Government consults on updating early years funding and £10m in extra funding for maintained nursery schools

The Early Years National Funding Formula and Maintained Nursery School funding consultation seeks views on proposed updates to the early years funding formulae, and maintained nursery school supplementary funding.

The early years national funding formula (EYNFF) was introduced in 2017 to set the hourly funding rates that each local authority is paid to deliver the universal and additional entitlements for three- and four-year-olds. There is a separate formula that sets the hourly funding rates for two-year-olds.

It has not been revised since then, and the government said that datasets used to reflect variations in cost across the country are not up to date.

Giving a statement in Parliament yesterday, children’s minister Will Quince said, ‘We are consulting on Updates to the funding formulae for the two-year-old and three- and four-year-old early education entitlements in England, the scope of which will also include the distribution of supplementary funding for maintained nursery schools.

‘We are proposing to update and adjust the funding formulae used to distribute the Government’s investment in the early years entitlements - which deliver 15 or 30 hours a week of free, high quality, flexible childcare for eligible two, three and four-year-olds for 38 weeks a year - fairly and transparently to local authorities across England.

‘Many of the datasets which underpin these formulae, and which we use to reflect geographical cost variation, are not up to date. It is important that they remain current, to ensure the funding system can be fair, effective and responsive to changing levels of need across different areas, with targeted investment towards those areas where it will do the most good.’

The government is planning update the formulae for the 2023-24 financial year and annually thereafter, subject to the consultation outcome.

The consultation also includes proposals to mainstream the early years elements of the teachers’ pay grant and the teachers' pension employer contribution grant from 2023-24, bringing early years in line with schools and high needs.

Quince added, ‘The proposed update will result in some changes to local authority funding levels given costs and levels of need in certain areas will have changed relative to others. As such, we are also consulting on applying new year-to-year protections to local authority funding rates, to help local markets to manage changes better. The 2021 Spending Review settlement allows us to offer protections which means all local authorities will see an increase in the hourly rate that the government provides for 2023-24.’

Maintained nursery schools

The government is also consulting on proposals to reform maintained nursery school supplementary funding.

Quince said, ‘Maintained nursery schools make a valuable contribution to improving the lives of some of our most disadvantaged children. As we have confirmed continuation of maintained nursery school supplementary funding throughout the Spending Review period, it is now right to examine the way in which this funding is distributed to LAs.’

The government is proposing to invest an extra £10 million into maintained nursery school supplementary funding from 2023-24, as well as proposals to create a fairer distribution of the funding across all local authorities with maintained nursery schools.

Beatrice Merrick, chief executive of Early Education, told Nursery World, 'We welcome the consultation on early years funding, including the proposal for an additional £10m for the least well-funded maintained nursery schools. 

'This is a big step forward towards a fairer funding formula that comes closer to covering the actual costs of delivering high quality early education in MNS.

'Nevertheless, there will still be many nursery schools which receive little or no increase as a result of this change and many which – like other early years providers - are struggling with financial challenges as a result of Covid, of low levels of funding and high levels of need, along with the rising cost of living. 

'Further investment in the sector is urgently needed, especially to support the young children most impacted by the pandemic, and we hope that ministers will continue to argue the case for the sector to get the funding it needs to have a real impact on children’s life chances.'

• The consultation is available here and closes on 16 September.