The consultation lays out expected funding rates for 2024/25 during which time 30 hours funded childcare will be rolled-out to children from nine months old.
Plans to expand childcare entitlements, announced by Chancellor of the Exchequer Jeremy Hunt in the most recent Budget, mean that from April next year, working parents of two-year-olds will be able to access 15 hours of funded childcare per week, from September this will be extended to parents of nine-month to three-year-olds.
From September 2025 working parents of nine-month to three-year-olds will be able to access 30 funded hours per week, according to the Department for Education.
Expected funding rates for local authorities, set to be introduced alongside the expansion next April, have been laid out in the consultation.
They will be confirmed in the autumn, DfE says, but are likely to be set at £8.17 per hour for two-year-olds and £11.06 for under twos.
“This makes the government rate for under-twos almost double the average hourly fee of £5.68 charged to parents,” the consultation document states.
It adds that funding rates for children aged nine-months to two-years will be calculated regardless of whether parents are accessing entitlements as working parents or those who are disadvantaged.
“The rates themselves will vary by age, with higher rates for the younger age group reflecting the difference in costs, particularly due to differences in staffing ratio requirements,” it adds, noting that staff:child ratios for two-year-olds are set to be relaxed to allow staff in settings to look after five children instead of the current four from September this year, subject to parliamentary procedure.
The consultation also seeks views on how best to calculate increased funding for children with additional needs.
DfE proposes introducing an area-based measurement of deprivation based on the Income Deprivation Affecting Children Index (IDACI) alongside free school meals data to establish additional needs funding for children aged nine-months to two-years.
It also poses questions around the use of English as an additional language, family receipt of disability living allowance and free school meals as proxy measures for additional needs funding for older children.
Responding to the launch of the consultation, Neil Leitch, chief executive of the Early Years Alliance, said: “We remain deeply concerned that, regardless of what funding formula is used, the decision to extend the early entitlement scheme will only serve to place even greater pressure on an already-struggling sector.”
Purnima Tanuku, chief executive of the National Day Nurseries Association, added: “
“We know the government tried to get the funding rates right for providers, but appears to be focussing on the two-year-old and under rates rather than making sure the investment for three and four-year-olds is sufficient to keep nurseries sustainable.
“Currently nurseries have around ten times more three and four-year-old children, so these are the rates that make the biggest difference to the sector.”
The consultation closes on 8 September.
