Funded Nursery Places

Outside of a nursery

 Free early learning is good for children and supports parents. It should be free to the family and free to the early years provider.

At the moment most nurseries are subsidising free places for two, three and four-year-olds, because the funding they get doesn’t cover their costs. This pushes up the cost of the extra hours parents pay for as nurseries have to balance their books. 

NDNA is clear – free places should be free to the parent and free to the nursery.

View details of the Department for Educations consultation outcome here

The facts – NDNA Annual Nursery Survey 2016: 

Average annual loss per 3/4 year old

England    £957 
Scotland   £1,128
Wales       £863

Latest news – 30 hours free childcare in England

The Childcare Act will bring in 30 hours free early learning and childcare in England from 2017.

NDNA is clear that whilst this is great support for parents, it will only be possible for nurseries if there is an increase in funding. 

NDNA called for an increase in funding ahead of the General Election. The Government has committed an additional £300 million to fund this increase. The top priority for nurseries is ensuring this increase translates into a sufficient hourly rate which reaches the frontline.

The government has consulted on reforms to early years funding. Whilst a number of NDNA recommendations have been taken up to improve the funding system, for many areas hourly rates published by the Department for Education still fall short of the true cost.

NDNA has warned that unless more investment is made to ensure all nurseries receive a viable hourly rate, the 30 “free” hours childcare promise will not add up unless nurseries are allowed to make compulsory charges to make up for the underfunding of free places.   

What next?

  • By early 2017 - Final proposals drawn up by local authorities following consultation with providers; providers informed of rates 
  • April 2017 - The new funding arrangements begin for existing 15 hours 
  • September 2017 - 30 hours entitlement implemented – the new funding arrangements apply

The Department for Education have responded to NDNA member questions regarding 30 hours funding - read the full Q&A here

Early Years Funding – Department for Education consultation outcome

Funding rates:

Every local authority will receive a minimum funding rate of at least £4.30 per hour. DfE says that this will give local authorities the scope to pay providers an average funding rate of at least £4.00 per hour. 

It is important to note that some providers are set to receive less than £4.00 per hour because local authorities can distribute up to 10% of their budget through supplements. 

National average hourly funding rates to local authorities will increase from £4.56 to £4.94 (previously set at £4.88 in the DfE consultation) for three- and four year-olds. This average rate includes the Early Years Pupil Premium, the Disability Access Fund, supplementary funding for maintained nursery schools, and quality and expertise funding.

National average hourly funding rates to local authorities will increase from £5.09 to £5.39 for two-year olds.

Funding rates are not linked to inflation, so are not set to increase year on year. 

You can look up the funding rate your local authority will receive in our spreadsheet here. Full details of allocations from DfE are here  

Next steps:

DfE is urging local authorities to begin their consultation on local funding rates before Christmas so that rates can be announced as soon as possible before April 2017.

Contact your local authority Early Years team now to ask when their consultation will start and get involved.

Work with other local childcare providers, if you are in an NDNA Network contact your network chair. Find your local NDNA Network here.

DfE’s revised statutory guidance and model agreement for local authorities to use with providers is due out shortly.

This will set out the national framework for delivery of free places, including what additional charges above the free entitlement will be allowable and the flexibility over how and when providers can offer places.

NDNA has said it is essential nurseries have full flexibility – read our latest comments here.  

View more detail on the consultation outcome here 


Some nurseries will be piloting the scheme from September 2016. These pilots need to inform the Government how to deliver the 30 hours in a way that is sustainable for nurseries.

The Department for Education has issued guidance for the early implementer local authorities delivering the 30 hour childcare from September 2016.   

Read what we’ve been saying here: 

Both the National Assembly for Wales and the Scottish Government have been discussing extending free childcare.

How does NDNA help?

We have been working hard to represent the sector, highlighting to governments across the UK why issues must be resolved. We have been ensuring that the problems with free places remain high on the agenda. Our work has played a critical part in achieving the funding reforms to date.

We are:
  • Meeting with key Government ministers and committees to make the views of our members heard and make sure the issue of funding is resolved before the 30 hours funded childcare is rolled out
  • Speaking out in the media, public forums and policy consultations as the voice of the nursery sector 
  • Undertaking research to provide evidence of funding problems – and how they affect nurseries and parents  
  • Supporting you to work with your local authority to resolve issues and highlight your needs, including help to create local nursery networks. 

Find out more about networks

Resources for nurseries:


Remember, we are always happy to provide further advice and support with your issues. Call NDNA on 01484 40 70 70 and select member help

Get involved – together we are stronger!

Our shared voice is vital to influence change. You can get involved in lots of ways:     

  • Help to spread the word about our Childcare Challenge
  • Invite your local MP, MSP or AM and councillors to visit your nursery. Show them the good work you do and how you are affected by funding problems.
  • Talk to parents about the issue and encourage them to support you. 
  • Download sample letters to explain more about this issue to parents then download the template letter which you can ask them to send to your local MP, MSP or AM and councillors here
  • Ensure you are involved in your local NDNA nursery network to make sure your voice is heard – find out more
  • Speak out - join our media database – we are often asked for real-life case studies and for nurseries that journalists can speak to - email 
  • Read our handy summary of the consultation here, share your views with us and look out for our consultation events - dates to be announced shortly.

Keep up-to-date with communication from NDNA, such as the email bulletin, Nursery news and Twitter @NDNAtalk and Facebook
Join us to access a wealth of advice, support and help with free early education issues to keep you in the know.

Resources to help you

Government guidance


Early Years Benchmarking Tool - England 
Your local authority has to publish clear information on its early years spending, including how much funding is allocated per child in different types of provision. Use this to hold your local authority to account. 
Click here for the Early Years Benchmarking Tool  

In partnership with the Department for Education (DfE), in 2011 NDNA produced free resources to support you with invoicing parents for free early education. These have been updated in 2016 to reflect the latest Statutory Guidance for local authorities on early education and childcare

Download our free nursery education - guide to invoicing parents here