The latest figures from the Department for Education show that the number of apprenticeship starts fell by 28% in the past year.
There were 261,200 apprenticeship starts reported between August 2017 and March 2018 for the 2017/18 academic year. This compares to 362,400 and 346,300 starts in the equivalent period in 2016/17 and 2015/16 respectively.
The downward shift has occurred since the introduction of the apprenticeship levy in May 2017.
However, the Department for Education has cautioned that the data may be misleading; it says "there was an unusually large increase in starts in March (and April) 2017 ahead of the introduction of the apprenticeship levy".
Even so, business groups have expressed concern that the current apprenticeship system is not working.
Seamus Nevin, head of policy research at the Institute of Directors (IoD), said: "These new figures … are proof, if more was needed, that the apprenticeship levy is not working as intended. Shockingly, employers have spent just 10% of their levy funds in the first year since the new system was introduced.
"Businesses support the apprenticeships programme but the chorus of employers, and city mayors, calling for the system to be reformed is growing. The drop in the number of starts shows that the Government needs to make the apprenticeship system a lot more flexible and a lot less bureaucratic."
The new system was intended to encourage more in-work training but, according to Nevin, "the narrow and centrally-controlled structure is not helping firms to invest in the training that is most needed by our economy. If we want employers to invest more in training British workers then we need to ensure that the levy system works better for the skills needs of employers."
Jane Gratton, head of business environment and skills policy at the British Chambers of Commerce (BCC), said: "This further drop in the number of apprenticeship starts is a clear sign that something is going wrong with the apprenticeship levy. Businesses want to make the system work … but the system as it stands is in need of reform. The Government needs to listen to the business community, and work with us to ensure more people have access to high-quality apprenticeship training, in order to make the levy system work better for everyone."