Businesses are being held back from attempts to increase apprenticeships because of the system's "rigidity", according to a new report.

A survey of 765 firms in England paying the apprenticeship levy found that almost half wanted to use the money to invest in other forms of training such as professional courses.

Skills development organisation City & Guilds said its research suggested that nine out of 10 levy-paying employers wanted greater flexibility in how they spend their apprenticeship allowance.

Improving skills 'has never been more urgent'

The apprenticeship levy was introduced in April 2017. It requires businesses with an annual wage bill of £3 million or more to pay 0.5 per cent of this amount into a fund that can be spent on apprenticeships and other eligible training.

Kirstie Donnelly, managing director of City & Guilds Group, said: "The turmoil we are facing, as a result of uncertainty around Brexit as well as the rapidly changing world we live in, means that it's never been more urgent to improve the skills of our workforce and invest in home-growing the skills that we may no longer be able to import from abroad.

"Apprenticeships have a huge potential to deliver on this, but the system is still not responsive enough to the needs of employers.

'Businesses need more flexibility'

"Businesses need more flexibility to use the apprenticeship levy in a way that will truly help them fill skills gaps, upskill their workforce and shore up their talent pipeline for the future. Although we welcome the government's commitment to introduce reforms, they are yet to set this in motion."

The survey suggested that 95 per cent of employers did not spend all their apprenticeship budget in the first year of the new system. They have up to two years to make use of the funds in their digital account.