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Everything about nursery funding changes in 2024

What you need to know
6 min of reading
25 March 2024

Want to know about 2024 government nursery funding? This article shares what you need to know about how funded places work, the 2024 average rates for nurseries, and the challenges to watch out for.

Jump to a funding fundamental:

    How is nursery funding changing in 2024?

    One of the main changes to early years in 2024 is the funding offers and structures. Starting April 2024, working parents of 2 year-olds can now access 15 hours of free childcare with nurseries that offer funded places.

    Here’s what to expect in the next year with government nursery funding:

    Funding changes in April 2024

    Working parents of two-year-olds will be entitled to 15 hours of free childcare (eligibility criteria must be met) averaged across 38 weeks – school term time.

    Funding changes in September 2024

    Children aged nine months to two years will be able to access 15 hours of free childcare from providers offering funded places, averaged across 38 weeks.

    Funding changes in September 2025

    The free childcare entitlement will increase to 30 hours per week across 38 weeks for working parents of any child between the ages of nine months and five years old.

    Want easy visibility of all funding your early years setting receives? Generate accurate financial reports showing income, funding expectations, and financial forecasts to ensure a financially healthy 2024 and beyond with Blossom.

    How do funded nursery places work?

    The government uses two separate funding formulas to decide how much each funding type receives. The Early Years National Funding Formula (EYNFF) for three- and four-year-olds, and a new formula for two-year-olds.

    Additional funding, such as the Early Years Pupil Premium (EYPP) and the Disability Access Fund (DAF), can also be added to the baseline funding rate.

    Supporting disadvantaged children is a priority, so regulations have been put in place that require local authorities to ensure the hourly rate early years providers receive for disadvantaged children is at least equal to the two-year-old rate.

    Your local authority then sometimes takes some away for admin purposes, and you get the rest (95%, to be exact).

    How do I offer funded places?

    A nursery doesn’t have to offer funded childcare places. Decisions can be made depending on nursery budgets, staffing capacity and business strategy.

    Nurseries can charge additional fees for services and resources beyond childcare costs. Examples of additional nursery charges may include meals, snacks, extra educational trips, and activities like baby yoga.

    If you want to offer funded places, contact your local authority if they haven’t reached out to you already. Their aim is for every child to have a place, and funded places can only be offered by local-authority-approved settings.

    Once that’s arranged, you’ll need to see the birth certificate of the child that is going to take the place, and there’s a declaration the parent needs to sign. Your local authority will have forms you’ll need to fill in both when filling the place and when claiming hours provided.

    In short – contact your local authority and go from there!

    What is 'stretched' funding?

    The government nursery funding equates to 570 hours for the 15-hour offer and 1140 hours per year for the 30-hour-a-week childcare funding offer across 38 weeks.

    ‘Stretching’ is the option to average this funding allocation across 52 weeks of the year instead, if nurseries feel this is more financially even when planning their budget goals and the local authority allows it.

    ‘Stretching’ is the option to average this funding allocation across 52 weeks of the year instead, if nurseries feel this is more financially even when planning their budget goals and the local authority allows it.

    Make sure funded places fit within your goals for the year. Stay organised and on track for your nursery’s 2024 growth goals with our nursery budget tips article.

    Nursery Invoicing Software : Revenue Reports

    What are the childcare funding rates in 2024?

    The nursery funding rates for 2024- 2025 were confirmed in November 2023. If you are a childminder, your local authority will release their final rates by 31st March 2024 if they haven’t already.

    The average hourly rate for each age group across England is as follows:

    • £5.88 for every three or four-year-old
    • £8.28 for two-year-olds
    • £11.22 for children under two, starting from nine months

    Even with the increase in funding, many nurseries may only break even financially. You can easily calculate your funding picture using Blossom’s funding calculator.

    How and where can funded hours be used?

    If a family wants to claim their universal 15 hours of childcare for their three or four-year-old, the first point of contact your setting. Parents must apply online for working parents’ childcare funding.

    After checking if they are entitled to government nursery funding, they can use their entitlement at any of the following settings if they’ve been approved to offer funded places:

    • A nursery unit operated by a local authority school
    • A childminder
    • A preschool or playgroup
    • An independent school
    • A private day nursery

    You don’t need to prove a parent is eligible for funding as a nursery owner, but the parent needs to sign a declaration of funding eligibility if you’re giving a place to their child.

    Nursery funding entitlement can be split between two providers for at least two days (not exceeding 10 hours per day).

    It’s vital you keep on top of the admin that comes with funded nursery places, and we’re here to help. Blossom’s funding software can calculate and allocate the funding you receive for each child for you.

    Challenges to watch out for with nursery funding

    There are many ways to make government nursery funding work for you and your early years setting. However, it is important to be aware of some of the challenges that come with the changes to the new funding structure.

    Your staff planning may change depending on the number and types of places you offer. Children under the age of two offer the largest financial benefit (on paper), but consider the space, staff and resources you need for this.

    Occupancy & Staffing

    Having total occupancy visibility is vital to identify which places will be coming available in the next 12 months and beyond. Nursery software tools help your early years business to stay profitable.

    Book a demo and discover how Blossom can help with your funding
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