THE chancellor reaffirmed his commitment to create three million apprenticeship places by 2020 but big businesses will have to help pay for them.

Mr Osborne announced a new apprenticeship levy which will come into effect in April 2017, at a rate of 0.5 per cent of an employer's pay roll.

A £15,000 allowance for employers will mean that the levy will only be paid on employers' pay bills over £3 million.

According to the Treasury less than two per cent of UK employers will pay the levy.

Stewart Dunn, chief executive of the Hampshire Chamber of Commerce, supported the move to create more apprenticeships but wanted to see more detail.

"Many smaller and medium-sized businesses will still be wondering if they have to pay this 'payroll tax'," he said. "More detail is needed otherwise firms will put training and investment budgets on hold until the full impact of the levy is clear. We have long called for measures to bridge skills gaps in many industries but we remain sceptical that the chancellor has done enough to instil confidence and promote quality apprenticeships."

Tim Thomas, head of employment and skills policy at EEF, the manufacturers' organisation said: "Whilst the principle of the levy is not supported by business, the chancellor's announcement balances the need to secure future employer funding to invest in quality apprenticeships at a rate that the employers affected can afford.

"But there are several future challenges which must be overcome before manufacturers can support the new levy. Employers must be able to control the funding with the lowest possible level of red tape. Any level of funding available to employers must allow them to cover the real cost of providing a quality apprenticeship with predictable and stable funding over the long-term."

Neil Eames, the Federation of Small Businesses development manager for Wessex, was more supportive of the levy, saying: "We believe this is a fair level as it recognises that not all businesses will be able to afford to pay the charge. While the levy will not be applied to the smallest firms, it is important that these businesses can continue to interact with the apprenticeship system. The government must ensure that whatever system is ultimately implemented is simple, accessible to all and delivers the high-quality apprenticeships sought by employers."