Please find below update and links to the DfE response to the Early Years Funding Consultation and Rates for 2023-24
The Government response to the consultation has been published and explains the changes we have made to the formulae, that have been used to determine next year’s hourly rates.
As you are aware, we consulted over the summer on updating and amending the national funding formulae that determine local authorities funding rates for the free childcare entitlements. Over 400 responses to the consultation provided broad support for our proposals and we have implemented almost all the changes we had set out. The Government response to the consultation has been published and explains the changes we have made to the formulae, that have been used to determine next year’s hourly rates. The response document can be found at here.
The Department has also announced today an additional £20m funding for Early Years, on top of the additional £180m for 2023-24 already announced at the Spending Review. Taken together, this will help support providers at a national level with the additional National Living Wage costs associated with delivering the free childcare entitlements next year.
Local authority hourly funding rates for 2023-24
The hourly funding rates for the two, three and four year old early years entitlements for 2023-24 have now also been published. The step-by-step tables setting out each authorities’ rates can be found at here. These tables also include the new hourly rates for Maintained Nursery Schools and the Early Years Pupil Premium, and the yearly funding rate for the Disability Access Fund in 2023-24.
Local authorities will receive average funding increases of 3.4% for the 3- and 4-year-old free childcare entitlements and 4% for the 2- year-old entitlement, compared to their 2022-23 rates. In line with the protections policy set out in the Government response document, all local authorities will benefit from at least a 1% increase in their funding rates in 2023-24, with increases for some up to 4.9% for 3- and 4-year-olds, and up to 10% for 2-year-olds.
Maintained Nursery Schools
Maintained nursery schools (MNS) are an important part of the early years sector, and we have always been clear that we are committed to supporting these schools in the long term. The Government response document confirms we are progressing with reforms to ensure a fairer distribution of supplementary funding and address the long-standing concerns from local authorities who do not currently receive any supplementary funding for their MNSs.
We are introducing a minimum and maximum hourly rate that a local authority can receive for their MNSs to create a fairer distribution of funding. The minimum rate will be set at £3.80 in 2023-24, and the cap on the hourly rate will be set at £10 in 2023-24, with transitional arrangements for the most affected LA. We intend to maintain the cap at that level in 2024-25. Local authorities not affected by the floor, or the cap will see their MNS supplementary funding rate increase by 3.4% in 2023-24.
Technical Note and Operational Guide
A Technical Note has been published alongside the tables, explaining how the funding rates for 2023-24 rates have been derived. This, along with an updated version of the Operational Guide for local authorities can be accessed at here. This Guide has been revised to reflect the latest rates as well as changes resulting from amendments to the formulae. This includes advice on how LAs might use their quality supplement to channel the additional Teachers Pay and Pensions Grant funding that has been rolled into the funding for three- and four-year-olds. And we have increased the cap on supplements from 10% to 12% to give flexibility to the minority of authorities who will need it to respond to these changes.
EY Dedicated Schools Grant (DSG) allocations
Finally, the initial DSG allocations for the Early Years block for 2023-24 have today been published by the Education and Schools Funding Agency and can be found here. These allocations will be updated in July 2023 in the usual way.
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