Pre-school Education: Finance
The question
To ask the Secretary of State for Education, what steps her Department is taking to help prevent the funding model for early years settings resulting in operating losses for those settings.
Answered by Olivia Bailey
In 2026/27 the department expects to provide over £9.5 billion for the early years entitlements, including an increase of 15% in Early Years Pupil Premium, more than doubling annual public investment in the early years sector compared to 2023/24. To calculate rate uplifts, we use an analytical model which considers data from the Early Years Census and the survey of childcare and early years providers, various government forecasts such as AEG and CPI, and the national living wage to determine cost pressures for the Early Years Sector. We have regular contact with each local authority in England about childcare delivery issues they may be facing.
The hourly funding rate for entitlement hours is intended to cover the core costs of providing 15 or 30 hours of childcare to parents. This includes costs associated with staffing such as salaries as well as non-staff costs such as rent, business rates and utilities costs associated with delivering the government funded hours.
The department will consult on changes to how early years funding is distributed later this year.
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