How early education is funded

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

Base rate funding

  • 2 year old children are funded at £5.03 per hour. There are no additional supplements for this scheme.
  • 3 and 4 year old children are funded at £4.03 per hour. Additional supplements are available. The funding formula factsheet explains how the money we receive from governement is allocated.

Base rate funding is paid over 3 payments per term:

  1. The first payment is an advance payment and is made during the first week of the term. This equates to 90% of the funding due for the term based on declaration forms received by the declaration cut off date. 
  2. The second payment is called a claim payment and is made at half term. This equates to 90% of your claim, minus the advance payment. 
  3. The third payment is called an adjustment payment and this is paid before the end of term. This is a final payment based on your adjustment claim, minus any payments already received.

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

Deprivation supplement

We pay an additional amount for children who live in a post code of deprivation who are counted at your setting in the early years census in January. The amount for 2020/21 is £352 per child. This supplement is paid 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 the Early Years Parent Declaration form. Children stop being eligible for this funding when they move into a school reception class.

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.