DfE consultation – two year old funding change

On the 12th July we wrote to all funded providers regarding the increases to early years funding rates from 1st September 2023.

The increases of funding have been paid to local authorities as an ‘Early Years Supplementary Grant (EYSG)’ and conditions of the grant is that it must be passed on to providers in full. This grant is not part of the early years funding formula that each local authority receives and passports to settings as an hourly rate for the Early Years Entitlements.

The Department for Education (DfE) have consulted on the Extension of the new entitlements which advises that the formula for 2 year old funding will need to change, as currently the rates are set and uplifted for the disadvantaged cohort of children that this funding is intended for.

With the roll-out of 2 year old funding to working parents, the DfE has determined it is not appropriate to use the existing formula calculation and their proposal is to use the formula that is currently used for 3 and 4 year olds.

Other proposals are that Early Years Pupil Premium and Disability Access Funding is extended to 2 year olds and under, alongside those that qualify for the new entitlements for working parents.

Unfortunately, we need to make you aware that initial allocations suggest that there will be a reduction of 13p to the 2 year old hourly rate from April 2024. This will not be confirmed until December 2023 so we recommend that you proceed with caution when planning any changes to your models and charges for 2 year olds.

We have responded to the consultation appropriately as we are equally disappointed that this was not considered in advance of the EYSG. However, the introduction of EYPP for 2 year olds and under will support those disadvantaged children that meet the eligibility criteria.

Early Years Funding Team