The government is under renewed pressure to implement a “radical rethink” of apprenticeships after a near 27% fall in the number taking up trainee posts in the last quarter of 2017.

The number starting apprenticeships dropped to 114,000 between August and October, down from 155,700 in the same period in 2016. That followed a 59% drop in the previous three months after the introduction of the apprenticeship levy in April last year.

The biggest drop came in “intermediate” apprenticeships, the basic level, which dropped 38% to 52,000. The highest level of apprenticeships – known as degree apprenticeships – rose nearly 27% to 11,600. Schemes for adult apprentices were worse affected than for those young people, falling by just over 30% compared with 20%.

Critics say employers are being deterred from creating apprenticeship posts because of the increased costs and complexity of the new scheme.

Businesses with a payroll of more than £3m are charged 0.5% of their payroll towards the apprenticeship levy. A fifth of training must be carried out away from the workplace and employers with 50 or more staff must contribute 10% of the cost.

Seamus Nevin, head of policy research at the Institute of Directors (IoD), said the government risked failing to meet its target of 3 million people starting apprenticeships by 2020.

“Clearly the new system has failed to take off,” he said. “The levy can be difficult to navigate and many employers still struggle to comprehend how the system is meant to work.”

The IoD said more than one in 10 of its mostly smaller company members paying the levy now viewed it as an extra tax and could no longer afford to offer any apprenticeships.

The government is no longer fully funding apprenticeships, particularly for young people. The cuts have been heavily criticised. Mark Dawe of the Association of Employment and Learning Providers said: “For a government committed to improving social mobility, ministers have to be really concerned about the continued drop in starts for both young people and at lower levels.”

The association wants all apprenticeships for 16- to 18-year-olds to be fully funded by the government.

Verity Davidge, head of education and skills policy at EEF, the manufacturers’ organisation, said: “Today’s figures should act as a wake-up call to government which has failed to act on industry’s growing concerns around the apprenticeship levy.



“This worrying trend is not just hampering employers’ ability to get the skills their business needs, it is taking away invaluable opportunities for the next generation to undertake training and secure a future job. It is clear the apprenticeship levy and wider reforms aren’t working and need a radical rethink.”

Neil Carberry, managing director of people policy at the CBI, said it wanted the levy to evolve into a “flexible skills levy” that would fund a broader array of training courses.

“Today’s drop in apprenticeship starts remains alarming and proves again that the apprenticeship levy isn’t yet working for businesses, apprentices and the economy. A fresh approach is needed to make skills reforms work,” he said.

The government said it remained committed to 3m apprenticeships after signing up more than 1.2 million new trainees since May 2015.

Anne Milton, the minister for apprenticeships and skills, said: “The last year has been a period of significant change. It will take time for employers to adjust.



“But we must not lose sight of why we introduced our reforms in the first place – to put quality at the heart of this programme, and put control in the hands of employers.”

Workers’ rights groups have suggested that the number of apprenticeship starts is falling because the levy is weeding out the use of low-quality apprenticeships. They believe employers were offering minimal training as a way to source cheap labour, because the minimum wage for apprentices is below the national minimum wage. The Unite union has raised concerns about the lowest grade of apprenticeships and whether they are beneficial.