The government has defended its apprenticeship levy despite a fall in the number of new starts since it was introduced.

Official figures showed there were 194,100 apprenticeship starts reported in England for the first two quarters of the 2017/18 academic year, compared to 258,800 reported at this time in 2016/17, a decrease of 25 per cent.

December's figure of 16,700 is a fall compared to both the same time last year (21,600) and from November's figures 32,500.

Jane Gratton, of the British Chambers of Commerce, said: "With our research showing three-quarters of businesses facing skills shortages, it is vital that employers can recruit young people into the business and upskill workers at every level of the workforce.

"Apprenticeships are very much part of the solution, but the restrictions and complexity around the use of the apprenticeship levy have made it more difficult for firms to use them to train staff and plug skills shortages.

"Since the levy was introduced nearly a year ago, we have seen a worrying fall in the number of new apprenticeships started. This is limiting opportunities for people and could impact on business competitiveness. Something must be done urgently to reverse this trend."

Apprenticeships and skills minister Anne Milton said: "I'm pleased to see an increase in people starting apprenticeships designed under our higher-quality standards, which we are developing with businesses so those programmes meet the needs of employers and apprentices.

"We've also seen a big jump in higher level apprenticeships which can lead to a range of exciting, highly skilled jobs.

"Our reforms have fundamentally changed what apprenticeships are, and the long-term opportunities they can provide.

"The apprenticeship levy is an important part of these changes to raise the quality of apprenticeships in this country, creating long-term, sustainable investment in training and education.

"Nearly 60 per cent of people starting on the new apprenticeship standards are levy-supported, showing that levy payers are working well with the new system."

Research by the Institute of Directors found fewer than one in five employers will use contributions from the levy to take on more apprentices.

Most of the 640 businessmen and women surveyed said they offered training to staff, but many complained about the administrative burden of the levy.