Early Years Funding 2026-27

Olivia Bailey Excerpts

Monday 15th December 2025 Written Statements

[The Parliamentary Under-Secretary of State for Education (Olivia Bailey)]

The Government are ambitious for every child. Our strategy, “Giving Every Child the Best Start in Life”, sets out our ambition for a record proportion of children to be starting school ready by 2028.

Early education and childcare are crucial to the delivery of this ambition. That is why we have expanded Government-funded childcare hours and are driving up the quality of provision, including in reception year.

In 2026-27, we expect to provide over £9.5 billion for the early years entitlements—more than doubling the Government’s commitment to funded childcare since 2023-24. This investment, alongside the hard work and dedication of early years educators, providers and local authorities, has ensured the successful expansion of Government-funded childcare, with the 30 hours roll-out saving working families an average of £7,500 a year. Against a tough fiscal outlook, the Government are choosing to prioritise and protect investment in the early years, which is why we are investing over £1 billion more in the early years entitlements next year, delivering an above-inflation increase to entitlements funding rates.

Today, we are publishing the early years local authority hourly funding rates for 2026-27. Hourly rates will vary between local authorities, reflecting the relative needs of the children and different costs of delivering provision across the country. On average nationally, we have increased the three and four-year-old hourly funding rate by 4.95%, the two-year-old hourly funding rate by 4.36% and funding rate for the nine months to two-year-old entitlement by 4.28%.

This Government are committed to closing the gap in development and school readiness between children from low-income families and their more affluent peers. So, building on the largest ever uplift to early years pupil premium in 2025-26, we are increasing EYPP rates by 15% to £1.15 per hour in 2026-27, equivalent to up to £655 per eligible child per year.

Eligible children can also receive £975 per child per year, an increase of £37 in 2025-26, through the disability access fund to support reasonable adjustments for children with a disability. And we expect to spend over £90 million on maintained nursery school supplementary funding in 2026-27, to support those high-quality providers that often support the most disadvantaged children with the unique costs that they face.

To support early years providers, we have also made some important changes to local funding rules. We know it is important that providers can plan ahead, so we have made it mandatory that local authorities must communicate their rates to providers by 28 February at the latest. From April 2026, we are also increasing the minimum pass-through requirement, meaning that local authorities must pass on at least 97% of funding to providers, to maximise the funding reaching early years settings. Full details of the 2026-27 local authority hourly funding rates, including step-by-step tables, will be published on www.gov.uk.

As we grow the childcare system, it is important that parents are able to access the affordable childcare they need. That is why, in addition to the increase in funding, we have committed to consulting on changes to how early years funding is allocated and distributed by summer 2026. As announced at the Budget, the Government will also conduct a review of our childcare system, with the aim of simplifying the system for parents and providers, making it easier to access childcare and increasing the overall impact of the Government’s offer.

[HCWS1162]