The Government's apprenticeship levy is causing "confusion and frustration" among businesses and should be reformed, a skills expert is warning.

Jane Gratton, head of skills at the British Chambers of Commerce (BCC), says many firms are finding it difficult to engage with the system because of its complexity.

She will tell a London conference that official figures show a 25% drop in apprenticeship starts since the levy was introduced a year ago.

"Most sectors and regions of the UK are facing skills shortages, and our research shows recruitment difficulties across the economy stand at near record highs," she will say.

"In this environment, and with virtually full employment, plugging the skills gap must be at the forefront of the Government's agenda.

"Businesses recognise that apprenticeships are a crucial tool in shaping the skills of tomorrow, but the current restrictions and inflexibility of the system make it unfit for purpose.

"For many levy payers it feels like a tax, or redirects funds set aside for other forms of workplace training.

"At the other end of the spectrum, the funding rules mean that SMEs (small to medium sized enterprises) are facing higher recruitment costs, and are unsure how and where to access quality training providers."

She will add: "The aim of the apprenticeship levy is laudable, but its structure and implementation are obstacles to training the talent of tomorrow.

"Once the necessary reforms are made, a period of stability in the UK's training system is needed to give businesses the certainty and confidence to engage and invest in the long-term."