The Apprenticeship Levy is a blunt instrument that is unlikely to improve the quality of workplace training, the Chartered Institute of Personnel & Development has argued after new research showed that two-thirds of employers are either opposed to the policy or unsure of where they stand.
The body said among employers that expect to pay the levy and have calculated the approximate cost, 47 per cent are opposed to the principle behind it, with just 39 per cent in support.
The Government is set to introduce the levy from April 2017.
Only one in four employers currently plan to use levy funding to invest in apprenticeships. Only one in 10 plan to use the funding to start a new apprenticeship programme.
The CIPD warned that while the levy is likely to increase the overall number of apprenticeships, it is likely to undermine their quality, as well as wider investment in workforce training and development.
In addition, the report suggests that levy funding is unlikely to benefit the majority of smaller businesses that need funding and support for training the most.
Over a quarter of employers do not know whether they are expected to pay the charge and only a third of those who do expect to pay it have calculated the annual cost.
Peter Cheese, chief executive of the CIPD, said: "We share the Government's ambition to increase the number and quality of apprenticeships in the UK. However, our research suggests while the levy will boost apprenticeship numbers among some employers, the majority of organisations, particularly SMEs, are unlikely to use levy funding to improve apprenticeship provision.
"Our research also finds that the levy could have damaging, unintended consequences. For example, taking investment away from other equally valuable forms of training and development and causing organisations to effectively re-badge existing training schemes as apprenticeships simply in order to reclaim levy funding. Many large employers, particularly in low margin sectors and the public sector, will have to make significant cuts to their training budgets as a result of the levy, or will simply write it off as a tax.
"These findings highlight that the levy is a blunt instrument providing employers with a one size fits all approach to training, forcing many larger employers to make a net contribution to a scheme that our research shows will suit only relatively few. We therefore believe a much broader, more flexible Training Levy should be developed to ensure that the system is genuinely employer-owned and meets the skills requirements of organisations. This would enable employers to draw down levy funding, with appropriate criteria, for a wider range of training activities, as well as for apprenticeships."
Responding to the report, Neil Carberry, CBI director for employment and skills policy, said: "While the Government's ambition to increase apprenticeships is the right one, the design and timetable for the new Apprenticeship Levy poses real risks to quality and provision of training. Across the business community there is deep concern about the system in its current form, and this research demonstrates the need for a radical rethink.
"The system needs to work for the country, not just Whitehall. It is crucial that businesses have time and space to continue the work they are doing with Government to try and shape the design before its introduction. Creating a flexible system that encourages employers to spend on quality training then recover their costs is the best way of ensuring the levy helps deliver the higher level skills we all want to see."