The 16 to 18 apprenticeships budget has been cut by £166m as would-be apprentices were squeezed out of places by “competition” from older applicants, a senior Department for Education (DfE) civil servant has revealed.

Simon Judge, the DfE’s finance and commercial director, wrote to the Education Select Committee after its expected funding of 16 to 18 apprenticeships in the current financial year fell nearly 20 per cent to £684.3m.

He said the removal of poor quality provision explained some of the underspend, but increased competition from applicants aged 19-plus, funded by the Department for Business, Innovation and Skills, was also a factor.

“The removal of poor quality [apprenticeship] provision is only one element of the overall underspend,” wrote Mr Judge in a letter dated May 8 to committee clerk Lynn Gardner.

He said changes in the apprenticeship mix by sector, and the wider economic conditions facing businesses in some regions and sectors, also explained the fall.

The financial revision was disclosed in the DfE’s supplementary 2012-13 estimate.

In the most recent Statistical First Release, published in March, the number of under 19 apprenticeships started in the first half of this year was provisionally 69,600 — a 12 per cent drop on last year’s provisional figure of  79,100.

By contrast, the 19-24 apprenticeship starts over the same period grew 6.5 per cent.

This comes just two months after the government revealed under 19 apprenticeship starts had fallen for the first time in three years — from 131,700 in 2010/11 to 129,900 last year.

Tristram Hunt, Junior Shadow Education Minister, claimed the underspend revealed incompetence. “The number of apprenticeship starts for young people has already fallen by nearly 2,000 in the past year. And now we discover that the government is so incompetent that it’s not even spending all the money in the apprenticeships budget. With nearly one million young people unemployed that is simply unacceptable,” he told FE Week.

A joint statement from the two departments said: “There are a number of reasons behind this underspend. This includes changes in the cost of courses that were taken up, economic challenges facing some sectors and an increase in 19 to 24-year-olds choosing to become an apprentice. We have also rooted out poor quality provision that was not meeting the needs of today’s employers.”

A senior economist at the Institute for Public Policy Research, Tony Dolphin, who wrote  the report Rethinking Apprenticeships, added that apprenticeships should be reserved only for those aged 16 to 24.

“They should not be just another form of on-the-job training; they should specifically support the transition of young people from education into work through a mix of on-the-job targeted training and more general off-the-job learning,” he said.