While the CBI yesterday welcomed the new moderate package, the GMB general union declared itself in favour of a statutory imposition on any business that failed to train its employees.
A document written by Stephen Byers, Labour's spokes- man on training, shows the leadership has clearly ditched the levy, which Tony Blair sees as simply another tax burden on business.
Matthew Taylor, the party's new head of research, said the imposition of fiscal penalties smacked of "old Labour" and that industry tended to see the negative aspects of the levy before they discovered the more positive elements of party policy.
The paper by Mr Byers suggests that employees should be entitled to an "individual learning account", which would be the subject to tax advantages.
The document said the party expected employers would "choose" to make a contribution to the accounts but did not envisage any compulsion.
Under the new proposals, the only concrete imposition on business would be a statutory obligation to become a "New Investor in People" - a revised version of the present voluntary system.
The plan was evolved after private discussions with individual unions, the TUC and the CBI.
A spokesman for the employers' organisation welcomed the abandonment of the levy, which she said had been clearly rejected by members of the CBI.
Party critics however believe that by leaking the document last week, the Labour leadership is trying to "bounce" them into accepting the new approach ahead of the economic policy commission next month, where unions will privately register their opposition to the package.
Union representatives pointed out yesterday that Labour was officially committed to the levy through successive decisions at annual party conferences.
The paper has set the scene for a public row between unions and the Labour leadership in April at the Scottish TUC in Edinburgh - the first big gathering of the conference season. It could be the last opportunity for Scottish trade unionists to register their opposition to the change before the election.
Davy Hall, president of the ultra-loyalist Amalgamated Engineering and Electrical Union has tabled a motion for the Edinburgh conference reiterating support for a levy. In the past, Labour leaders have been able to rely on the AEEU to support the "modernisation" of policies.
All the party's largest affiliates - the Unison public service union, the Transport & General and the GMB - have expressed their support for a strong element of compulsion to ensure that Britain catches up with the skill levels in competitor economies. Together with the AEEU, they represent nearly 40 per cent of the vote at Labour's policy-making conferences.
A GMB spokesman said the union was "not happy". "It is critically important that the party recognises the need for a thorough and compulsory training programme."Reuse content