Early Years Funding 2025-26

Statement

This government is clear that whoever you are, wherever you come from, ours should be a country where hard work means you can get on in life. Ensuring every child has the best start in life is crucial to breaking down barriers to opportunity from the earliest point in our lives.

Early years educators, providers and local authorities are already doing incredible work to meet this mission and expand their provision so that more families can benefit from affordable, accessible and high-quality early education and childcare.

As announced at 2024 Autumn Budget, we expect to provide over £8 billion for the early years entitlements in 2025-26 – a more than 30% increase compared to 2024-25 - as we work towards the expansion of the entitlements.

Today, we have also published the new early years local authority core funding rates for 2025-26. The national average 3- and 4-year-old hourly funding rates of local authorities is increasing by 4.1%, the 2-year-old hourly funding rates is increasing by 3.3%, and the 9 months to 2-year-old hourly funding rate is increasing by 3.4%. As usual, the hourly funding rates will vary between local authorities, reflecting the relative needs of the children and different costs of delivering provision across the country.

To ensure that providers are set-up to deliver 30 funded hours of childcare and early education for children age 9 months to when they start school, and that parents are able to access this across our communities from September 2025, on top of over £8 billion through the core funding rates, we will be investing an additional £75 million of revenue funding in 2025-26 through an expansion grant, recognising the significant effort and planning to prepare for the final phase of the expansion. This grant is on top of over £8 billion provided through the core funding rates.

It is essential that high quality early education and childcare are accessible for all children and families, given the importance of the early years of life. However, currently there are gaps in both provision and quality, especially for disadvantaged children. That is why we are delivering the largest ever uplift to the early years pupil premium, increasing EYPP rates by over 45% per hour in 2024-25 to £1 per hour in 2025-26, equivalent to up to £570 per eligible child per year.

This unprecedented increase is an investment in quality early education for those children who need it most, providing additional support for disadvantaged children to meet development goals at age 5.

Eligible children can also receive £938 per child per year through the disability access fund to support reasonable adjustments for children with a disability. We also expect to spend £92.6 million on maintained nursery school (MNS) supplementary funding in 2025-26, in recognition of the additional costs MNS face.

It is important that providers can plan ahead, therefore we have set the expectation that local authorities communicate their rates to providers by 28th February 2025 at the latest and we will be working with local authorities to support them to do this. This will become mandatory from 2026-27.

From April 2025, we are increasing the minimum pass-through requirement, meaning local authorities must pass on at least 96% of funding to providers, as part of a phased approach to a 97% pass-through in the future.

Full details on the 2025-26 local authority hourly funding rates, including step-by-step tables, have been published on GOV.UK.