The Chancellor told Parliament this afternoon that firms would pay the fee, set at the rate at 0.5% of an employer’s pay bill, from April 2017.

This was to “ensure large businesses share the cost of training the workforce”, George Osborne said.

Mr Osborne set a target of 3 million apprentices by 2020 – which would be treble the number compared to 2010 when the Conservatives became the majority party in a coalition Government.

He said: “Every employer will receive a £15,000 allowance to offset against the levy – which means over 98% of all employers - and all businesses with pay bills of less than £3 million - will pay no levy at all.

“Britain’s apprenticeship levy will raise £3bn a year. It will fund three million apprenticeships. With those paying it able to get out more than they put in.

“It’s a huge reform to raise the skills of the nation and address one of the enduring weaknesses of the British economy.”

He said: “Almost 250,000 extra students will benefit from all this new support I am announcing today and then there’s our apprenticeship programme – the flagship of our commitment to skills. In the last Parliament, we more than doubled the number of apprentices to 2 million.

“To make sure they are high quality apprenticeships, we’ll increase the funding per place - and my Right Honourable Friend the Business Secretary will create a new business-led body to set standards.

“As a result, we will be spending twice as much on apprenticeships by 2020 compared to when we came to office.”