The apprenticeship levy announced by chancellor George Osborne in his autumn statement has received a cautious welcome.

Having revealed the intention to introduce the levy for larger businesses in this year’s summer budget, Osborne has now confirmed it will be in place by April 2017, set at a rate of 0.5% of an employer’s paybill.

Every employer will receive an allowance of £15,000 to offset against their levy payment, meaning it will be only be paid on any paybill in excess of £3 million – so less than 2% of UK employers will pay it.

The levy will raise £3 billion by 2019/20, doubling the level of spending since 2010-11 and helping to achieve the target of three million apprenticeships by 2020.

Justine Fosh, chief executive of the National Skills Academy for Food & Drink, says, “This heralds a new era for apprenticeships in the UK. The announcement is in line with expectations and the guidance we have been giving to businesses in the food and drink manufacturing sector.

“Despite being the largest manufacturing sector in the UK, with the need to recruit more than 100,000 new people into the industry, historically we have under invested in apprenticeships, so this levy is a positive move to increase the numbers dramatically. However, it is not all about number and with the development of new trailblazer apprenticeships due to launch early in 2016, industry can be reassured that high quality and relevant apprenticeships will be available.

“The levy will put control of apprenticeship funding in the hands of employers and will encourage employers to invest in their apprenticeships and take on more. Employers in England who pay the levy and are committed to apprenticeship training will be able to get out more than they pay into the levy, through a top up to their digital accounts. All employers who do not pay the levy will be able to access government support for apprenticeships.

“As well as increasing the numbers of apprentices, the government will ensure quality is increased too. The government will establish a new employer led body to set apprenticeship standards and ensure quality. The body will be independent of government and will also advise on the level of levy funding each apprenticeship should receive. Funding caps will be significantly higher for programmes which have high costs and are of high quality.”

Ian Wight, director general of the Food and Drink Federation, adds, “Growing apprenticeship numbers is a key ambition for the UK food and drink industry. Reform is needed to make this route more attractive and an apprenticeship levy system that is proportionate, simple and works for businesses of all sizes will be a key ingredient in achieving this.

“The rate announced will be a cause of concern for larger businesses and may hit company investment pots for staff training and, perversely, new apprenticeship starts.

“We look forward to working with the new levy board, in particular to make sure that due attention is paid to improving the quality of apprenticeships, not just increasing the volume.”