An additional 20,000 higher apprenticeships will be offered in England up to 2014/15 with employers being funded directly for them.
In his Autumn Statement address earlier today Chancellor George Osborne said that the increase will be funded by an extra £40m from Government, while he also announced that HM Revenue and Customs will now fund employers directly for apprenticeships rather than via a training provider.
Steve Radley, director of policy at the EEF manufacturers' organisation, said: "Businesses have long been calling for a revolution in how apprenticeships are funded, and today their calls have been heard.
"Placing funding in the hands of the employer will create a truly responsive, relevant skills system that delivers high quality apprenticeships. Employers now need stability and certainty on apprenticeship funding."
Paul Davies, IET Head of Policy, said the announcement of extra funding is welcome.
But he warned: “Reforms of apprenticeships must include mechanisms to ensure SMEs – the lifeblood of the economy – are not priced out of the market.”
Qualifications body City & Guilds voiced similar concerns saying that the Autumn Statement had put the apprenticeship system "at risk" because of additional bureaucracy faced by employers.
Chief executive Chris Jones said: 'It's not the focus on employer ownership that's risky – that's something we actually welcome. It's the assumption that employers have the time, and indeed the will, to cope with the additional bureaucracy these reforms will entail.
"Rather than incentivising employers, I fear they'll be put off by what's been announced and decide it is simply not worth the hassle. That would be a disaster, and another generation of young people in this country would lose out."
Business Secretary Vince Cable said the move was part of his aim of putting further and higher education on an equal footing.
"My ambition by 2015 is for every school leaver to look at a university degree and a high level apprenticeship as different but equal in terms of desirability, future employability and earning potential,” he said.
“That's why today we are announcing an extra £40m of investment in funding an additional 20,000 higher apprenticeships in the next two years. This demonstrates our commitment to putting vocational and higher education on an equal footing."