Figures from the Department of Education show that in the last three months of the 2017 academic year, 48,000 people began an apprenticeship, compared with 117,000 for the same period last year, equating to a 59% fall.

The levy was supposed to increase the number of people training at work by imposing a 0.5% tax on UK employers with payroll costs in excess of £3m. It is hoped the move raises £2.5bn a year for training.

Firms with 50 or more staff now have to find 10% of the cost of training and also release staff for a day a week of off-site training.

Verity Davidge, head of education and skills policy at manufacturing institute EEF said the figures were both ‘shocking’ and ‘frankly unsurprising’.

‘Manufacturers have long been true champions of apprenticeships and have been left frustrated that the introduction of the levy has in, some the cases, resulted in them being unable to offer and deliver apprenticeships. Accessing the funding has proven complex and difficult to unlock in time and employers have struggled to get their heads around the complex rules and restrictions in accessing funds.’

She added the Budget had been a ‘missed opportunity’ to address these issues.

Seamus Nevin, head of policy research at the Institute of Directors, said that while the 59% drop in apprenticeship starts is alarming, he added there is an ‘equally big problem’ in low levels of completion.

He said: ‘Official figures show that one-third of those who started an apprenticeship failed to complete it last year. Even of those who do start, there remain chronic shortages of entries in the sectors where skills gaps are most acute.

’The design of the Levy system is also likely to increase, rather than reduce, regional disparities. Almost £1bn of the £2.5bn being collected via the Levy is being raised and thus spent in London, a region where most businesses are predominantly graduate employers and where there are already a variety of education and training options available. Conversely, the levy is raising less, and stimulating less training opportunities, in the regions where it is needed most.

‘Despite common misperceptions, businesses generally support the idea of apprenticeship levy. However, our members feel the system, as currently designed, is unlikely to achieve its stated aim to boost productivity.’

A Department for Education spokesperson said: ‘We have put employers at the heart of our reforms so they get the skilled workforce they need to compete internationally. We are transforming the skills landscape and progress should not be judged on the basis of a few months’ worth of data. There has been over 1.1 million apprenticeship starts since May 2015 and we remain committed to reaching 3 million apprenticeship starts in England by 2020.

‘We know that the last year has been a period of huge change for employers but it is right that employers are taking their time to plan ahead and maximise the opportunities the apprenticeship levy can bring. Feedback we have had from levy payers has shown they are doing this and they plan to increase their demand for apprenticeships.’

Official Department of Eduction figures can be found here.

Report by Calum Fuller