Dame Judith Hackitt has called upon the government to rethink the Apprenticeship Levy, during a speech at the Semta Skills Awards in London.

During the speech, she said that the new system, which finances apprenticeships, needed urgent radical reforms to reverse the ‘collapse’ of new start apprenticeships.

“We are not asking for the levy to be scrapped but it does need a rethink if it is to achieve what we all want and what the UK needs for the future,” said Dame Hackitt.

“We have seen the number of new starts collapse, with many companies postponing or halting apprenticeships. What should have been a win-win has become a lose-lose. To train the talented individuals we are going to see here tonight costs more than £27,000. Providers are reluctant to offer courses, which cost more than the cap, so there is a need to recognise the true cost of different types of apprenticeships, not have one simple cap.

She continued by expressing the need for greater flexibility for employers and providers to agree payment schedules, especially in sectors where upfront costs are high.

She added: “The rules on transfer of unused levy need to be relaxed – moving the current cap at 10% to 50% would stimulate Levy funds being used across supply chains. The levy should be used for what is says on the tin – apprenticeships, without dilution to fund other training schemes.

“And the process of approval of apprenticeship standards must be streamlined. We know that the IFA has taken time to set up, but if we are to achieve the momentum we need on apprenticeships, we cannot have the delays and deferrals, which we have been seeing.

“We all need to work together to make this as easy to implement as possible, not create unnecessary obstacles when we all want the same thing – more and more young people taking up apprenticeships. These conversations need to continue elsewhere, and urgently.”