THERE is a "looming car crash" over the proposed apprenticeship levy, manufacturers have warned, after it emerged only 1 per cent of them support the controversial scheme in its current guise.

EEF urged ministers to apply the brakes to the launch of George Osborne's "flawed" policy until at least September 2017, following new research showing that employers have grave concerns about the scheme's design and implementation.

EEF, the manufacturers' organisation, warned that the majority of its members believe the drive to create three million new apprenticeships by 2020 is doomed without major surgery.

It echoes concerns voiced by the British Cambers of Commerce who warned that Britain's skills shortage could get worse unless the Government clarified the terms of the new scheme as quickly as possible.

The levy introduced in the Autumn Statement, which is due to come into effect in April 2017, will apply to all employers with annual pay bills in excess of £3m and is expected to raise £11.6bn over the next five years. It means firms will have to pay a 0.5 per cent levy to fund the Conservatives' apprenticeship target.

All employers will receive a £15,000 allowance to offset the payment of the levy, paid in vouchers.

The BCC said the current design of the scheme "could lead businesses to shoehorn other forms of training into apprenticeships in order to recover their costs".

The Institute for Fiscal Studies has also warned that some companies could try to take advantage of the scheme by “labelling” employees as apprentices to secure funding.

Tim Thomas, director of employment and skills policy at EEF, said: “The headlong rush to bring this levy to market has left little time to iron out some significant wrinkles and get responses to industry’s unanswered questions. As a result, firms can see serious flaws that could sink this policy at launch. This is in nobody’s interests, which is why we’re recommending a delay to buy us all enough time to avoid the looming car crash.

“Manufacturers are highly committed to providing quality apprenticeships. They are supportive of the principles behind the apprenticeship levy, but are clearly dismayed at the way it is being put into practice.

"The fact that just 1 per cent of firms want to see the levy go into place in its current guise is pretty telling. Companies can see issues over clarity, simplicity and timing, along with many other concerns. As a result a large majority want to see the levy delayed until business and Government are satisfied that it’s fit-for-purpose."

EEF said delaying roll-out would allow time for industry and Government to jointly tackle concerns and launch a scheme that is fit-for-purpose.

A delay will also mean avoiding a clash with the amalgamation of the annual rise in the national living wage and national minimum wage – due in April next year – plus it would allow for better matching with businesses’ recruitment cycles, employers said.

Worryingly, the Government has claimed that firms will be able to get more out of the scheme than they put in. However, little over 10 per cent of EEF members have faith in that claim, while just 13 per cent

believe the scheme will level the playing field and enable smaller businesses to offer apprenticeships too.

At the moment, less than a third of companies think that the levy will prove to be a game changer for apprenticeships in the UK.

Mr Thomas, added: "While Government has made every step to engage employers in the process, the levy simply isn't ready to roll out - half a year more in development could make all the difference between whether it succeeds or fails."