Growth & Skills Levy: Data Engineering (Level 5)

Part of our topic guides on Data & AI Apprenticeships, Data Engineering and Government-Funded Data & AI Training.

By James Cotton, Founder, iO-Sphere

The objection usually arrives before anyone has looked at the funding. Someone says they cannot release a data engineer for 418 hours, and the plan stalls. It is a fair worry, and it rests on a picture of off-the-job training that is worth correcting, because the correction is also the reason to fund the programme at all.

Off-the-job is not defined by where the time is spent. It does not have to be time out of the business or a booked classroom, though a classroom session counts when it genuinely develops new capability. What it means is protected hours, inside the paid working week, spent on development rather than on the duties the person can already discharge.

The useful question is what fills those hours. Fill them with work the person could already do and you have wasted the time, and it would rightly not count. Fill them with work the person cannot yet do, the projects their skills gap currently blocks, and those hours produce output you were never going to get any other way.

This page is for the HR, L&D and hiring leads who know a levy budget exists but have not yet worked out how the Growth & Skills Levy funds a data engineering apprenticeship, what it covers, and who to check when the rules move. The apprentice can be someone already on your team whose role has grown past what they can currently do, or someone you hire into that gap; either way, the funded hours are what closes it.

The 418 hours are capability you are buying

The funding exists to close a skills gap. An apprentice, whether an existing team member you are developing or someone you have just hired, holds a role that already contains duties they cannot yet fully discharge, because they are missing the knowledge, skills and behaviours the standard sets out. Off-the-job time is where that gap gets closed, and the work that fills it is net new: projects the business cannot currently run because nobody has the capability yet.

That single test carries its own limit. Could the person already do the work? Then it is not development, and it should not be counted. Could they not? Then the training is what made it possible, and it counts. You do not need a list of qualifying activities, and no list would be safe anyway, because the real test is whether the capability existed beforehand.

In practice those hours become a portfolio. The projects are shaped at admissions against the gap in that specific role, delivered through the programme with a coach who has done the job, and the end-point assessment is one more project built on top of the ones already produced. That gives the learner evidence for progression, in the form of work they demonstrably could not have made before, and it gives you the return in the very same piece of work: something you could not previously get done, now done, by someone who will keep doing it.

The 418-hour figure is Skills England's, published for the Data Engineer standard as its off-the-job minimum (Skills England). How a provider fits those hours into the calendar is a delivery choice. We smooth the standard's hours across our 15 months of training, which works out at roughly six and a half hours a week. Treat 418 as the fixed number and six and a half hours as our arithmetic on top of it; a weekly figure quoted as if it were the requirement is simply wrong.

What the Growth & Skills Levy is, and what changed

The Growth & Skills Levy (formerly the Apprenticeship Levy) works the way it always has, with one recent addition. The underlying charge is unchanged: employers with an annual pay bill over £3 million pay 0.5% of that pay bill, collected monthly through PAYE and offset by a £15,000 annual allowance. If you pay the levy, the funds sit in your apprenticeship service account and pay for approved apprenticeship training and its end-point assessment. They cannot be spent on wages, travel or other employment costs. You cover the apprentice's salary yourself.

One scope point often missed: the levy is collected across the whole UK, but the apprenticeship service account funds apprentices in England only. Scotland, Wales and Northern Ireland run their own skills funding arrangements.

The addition is flexibility, delivered through short apprenticeship units. From 28 April 2026 the levy also funds these units alongside full apprenticeships, drawn from the same apprenticeship service account, with no cap on how much of your allocation you can direct to them.

Separately, a set of funding-mechanic changes lands on 1 August 2026, the start of the 2026/27 funding year. The 10% government top-up on funds entering your account is removed. Fund expiry shortens from 24 months to 12, but only for contributions made from that date. And co-investment for a levy payer who has exhausted their pot rises from 5% to 25%, for apprentices aged 25 and over only; every apprentice aged 16 to 24 stays fully funded. These are the 2026/27 funding rules; your existing pot and its expiry are not affected retrospectively.

We do not deliver the short apprenticeship units that the new flexibility funds. The money attached to a unit is small and the format limits how deep the practice can go. A unit fits where an employer needs a fully funded, short, narrow intervention and cannot fund more; it is not the route we recommend where building real capability is the goal. For that, the full Level 5 apprenticeship is the route, and the rest of this page is about paying for it.

