Childcare: Finance
The question
To ask the Secretary of State for Education, what assessment her Department has made of the gap between her Department's funding rates for early years childcare and the cost of provision.
Answered by Olivia Bailey
The government is prioritising and protecting investment in the early years, and in 2026/27 we expect to provide over £9.5 billion for the early years entitlements, more than doubling annual public investment in the early years sector compared to 2023/24.
On average nationally, next year we are increasing the 3- and 4-year-old hourly funding rate by 4.95%, the 2-year-old hourly funding rate by 4.36% and funding rate for the 9 months to 2-year-old entitlement by 4.28%. National average funding rate increases continue to reflect in full forecast cost pressures on the early years sector, including the National Living Wage announced at Autumn Budget 2025, and go further.
The department uses the early years national funding formulae (EYNFF) to distribute the early years entitlements budget to local authorities. The EYNFF determine local authority hourly funding rates by taking into consideration the different costs of delivering early years provision in different parts of the country.
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