The apprenticeship levy has had a “disastrous” impact on employers, the chair of the UK’s largest employers’ organisation will say tonight.

Dame Judith Hackitt, chair of the EEF, which represents manufacturing businesses, is expected to say employers are “near breaking point” with the levy, during a speech at the organisation’s annual dinner this evening.

She said she could not let the dinner, which will be attended by business secretary Greg Clark, pass without raising the issue of the apprenticeship levy.

‘Another tax of business’

“While the levy has laudable aims, its impact on employers has been disastrous. It is complex, companies are unable to access their funds - and many view it as another tax on business. As a result, we have seen new starts collapse, with many companies postponing or halting apprenticeships,” she will say.

“A win-win has become a lose-lose. Some employers are near breaking point. The government must now listen to what EEF has long said and rethink the entire levy system from top to bottom.”

The EEF - formerly the Engineering Employers’ Federation - is the largest sectoral employers’ organisation in the UK.

Skills levy

It comes after former education secretary Justine Greening said ministers should consider reforming the apprenticeship levy into a skills levy.

In a blog posted on her website, published ahead of Theresa May’s announcement of a review of the post-18 education system, she wrote: “A reform of the apprenticeship levy to become a wider skills levy could be a way to effectively channel extra funding and incentives to plug the skills gap and give employers some of the flexibility that they are asking for in the apprenticeship levy.”

Ms Greening said the change could be considered in line with adjusting the levy rate. It currently sits at 0.5 per cent of an employer’s payroll, if they have an annual pay bill of over £3 million.

The apprenticeship levy was introduced last April as part of the government’s ambition to see three million apprenticeships by 2020. Immediately after the introduction of the levy the numbers starting apprenticeships fell by 61 per cent compared to the same period a year before.

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