Who pays what for a Level 5 data engineering apprenticeship

The funding attaches to the Data Engineer standard (ST1386). The maximum government funding is a band of £19,000, which covers approved training and the end-point assessment (Skills England). What you pay toward that band depends on two things: whether you pay the levy, and how old the apprentice is at the start. Any start you plan now falls in the 2026/27 funding year, so these are the operative rules.

Your situation	Apprentice aged 16 to 24	Apprentice aged 25 or over
Levy payer, funds in your account	Paid from your account, up to the £19,000 band	Paid from your account, up to the £19,000 band
Levy payer, account exhausted	Fully funded by government (£0 from you)	Government pays 75%, you pay 25%
Non-levy, pay bill under £3m	Fully funded by government (£0 from you)	Government pays 95%, you pay 5%

A few things sit around that table. "Non-levy" means an annual pay bill under £3 million, not a headcount. A non-levy employer has a second route to nothing to pay: a larger levy-paying employer can transfer up to 50% of its unused funds, a share raised from 25% on 22 April 2024, and that transfer often covers the whole cost of a smaller partner's apprenticeship.

So for most starts the employer pays nothing, and where a contribution does apply it is a slice of the training price and never the salary, appearing only in the specific cases the table names. Figures near the annual boundary can change, so confirm the live band and splits in the DWP apprenticeship funding rules before you commit budget.

Two more rules shape what actually gets funded. An existing member of your team can be the apprentice, which is often the strongest use of the route; recognition of prior learning then reduces the content, duration and price to reflect what they already know, though it can never take a programme below the funding floor of 8 months or 187 off-the-job hours. And the off-the-job hours are a condition of funding, not an optional extra: they have to be agreed and planned into the working week before the programme starts. The Growth & Skills Levy explainer and our funding options go into the fuller mechanics.

A data engineer sits in a sparser pay population than a data analyst, so a pay figure only helps if it names its basis and its level. Advertised UK data engineer roles cluster around £70,000 (median of job ads across ITJobsWatch and Reed, 2026), which reflects experienced hires; measured pay runs lower, roughly £45,000 to £57,000 for a typical data engineer (Payscale, Glassdoor, and the ONS software-developer proxy, since there is no data-engineer-specific ONS code), with entry-level nearer £32,000. For a live figure in your own market, a current salary guide refines it further.

What holds across those sources is the direction of travel: demand for people who can make data usable is structural, which is the underlying reason building the capability in-house tends to pay off.

Who regulates it now: DWP funding, Skills England standards, HMRC collection

Apprenticeship funding policy now sits with the Department for Work and Pensions. This was a machinery-of-government change, announced in the September 2025 reshuffle and confirmed by written ministerial statement on 16 September 2025; it did not abolish an agency. Higher education and under-19 skills stayed with the Department for Education. The 2026/27 funding rules are the first published under DWP ownership (GOV.UK apprenticeship funding rules).

Standards and their assessment plans are Skills England's domain. Skills England replaced the Institute for Apprenticeships and Technical Education (IfATE) on 2 June 2025, a separate event, under the Department for Education at the time, and moved with skills policy to the DWP that September. The old Education and Skills Funding Agency (ESFA) closed on 31 March 2025; if you see it named as current, that guidance is out of date. The levy itself is still collected by HMRC through PAYE, as it has been since 2017.

The practical upshot is a short list of who to check when details move: funding rules from the DWP, the standard your programme runs on from Skills England, collection through HMRC. None of that changes whether a Level 5 data engineering apprenticeship is fundable; it is. It only changes whose page you open when a figure or a date shifts under you.

Common questions on levy funding and eligibility

Can the Growth & Skills Levy fund a full data engineering apprenticeship?

Yes. Run against the Data Engineer standard (ST1386), a Level 5 data engineering apprenticeship is approved apprenticeship training, so it is fundable up to the £19,000 band that covers the training and its end-point assessment. A levy-paying employer draws that from their apprenticeship service account; a smaller, non-levy employer is funded through government co-investment or a transfer of levy funds from a larger business. The account funds apprentices in England; Scotland, Wales and Northern Ireland have their own schemes.

