Apprenticeship Funding Rules 2022/23 – Version One


Apprenticeship providers across the country will be breathing a sigh of relief, as the Education and Skills Funding Agency (ESFA) has finally published version 1 of the apprenticeship funding rules for 2022/23. With less than two weeks until the start of the academic year, there are plenty of changes that providers need to get on top of quickly to ensure they’re compliant. I hope this blog offers a useful explainer on some of the key changes to be aware of.

Off-the-Job Training and Recognition of Prior Learning

The areas which will require providers to make significant changes from their current approaches are the new off-the-job training (OTJT) baseline and the new formulaic approach to the recognition of prior learning (RPL). It is, however, worth noting these have not materially changed between the draft and version 1. In summary, the OTJT baseline moves away from a minimum of 20% of contracted time to a minimum of 20% based on an average 30-hour week – the notional 6 hours is for calculation purposes only. For a 12-month apprenticeship, this is a minimum of 278 OTJT hours. For RPL, the Department for Education (DfE) has introduced a formula-based approach where the provider needs to calculate how much prior learning relates to duplicate OTJT time, as a percentage of the total hours of a full programme. Based on this, the provider must use a factor of 50%, which acts as a proxy for variable costs to reduce funding from the funding band cap. The DfE has also recently published updated supporting guidance on RPL which providers should read alongside the funding rules. These make the requirements and expectations on RPL assessment very clear.

Change of Employer

It was very positive to see version 1 of the funding rules include a new change in how providers deal with an apprentice changing employer. From 1 August, the new rules allow for the use of a break in learning (BIL) for an additional eight weeks on top of the current 30-day grace period. This is a big win for learners, providers and employers, as it will mean fewer apprentices have to withdraw and restart, in turn boosting completion rates. Providers will need to think about updating their processes and systems around BIL to capture and record this new scenario.

Maths and English Policy

Maths and English funding, policy and flexibilities continue to be top policy priorities for AELP. The draft rules finally saw the end to the arbitrary requirement for level 2 apprentices having to study towards and attempt the level 2 test once they had passed level 1. In AELP's response to the clarification of the draft rules, we requested that the ESFA consider applying these changes to not just new starts from August 2022, but also retrospectively to level 2 apprentices already on-programme. Therefore, this change is most welcome and removes another barrier for many entry-level apprentices.

Evidencing Progress of Withdrawn Apprentices

Within the consultation period, we also highlighted concerns regarding the new requirement for providers to evidence progress “within four weeks of planned activity” for withdrawals, as apprentice progress is subjective and not always linear. Providers also expressed concern about the potential additional cost and bureaucracy of having to update and replan the Training Plan more frequently to ensure that apprentices are within those 4 weeks.

The ESFA has now removed this specific requirement from version 1 of the funding rules, but there is a new term in the glossary under the heading "insufficient progress against training plan”. Officials say they intend to revisit this area in a later version of the rules. Providers should still note the intent- it’s just that evidencing and measuring still need to be ironed out.

Active Learning

As previously, active learning needs to happen every four weeks. In the clarification version, the ESFA defined active learning as either OTJT or maths and English training. This is not a new rule, but it was not previously defined, so some providers interpreted this to also include on-the-job training. The only exemption to active learning is term-time contracts, where the ESFA say that apprentices do not need planned activity over the six-week holiday. A BIL is not required here either.

The ESFA reinforced that as a minimum, OTJT needs to be planned to take place at least every four weeks. In version 1 of the rules, the ESFA highlight that active learning can include employer-led activities such as planned coaching, shadowing and mentoring, and they do not stipulate the volume of activity that needs to take place. We’ve had assurances that auditors will take a pragmatic view when activity is planned, but does not always take place when it should. However, any missed activity should be replanned- auditors will not accept ‘endemic’ training gaps, even when it has in theory been planned. In these circumstances, a BIL should be utilised, and funding paused.

Officials also informed us that they have received significant feedback on active learning and that they are committed to reviewing it in a later version of the rules. The challenge of undertaking meaningful OTJT activity in sectors which have higher levels of seasonal work- such as hospitality, retail and tourism- is understood, and there may be some new flexibilities in the future.


Officials have accepted our challenge on the revised requirements for main providers on subcontracting. The draft rules stated that the volume of training and/or on-programme assessment that the main provider directly delivers for each employer must have some substance and must not be a token amount to satisfy this rule. It must include the delivery of off-the-job training.

AELP successfully argued that the rules cannot stipulate that providers have the choice to deliver training and/or on-programme assessment, but then at the same time state that they must also deliver OTJT. The rules have been changed in version one to revert to requiring that main providers deliver some of the "training and/or on programme assessment". Providers should note that the ESFA has also updated the supporting guidance on subcontracting in apprenticeships with further illustrative examples.

Eligible / Ineligible Costs

The ESFA have added a clarification on their approach to how providers fund ineligible costs – now saying that: “the majority of training providers will operate on commercial terms and will expect to create a surplus (profit); a surplus ensures the financial viability of a business and can provide funds to e.g. fund ineligible costs, improve facilities and services and remain competitive. This is a legitimate approach to take (P103.2).” The only exception to this is mark-up on external supplies and delivery from a delivery subcontractor. The latter of which, is because there is an expectation of the delivery subcontractor is already applying a mark-up.

The ESFA has clarified that mock testing (relating to the end-point assessment) and exam revision are ineligible costs, as these activities do not meet the definition of off-the-job training. Initial assessment remains as a new eligible cost for starts from August 2022 onwards and can be included in the total negotiated price between the provider and the employer.

Progress Reviews

In the current funding rules, the requirement for progress reviews is that they are "planned" and "regular"- which is somewhat subjective. Version one of the funding rules have been tweaked to specify that these must now take place “at least every 12 weeks”- which is tweak from the 8–12-week requirement in the draft rules. The ESFA believe that keeping apprentices and employers engaged in the apprenticeship programme is key to increasing success rates, so expect this to be the direction of travel moving forwards.

Apprentices on the PAYE Scheme

The proposed PAYE requirement for providers in the draft rules has been softened. There is now emphasis on ensuring employers are putting apprentices on the PAYE scheme: “The provider must support the employer to ensure that the apprentice is included in the PAYE scheme declared in the apprenticeship service account.”

Evidencing Additional Incentives

Following our feedback on additional bureaucracy, the ESFA has removed the proposed draft rule that would have required the main provider to obtain written confirmation from the employer to verify that they have forwarded the relevant payment to them. There has also been a change to the evidence pack. Providers must now evidence additional payments to the employer and forwarded within deadlines, shown through the provider’s financial systems (to show transaction of payment). They must now also include a provider confirmation, to the employer, that this payment has been sent. (P346.5)

There will undoubtedly still be challenges for providers to grapple with, but it’s really positive that officials have taken feedback on our board in version 1 of the 2022/23 apprenticeship funding rules. As always, any AELP members with questions or concerns can get in touch at any time- I will do my best to help.


Simon Ashworth, Director of Policy at AELP

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