Apprenticeship Funding

In April 2017, the government introduced a new approach to funding. All apprenticeship standards, have been allocated one of 30 funding bands, ranging from £1,500 to £27,000.

For the water sector the funding rates are:

  • £6,000 – Level 2 Network Technician 
  • £9,000 – Level 2 Treatment Process Technician 
  • £15,000 – Level 3 Water Network Operative 
  • £16,000 – Level 3 Water Process Operative 
  • £9,000 – Level 4 Asset Manager 

These amounts are the maximum amount of government funding available, this is before any Recognition of Prior Learning (RPL) is calculated and deducted. If an employer agrees a price with a training provider above the final calculated training fee then the difference would need to be funded by the employer.

These funding levels are also the cap for any government ‘co-investment’ where an employer does not pay the levy or has insufficient funds in their digital account and is eligible for extra support. There is an additional £1,000 of funding payable to both the employer and the training provider if the apprentice is 16-18 years old.

Funding Rules

Apprenticeship funding is governed by rules laid down by the Education & Skills Funding Agency which detail the obligations for both employers and training providers.

Apprenticeship Funding Rules – August 2023 to July 2024

Apprenticeship Performance – Management Rules for Training Providers – July 2022 – Version 4

Apprenticeship Technical Funding Guide 

Employer Levy

All UK employers now pay a levy of 0.5% on total employee earnings subject to Class 1 secondary NICs. Employers then get a £15,000 fixed annual allowance to offset against the levy payment. So in practice that means no levy is payable until the pay bill exceeds £3m. The levy applies to all public and private sector organisations including charities and education providers.

The levy is collected monthly by HM Revenue and Customs (HMRC) through Pay as You Earn (PAYE), alongside tax and National Insurance. These monies are then held in a Digital Apprenticeship Service (DAS) account.

Full details on the Apprenticeship Levy can be found at: Pay Apprenticeship Levy.

In England, employers need to register with the DAS and accept a digital contract with the Education and Skills Funding Agency (ESFA) to cover the use of these levy funds in the delivery of apprenticeships – ESFA Apprenticeship Agreement for Employers January 2020 (updated 26th October 2022).

Once set up, an employer can then contract with training providers on the Register of Apprenticeship Training Providers. Employers then link apprenticeships and apprentices to a provider and approve the agreed price for the delivery of the apprenticeship programme.

If an employer does not have sufficient funds in their digital account to cover the training and assessment costs in any particular month then it will be required to make a 5% co-investment with government paying the remaining 95%.

Employers will be able to use the funds in their digital account and access government co-investment support to train individuals to undertake an apprenticeship provided the training will allow them to acquire significant new skills and knowledge, and the content of the training is materially different from any prior training or previous apprenticeship.