How early education is funded

Funding paid to childcare providers must be used to deliver the funded hours to each eligible child. The funded hours must be free to the parent/carer at the point of delivery. The funding formula factsheet gives an overview of how funding is distributed.

Funding rates

On 7 July 2023 the Department for Education (DfE) announced the Early Years Supplementary Grant (EYSG) details and the EYSG funding rates for individual local authorities. 

The EYSG is a stand-alone grant for 7 months made in addition to the base hourly rate (which remains at the April 2023 rate). The EYSG is paid on top of the base rate for the period 1 September 2023 to 31 March 2024.

As per the DfE guidance, we are passing on the EYSG in full to early years providers for each of the funding streams.

The table shows the current base rate funding, the EYSG amount and the new combined rate applicable for September 2023 to March 2024. 

The current base rate funding, the EYSG amount and the new combined rate applicable for September 2023 to March 2024
2 Year Old Funding hourly rate




3&4 Year Old Funding hourly rate




Combined hourly rate for funded hours from September 2023 until March 2024

  • 2 year old funding is paid at £7.29 per hour. There are no additional supplements for this scheme.
  • 3 and 4 year old funding is paid at £4.71 per hour. Additional supplements are available. 

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

  1. The first payment is an advance payment. This equates to 70% 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 usually paid at half term.
  3. The third payment is a reconciliation payment. Each term a reconciliation is carried out to ensure that providers have received all the funding that they claimed for. Where a provider hasn't received the full amount of funding due, this payment is made at the end of term. 

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

Funding is claimed by a termly Headcount submission on the Education Portal. Providers receive funding for a full term, there are no opportunities to claim after the Headcount has been submitted. There are no centrally administered mid term funding transfers so where funding has been claimed for a child at a setting, it cannot be moved to a new setting until the start of the next term.

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 year we will be paying for universal and extended hours, the rate is £247 per child based on a 570 hour place any hours over this will be paid pro rata. Your payment will be split over three termly amounts.  

Quality supplement

If providers have invested in a graduate leading practice in their setting, they will receive the quality supplement. This supplement is available to private and voluntary settings which includes day nurseries, pre schools playgroups, childminders and school nurseries.

The quality supplement is paid in three equal amounts at each half term. The annual rate for settings with graduate leaders who have achieved Early Years Teacher (EYT) status, Early Years Professional (EYP) status or Qualified Teacher Status (QTS) is £1250 for group settings, £500 for childminders and £5000 for school nurseries.

Early Years Pupil Premium (EYPP)

This is additional funding for early education providers to support the education of disadvantaged 3 and 4 year old children. It is paid at the national rate of £0.62 per hour, for eligible children claiming a free place. This equates to an additional £353.40 for a child receiving the full 570 hour entitlement.

This will rise to 66p per hour from 1 September 2023 until March 2024, the extra 4p is being paid through the Early Years Supplementary Grant. EYPP is only payable for the universal 15 hours per week. Further information on Early Years Pupil Premium (EYPP) including the eligibility criteria is available. 

Disability Access Fund (DAF)

This supports funded 3 and 4 year old children in receipt of Disability Living Allowance (DLA) to access a setting. To claim Disability Access Funding for an eligible child, providers will need to upload a copy of the child's Disability Living Allowance awards letter to the child's record on the Education Portal and it will also be required should a setting be audited. 

The funding is a one-off payment of £828.00 for the 2023 - 24 financial year, increasing to £858.92 from 1 September until March 2024. The extra £30.92 is being paid through the Early Years Supplementary Grant.

DAF 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. Further information on Disability Access Fund is available.