Mid-year funding rates in England to rise, but not enough to meet the funding gap

The Department for Education has today announced that the extra £204m for early years announced in the budget will be allocated to local authorities as an additional grant to boost funding for the early years entitlements between September 2023 and March 2024. The average rate for a 3- or 4-year-old will rise from £5.29 to £5.62 (c.6% increase) and for the funded 2-year-olds will rise from an average of £6 to £7.95 per hour (c.32% increase). In addition to increasing the hourly rates, the grant is to be used to increase MNS supplementary funding (rising from an average of £4.39 to £4.63), the Disability Access Fund (from £828 to £881) and Early Years Pupil Premium (from £0.62 to £0.66 per hour). (Guidance for local authorities gives more detail)

This unusual mid-year increase in funding demonstrates that government has taken on board that the rates for 2023-24 do not reflect the real impact of inflation. However, the stark difference between the increase in the 2-year-old rate and the 3-/4-year-old rate shows that ministers have not acknowledged that it is the current 3-/4-year-old entitlement that is the most drastically underfunded, and that this is what is the cause of the huge instability in the sector, with setting closures increasing, especially in the most disadvantaged areas and recruitment and retention in crisis across the country. We call on government to stabilise the sector by adequately funding all the current entitlements before trying to expand the system further.

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