As part of the Spending Review in November 2015, we announced that we will be investing over £1billion more per year by 2019-20 to fund the government’s commitments on the early education entitlements. The funding includes £300 million per year for a significant increase to the rate paid for the two, three and four year old entitlements. From April 2017, the national average funding rates will increase to £4.88 for three and four year olds and £5.39 for two year olds. Local authorities are responsible for deciding how to distribute this funding across their area and for setting the rate paid to early years providers.
We will introduce a national funding formula for early years so that funding is transparently and fairly matched to need and fairly distributed between different types of providers and different parts of the country. We will be consulting on detailed proposals later this year.