How early education is funded

Funding paid to childcare providers must be used to deliver the correct number of funded hours to each eligible child. The funded hours must be free to the parent  carer at the point of delivery.

Base rate funding

  • 2 year old funding was paid at £5.03 per hour in 2020/21 and will be paid at £5.11 per hour from April 2021. There are no additional supplements for this scheme.

  • 3 and 4 year old funding was paid at £4.03 per hour in 2020/21 and will be paid at £4.09 per hour from April 2021. Additional supplements are available. The funding formula factsheet explains how the money we receive from governement is allocated.

Base rate funding is paid over at least two payments per term:

  1. The first payment is an advance payment. This equates to 90% of the providers funding estimate which is submitted by the cut off date for the term. This is paid during the first week of the term.
  2. The second payment is a claim payment. This equates to 100% of a providers funding claim, minus the advance payment. This is paid at half term.
  3. The third payment is a reconciliation payment. Each term a reconciliation is carried out to compare how much funding a provider is due and how much funding they have received. Where a provider hasn't received the full amount of funding due, this payment is made towards the end of term. A provider may be due funding due to children starting late in the term.

In exceptional circumstances, we reserve the right to implement specific payment arrangements for individual providers.

Deprivation supplement

Children who live in a post code of deprivation who were counted at your setting in the early years census in January are eligible. This is £352 per child and is paid to the provider in three equal amounts at each half term. 

Quality supplement

If you have invested in a graduate leading practice in your setting, you will receive the quality supplement. This supplement is only available to private and voluntary settings which includes day nurseries, preschool playgroups and childminders. The quality supplement is paid in three equal amounts at each half term. There are two levels available:

  • Basic rate for settings with a graduate leader who holds a relevant level 5 or 6 Early Childhood qualification and who is on a route to Early Years Teacher (EYT) status. The annual rate is £1,500 for group settings and £300 for childminders.

  • Enhanced rate for settings with graduate leaders who have achieved Early Years Teacher (EYT) status, Early Years Professional (EYP) status or Qualified Teacher Status (QTS). The annual rate for this is £2,500 for group settings and £500 for childminders.

Disability access fund

This supports funded 3 and 4 year old children in receipt of Disability Living Allowance to access your setting. The information we require to check if a child is eligible for this funding is collected on your funding claim, you will need to upload a copy of the child's Disbability Living Award (DLA) letter.

The funding is a one-off payment of £615 per financial year and is paid in the first term that a child claims early education funding. Once the funding has been paid to a provider it cannot be transferred. It cannot be used to pay for additional hours at the provider.