As part of the consultation, illustrative local authority hourly funding rates have been set-out. Under the proposed formula, the DfE expects average funding rates of £8.17 for two-year-olds and £11.06 for under-twos in 2024/25.
It says this makes the Government rate for under-twos, double the average hourly fee of £5.68 charged to parents.
The proposed formula provides additional funding for areas of deprivation. It also extends eligibility for additional disability funding and for the early years pupil premium down to nine months old.
Final 2024-25 hourly funding rates for local authorities for all age groups will be confirmed in the autumn, says the DfE.
The proposed ‘fair funding formula’ is based upon findings from the DfE’s annual survey of 10,000 early years providers on the cost pressures they face.
When the extended hours are introduced
The new rates under the formula will come in from April when eligible working parents of two-year-olds will be able to claim 15 hours of funding.
From September 2024, the 15 hours will be available to children from the age of nine months in households where all parents work.
From September 2025, 30 hours of funded childcare will be available from nine months until the start of school.
Children’s minister Claire Coutinho said, ‘Today we are giving providers further confidence that the largest ever expansion of free hours over the coming months and years will be properly and fairly funded.’
'If the central pot of funding is insufficient, those on the front line are likely to lose out.'
Neil Leitch, chief executive of the Early Years Alliance, said they welcomed further detail on how the extended entitlement will be funded, but warned that if the central pot of early years funding is insufficient, then no matter how well it is distributed, those on the front line are likely to lose out.’
He added, ‘It is also incredibly worrying that in the face of sharply rising delivery costs, under the Government’s proposals, the introduction of this new formula will result in some local authorities seeing their funding rates for two-year-olds actually fall in April 2024 compared to September 2023.
‘This is completely counterproductive and so we urge the Government to rethink this short-sighted approach.’
Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA), accused the Government of focussing on funding rates for children aged two and under, rather than making sure the investment for three and four-year-olds is sufficient to ensure nurseries are sustainable.
'Currently nurseries have around ten times more three and four-year-old children, so these are the rates that make the biggest difference to the sector,' she said.
'We are keen to understand how the single rate for two-year-olds will work and whether this will be top sliced by local authorities in a similar way to the three-year-old rate. We are also looking into the additional funding for areas of deprivation and how this will work in practice. While the announced rates for twos and under sound encouraging, these children do need more support than ever and that is always costly.'
The consultation is here
