Childcare settings receive cash boost as funding rates increase

• Nurseries and childminders up and down the country will be paid more from today for every government funded hour they provide to parents. 
• Hourly funding rates paid to local authorities have increased from an average of £5.29 to £5.62 for three and four-year-olds, and from an average of £6.00 to £7.95 for two-year-olds.
• Further increases due next April, as part of rollout of more free hours to parents, as government commits to making sure childcare is affordable and accessible for all.

Nurseries and childminders will benefit from higher payment rates from today (1 September), as part of the largest ever investment in childcare in England.

The government has today increased the funding rates to local authorities for both three- and four-year-olds and two year olds, in a landmark moment for the early years sector.

The additional £204 million of funding is providing a substantial uplift for local authorities to increase hourly rates paid to early years providers for delivering the government funded hours to parents.    

Funding rates per child paid from today are increasing from an average of £5.29 to £5.62 for three and four-year-olds, and from an average of £6.00 to £7.95 for two-year-olds. 

There will be a further increase in funding to come next year, with the average rate paid to local authorities for 2024/25 anticipated to be set at £8.17 for two-year-olds and £11.06 for under twos. This would make the average rate for under twos almost double the average hourly fee of £5.68 charged to parents. 

Final 2024-25 hourly funding rates for local authorities for all age groups will be confirmed in the autumn. 

From April 2024, eligible working parents of two-year-olds will get a new offer of 15 free hours per week of free childcare. From September 2024, eligible parents will get 15 free hours from nine months until their children start school, and from September 2025, they will get 30 free hours from nine months until the start of school. 

Parents whose children turn three this term can sign up for the 30 hours codes for the spring term, which starts from 1^st January. The government is therefore urging every parent to check now if they are claiming the free childcare hours they are entitled to, with national data showing almost one in five eligible children may be missing out.  

Minister for Children and Families David Johnston said:

“This funding increase is another vital step in this government’s work with the early years sector to deliver the flexible, affordable, and quality childcare that parents need.

“With yet another increase in funding coming next year, we are committed to supporting nurseries, childminders and everyone working with children in their vital early years to deliver on our biggest ever investment into childcare in England – set to save a working parent using 30 hours of childcare up to an average of £6,500 per year.”

Alongside funding and developing a national recruitment campaign, the government is also supporting the early years workforce to deliver the biggest ever investment in childcare in England. 

Funding rates have been set using insight gathered from surveying 10,000 providers up and down the country to understand their cost pressures. In autumn 2023, it will look into how best to bring down registration times for childminders from up to four months to 10 weeks.