What are the off-the-job training requirements for ST1386?

Since 1 August 2025, Skills England sets a minimum number of off-the-job hours for each standard, replacing the older flat proxy of 20% of contracted hours. For the Data Engineer standard that minimum is 418 hours, more than any other standard we deliver. Those hours are protected working time spent on development the role does not already contain, and planned into the working week before the programme starts; a classroom session counts only when it genuinely develops new capability. How they are scheduled is the provider's choice: we spread them across our 15 months of training, about six and a half hours a week.

Who pays the levy, and how much?

Employers with an annual pay bill over £3 million pay the Growth & Skills Levy at 0.5% of that pay bill, collected monthly through PAYE, with a £15,000 annual allowance set against the charge. These figures carry over unchanged from the Apprenticeship Levy. What is new is that, from 28 April 2026, the levy also funds short apprenticeship units alongside full apprenticeships, drawn from the same account and with no cap on how much of your allocation you can direct to them; the underlying charge is the same.

What does an employer actually pay toward a Level 5 apprenticeship?

In the common case, nothing beyond the levy itself: a levy payer with funds in their account draws the whole cost from that account, up to the £19,000 band. A contribution only appears in specific situations. A levy payer who has exhausted their pot pays 25% for an apprentice aged 25 or over, and nothing for one aged 16 to 24. A non-levy employer pays 5% for a 25-or-over apprentice, and nothing for a 16-to-24 one. A non-levy employer can also take a transfer of levy funds from a larger business that covers the full cost.

How much of our levy funds can we transfer to another employer?

Up to 50% of your unused levy funds can be transferred to other UK employers, typically supply-chain partners, smaller businesses or charities. That ceiling was raised from 25% to 50% on 22 April 2024 (GOV.UK). It is the mechanism by which a larger levy payer can fund a data engineering apprenticeship at a smaller partner that does not pay the levy itself.

Can we put an existing employee on a funded data engineering apprenticeship?

Yes, and it is often the most effective use of the route. Where the person already holds some of the required knowledge, skills and behaviours, recognition of prior learning trims the content, duration and price to match, though it cannot take the programme below the funding floor of 8 months or 187 off-the-job hours. Recognition of prior learning only ever reduces a programme; it never adds funding, and it never removes the off-the-job requirement, only rescales it.

Who regulates apprenticeship funding and standards now?

Three bodies, each with one job. Apprenticeship funding policy sits with the Department for Work and Pensions, following a machinery-of-government change confirmed on 16 September 2025, and the 2026/27 funding rules are published under DWP ownership. The apprenticeship standards themselves, including the Data Engineer standard, are Skills England's responsibility; Skills England replaced IfATE on 2 June 2025. HMRC still collects the levy through PAYE. The former ESFA closed on 31 March 2025 and should not be cited as current.

Can the levy fund shorter training too?

From 28 April 2026, the Growth & Skills Levy also funds short apprenticeship units alongside full apprenticeships, drawn from the same levy account and with no cap on how much of your allocation you can direct to them. For building genuine data engineering capability the full apprenticeship remains the route: we do not deliver the short units, because the funding per unit is small and the format limits how deep the practice can go.

Is iO-Sphere the right choice for every employer?

Not always. If you need Level 6, Level 7 or a degree apprenticeship, that sits above what we deliver at this level, and a degree-apprenticeship provider is the right call. If a role genuinely does not hold Level 5 engineering work, then a lower level or a different route is the right answer, not this one. Where we are a strong fit is building applied data engineering capability, funded through the levy, in people from a wide range of starting points.

What comes after the funding question

If the funding answer is yes and the appetite is there, the next decision is not about the levy at all. It is whether the role genuinely holds 418 hours of Level 5 engineering work, and what the standard develops once it does. That has its own test, and it is the subject of our Level 5 Data Engineer apprenticeship guide, which covers the level-fit check, entry requirements and how the end-point assessment works.

When you are ready to price it against your own team, the conversation is your levy position, who is eligible, and how the programme maps to the work you need done. You can explore the data engineering apprenticeship, see how the pieces connect in the data engineering hub, or talk to us about commissioning a cohort.

Policy correct as of August 2026. Funding rules and effective dates change; confirm the current position in the latest DWP apprenticeship funding rules before you commit budget.