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.

Base rate funding

  • 2 year old funding is paid at £5.11 per hour from April 2021. There are no additional supplements for this scheme.

  • 3 and 4 year old funding is paid at £4.09 per hour from April 2021. Additional supplements are available. The funding formula factsheet explains how the money we receive from government 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. From September 2021, this will be calculated at 70% of the providers funding estimate. 
  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.

Base rate funding is claimed by a termly Headcount submission on the Establishment 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 is £402 per child and is paid to the provider in three equal amounts at each half term. 

Quality supplement

If providers have invested in a graduate leading practice in their setting, they will receive the quality supplement. This supplement is only available to private and voluntary settings which includes day nurseries, pre schools 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 Teach (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 a setting. The information we require to check if a child is eligible for this funding is collected on the Headcount form. Providers will need to upload a copy of the child's Disbability Living Award (DLA) letter to their record on the Establishment Portal and it will be required should a setting be audited.

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.