Nurseries: Finance

It is the department’s ambition that all families have access to high quality, affordable and flexible early education and care, giving every child the best start in life. This is key to the government’s Plan for Change, which starts with reaching the milestone of a record number of children being ready for school. That also means ensuring the sector is financially sustainable and confident as it continues to deliver entitlements and high quality early years provision going forward.

In the 2025/26 financial year alone, the department has provided over £8 billion for the early years entitlements, increasing to over £9 billion in 2026/27. We have announced the largest ever increase to Early Years Pupil Premium since its introduction and have delivered a significant tranche of supplementary funding of £75 million through the Early Years Expansion Grant.

The early years market is vibrant and diverse, made up of a range of for-profit and not-for-profit provider types. The department aims to distribute funding fairly, efficiently and transparently across the country and across provider types. The hourly funding rate paid to local authorities is designed to recognise the average costs across different provider types, reflecting staff and non-staff costs.