Early Years Education Entitlements: Hourly Funding Rates

Today I am confirming the hourly funding rates for the free early education entitlements in 2022-23 for each local authority.

We have spent over £3.5 billion in each of the past three years on those entitlements to support nurseries and childminders in England to deliver high-quality care and education.

At the spending review on 27 October the Chancellor announced increases in the funding for the early years entitlements worth £160 million in 2022-23, £180 million in 2023-24 and £170 million in 2024-25, compared to 2021-22. This is for local authorities to increase the hourly rates paid to childcare providers for the Government’s free childcare entitlement offers and reflects cost pressures, as well as anticipated changes in the number of eligible children.

As a result of this additional funding, we will increase the hourly funding rates for all local authorities for the two-year-old entitlement by 21p an hour. Funding for the three-and four-year-old entitlements will also increase by 17p an hour in the vast majority of areas. We are increasing the minimum funding floor for the three and four-year-old offer to £4.61 per hour.

Ten local authorities have had their 2021-22 hourly funding rates for three and four-year-olds protected by the “loss cap” in the early years national funding formula, to ensure that they do not face large drops to their funding rate. Funding for Bristol, Camden, Ealing, Halton, Islington, Lambeth, Southwark, Tower Hamlets and Westminster will be maintained in 2022-23. Funding for Rutland will be increased by 13p per hour, in recognition that Rutland’s loss cap protection was only worth 4p per hour in 2021-22.

I can also confirm today that the supplementary funding hourly rate for maintained nursery schools will increase by 3.5%, equivalent to the increase in the three and four-year-old hourly funding rates.

We are also increasing the early years pupil premium by 7p to 60p per hour, equivalent to up to £342 per eligible child per year, to support better outcomes for disadvantaged three and four-year-olds. Funding for the disability access fund—an additional payment made to providers to help to make reasonable adjustments within their provision to support eligible three and four-year-old children with a disability—will also increase by £185 to £800 per eligible child per year.

For 2021-22 we put in place a temporary variation to the way we fund local authorities for the early years entitlements, using a termly rather than annual census, in response to coronavirus (covid-19). I can confirm that, from 2022-23, we will return to the normal process of allocating funding based on the annual January census.

In addition to the increase in funding rates for the early years entitlements, we have also announced £153 million of recovery funding which will be used to strengthen teaching in early years and ensure our youngest children are given the support they need as we emerge from the pandemic. This includes high-quality, online training available to all early years practitioners, access to mentor support for those settings that need it most and opportunities to build innovative practice. We will increase supply of qualified graduates in the sector through a substantial expansion in the number of fully funded early year initial teacher training places, and improve the identification and support of SEND children by increasing the numbers of staff with special educational needs co-ordinator qualifications. Through home learning programmes, early years practitioners will also be better equipped to support parents with their children’s development in their own homes.

Further details and guidance on early years entitlements funding will be published on gov.uk.

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