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DfE confirms details of additional funding to support early entitlement expansion plans

DfE confirms details of additional funding to support early entitlement expansion plans

28 February 2025  

The government has published new guidance for local authorities on the allocation of GBP75 million in additional funding which is intended to support the final phase of the funded entitlement expansion.


From September 2025, the two-year-old and under-twos early entitlement offer for children from eligible working families will be extended from 15 hours a week to 30 hours.


The additional funding to support this expansion will be distributed via an 'early years expansion grant', which will be paid to local authorities in July 2025 to be allocated to providers delivering the funded entitlements. The grant equates to an average increase of 14p per hour for two-year-olds and 19p per hour for under-two (though the actual funding increases varies between local authorities - a breakdown is available here).


The Department for Education (DfE) has confirmed that local authorities can choose how they distribute their grant funding to "support specific growth needs" in their area, but has suggested councils may want to "distribute their total allocation between providers as a flat rate per-PTE, according to the number of two-year-olds and under-twos taking up the early education entitlements in settings" or to "use their local two-year-old and under-twos local funding formulae to determine provider-level funding".


The DfE guidance to local authorities adds that: "Any bespoke models adopted should reflect the crucial role that private, voluntary, and independent providers, including childminders, play in local expansion plans and take into account the full funding context for 2025 to 2026, including the funding delivered to school-based settings through the 2025 2026 National Insurance contributions grant".


Councils are expected to communicate provider funding rates by 10 April 2025, and to pay providers before the end of August 2025. The DfE guidance confirms that "all funding received via this early years expansion grant must be distributed to eligible early years providers and, regardless of distribution method, must not be used for contingency purposes or local authority central or administration costs".

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