Business groups are stepping up the pressure on ministers to reform the apprenticeship levy after new figures revealed a collapse in new apprentice starts across the economy.
Official figures have revealed a 40 per cent drop in apprentice starts across all industries in February compared with the same period last year.
The Department for Education reported there were 21,800 starts in the month, compared with 36,000 in February 2017.
The DfE does not provide figures on apprentice starts by sector on a month-on-month basis.
However, government figures released last November showed a 1.2 per cent annual drop in construction apprenticeship starts, despite the introduction of the levy the previous April.
Commenting on this week’s economy-wide figures, Federation of Master Builders chief executive Brian Berry said: “These disappointing figures should be taken as a warning sign that any flaws in the way the apprenticeship levy operates need to be ironed out as a matter of urgency.”
British Chambers of Commerce head of skills Jane Gratton said: “There is consensus across the UK business community that the levy needs reform, yet our calls continue to go unanswered.
“We are not asking for a complete overhaul – everyone wants this system to work better.”
The Institute of Directors added to calls for change. “How much more evidence does the government need before it takes action?” a spokesperson said.
“While the motivation behind the policy is laudable, the execution is flawed.”
Under the levy, companies with an annual wage bill over £3m contribute 0.5 per cent of that to the levy.
Employers can then apply for levy funds to spend on apprenticeships, with the government billing the system as a boost for productivity through increased skills.
A number of construction firms have previously reported confusion over the levy, with many unsure of how to access funds.
Mr Berry said: “The inflexibility with which the apprenticeship levy voucher system has been implemented in England poses particular difficulties for the construction industry, compared with other business sectors.
“Most large construction firms directly employ relatively small numbers of people, and tend not to directly employ tradespeople or directly train apprentices.
”It would make sense and would maximise the impact of levy, if these firms were able to pass their vouchers down through their supply chain and ‘spend’ their vouchers in this way.”
Ms Gratton added: “For larger firms, the inflexibility of the system has made it difficult to spend their levy funds as they see best, making it feel more like a tax, and leaving less money available to pay for the training people need.”
Housebuilder Redrow said employers “aren’t fully capitalising on the opportunity to take on apprentices”.
Redrow group HR director Karen Jones said: “It is important for employers and parliament to iron out their differences if the levy it is to work effectively across all sectors.”