Funding rates to increase by a few pence 

The Chancellor announced an additional £44m for early years in the Spending Review and now the Government has published its Early Years Funding rates for 2021/22 which will come in from April. Department for Education logo

Local authorities’ 2021-22 hourly funding rates in the vast majority of areas will be increased from their 2020-21 rates by 6 pence per hour for three and four-year-olds. Two-year-old places will have an 8p increase per hour.  

The new funding floor is £4.44 which is the rate paid to local authorities – so some providers will get slightly lower than that.

NDNA’s Chief Executive Purnima Tanuku OBE expressed her bitter disappointment that funding rates were only increasing by a small amount which will not be enough to cover increased National Living Wage and National Minimum Wage rates.

She said: “It is beyond disappointing that the Government has only seen fit to increase the hourly rate for funded childcare by a few pence per child. 

“For three and four year old places, the additional 6p per hour will give providers an extra £1.14 per week per child. This doesn’t even cover a pack of baby wipes. Early years educators were praised by Ofsted’s Chief Inspector this week for their ‘resilience and creativity’ in giving our youngest children the best learning experiences they can and supporting their development and wellbeing. And this is clearly not recognised as valuable by government.”

The announcement yesterday revealed: 
  • For the early years block allocations, the national funding rate for the early years pupil premium is 53 pence per eligible child per hour, and Disability Access Fund is £615 per eligible child per year
  • The vast majority of local authorities, 2021-22 funding rates will be increased from their 2020-21 rates by 6 pence per hour. Local authorities who have previously been protected from large drops to their funding rate as a result of the ‘loss cap’ will have their 2020-21 hourly funding rates maintained in 2021-22
  • The starting point for calculating 2021-22 rates is the 2020-21 EYNFF rates before protections are applied
  • The hourly rates are then uplifted from this starting point by 6 pence and rates that are below £4.44 are topped up to the new minimum funding floor of £4.44
  • For those local authorities protected by the loss cap, the Government will then top up those that would receive less than their 2020-21 rate in 2021-22


See the full funding rates here.

The Government also announced that local authorities should fund providers at their actual head count numbers in January rather than at pre-Covid levels which has been the arrangement since Easter. Read more here

Funding rate comparison table - region
(Microsoft Excel Workbook)
Funding Rates 2021-22
(Microsoft Excel Workbook)