Labour’s planned new body to oversee training in England will open up opportunities for young people, Sir Keir Starmer says.

In a speech on Monday, the prime minister will argue a new approach is needed to reduce the need for immigration in key sectors.

During the election, the party pledged to give businesses more flexibility to spend subsidies currently earmarked to create apprenticeships.

Labour wants to set up a new agency, Skills England, to decide which types of training should be eligible for funding.

But the Conservatives have warned that the plans to redirect cash could slash the number of apprenticeships on offer.

Labour argues the existing apprenticeship levy, introduced by the Tories in 2016, has resulted in a fragmented system and a low-take up from employers.

The tax, which is paid by larger companies and raises around £3.5bn a year, is currently used to fund apprenticeships, paid jobs that allow recruits to gain experience in the workplace alongside training or study.

But Labour wants to let eligible firms use up to 50% of the cash to fund other types of training, arguing it will help boost skills among a broader range of people and help the UK economy respond to changing technologies.

Largely replacing an existing arm’s length body, the Institute for Apprenticeships and Technical Education (IfATE), Skills England will be charged with deciding what courses can be funded.

Although Labour has pitched the change as part of its offer to young people, it has not laid out plans to restrict the ages of employees that will be eligible for the newly-funded training programmes.

Currently, around under half of all apprenticeships are taken up by workers under 25, although the age profile has been getting older over time.

Sir Keir said England’s current skills system was “in a mess, which is why we are transforming our approach”.

He added a new approach would “help to deliver our number one mission as a government, to kickstart economic growth, by opening up new opportunities for young people”.

The government says it wants Skills England to work more closely with official migration advisers to develop training plans for sectors that are currently reliant on immigrants to fill roles.

Before the election, Labour pledged to make it harder for companies that refused to comply with training plans to hire workers from abroad, although detailed plans have not been published.

Skills England will initially be set up within the education department, with former Co-Operative Group boss Richard Pennycook as interim chair.

Setting up the new body on a permanent basis is expected to take 9-12 months, including passing relevant legislation to create its new powers.

The number of adults in further education courses has declined by around 50% since 2010, according to official figures, with the number of people completing apprenticeships also falling in recent years.

The Institute for Fiscal Studies think tank says the success of the new policy will depend on how well Skills England can identify courses for funding that companies would not have funded themselves anyway.

A Conservative spokesman said Labour’s plans to allow up to 50% of the apprenticeship levy to be rediverted could see apprenticeships halve.

This could lead to “fewer opportunities for the next generation,” he added.