on-one training and often felt like cheap labour. At the end of his apprenticeship he was offered a contract for just 15 hours a week, spread over a number of days.

“It was a bit of an insult,” he says. His impression was that Next would “prefer to churn out another apprentice.”

Over £1.5bn was spent by the government on apprenticeship training last year, but serious concerns have been raised about the quality of provision across the sector.

In October, the chief inspector of schools, Sir Michael Wilshaw, said too many apprenticeships are of poor quality and fail to provide the skills and knowledge that employers need.

“Employers and providers involved in poor-quality, low-level apprenticeships are wasting public funds. They are abusing the trust placed in them by government and apprentices to deliver meaningful, high-quality training.”

A spokesperson for Next said the company “completely accepted Ofsted’s conclusions and immediately took vigorous action to improve our Apprenticeship Scheme.

“The NEXT Apprenticeship Rate is 67% above the statutory legal minimum apprenticeship rate.

“In September we received an encouraging Monitoring Visit from Ofsted, but accept we still have more to do.”