Early Years Funding: Hampshire

Olivia Bailey Excerpts

Wednesday 1st July 2026 Westminster Hall

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

It is an honour to serve under your chairship, Sir Alec. I thank the hon. Member for North East Hampshire (Alex Brewer) for securing this important debate, and all hon. Members who are present. I will start by also thanking all the wonderful staff who work in early years settings in her constituency and across Hampshire. They do a brilliant job and give all our children the best possible start in life. They deserve all our thanks and recognition.

The hon. Lady made a number of fair points that I will address in my speech, but I will say at the outset that for the first time in a long time this Government have prioritised the early years. We have put record investment into the early years, with £9.5 billion next year. We have stretching targets to ensure that record proportions of children are ready for school. We are opening Best Start family hubs across the country and network sites, encouraging integration between our local services and early education providers. Through our best start in life strategy, we are determined to have the back of providers, ensuring that the workforce is brilliantly supported to continue doing such a fantastic job for our children and young people. It was important to start my remarks by situating us in that important context.

I will move on to my substantive speech and address the points that the hon. Lady raised. The Labour Government have delivered a record expansion of free childcare, halving childcare costs for families, boosting family finances and improving children’s life chances, driving towards record proportions of children being ready for school. Not only are we saving working parents thousands of pounds, but we are giving every child excellent early education, which they will need to thrive later.

[Matt Rodda (Reading Central) (Lab)]

My hon. Friend is making an excellent point. Does she agree that there is genuine excitement and joy from families when they see the benefits of this investment? She and I have both witnessed that in our community in Reading. The Government are building on a great tradition in that local authority; I wish other local authorities invested to that extent.

[Olivia Bailey]

I thank my hon. Friend and constituency neighbour for giving me the opportunity to thank the fantastic early years staff in my constituency of Reading West and Mid Berkshire and across Reading, who do a brilliant job for our children. As a constituency MP, as well as a Minister, I know that giving every child the best possible start in life is so important for their future life chances. If we get it right in the early years, it makes a transformational difference as they grow older.

The work we are doing is thanks to our brilliant early education sector, which has worked tirelessly to deliver the large expansion of childcare, making it such a success. We have a responsibility to ensure that the sector is financially sustainable to deliver the entitlements and high-quality early years provision. That is why we are investing record amounts in early education and why, through our proposals, we have the back of the sector. In 2026-27, we expect to provide over £9.5 billion for the early years entitlements, more than doubling annual public investment in the early years compared with 2023-24. We are investing over £1 billion more than last year to deliver a full year of expanded entitlements and an above-inflation increase to entitlements funding rates.

The national average funding rate increases continue to reflect the forecast cost pressures on the sector, including the national living wage, and they take into account the wider workforce pressures felt by the sector that the hon. Member for North East Hampshire mentioned. 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 the funding rate for the nine months to two-year-old entitlement by 4.28%. That investment, alongside the hard work and dedication of countless colleagues in the sector, means that working families are saving an average of £8,000 a year.

There has also been a benefit in Hampshire from those rate increases. The rates set for Hampshire have seen increases of 3.6% for three to four-year-olds, 2.9% for two-year-olds and 2.8% for under-twos. That means that Government-paid rates for Hampshire are £6.38 for three to four-year-olds, £8.73 for two-year-olds and £11.81 for under-twos. That compares relatively favourably with average rates, which are marginally above those figures. This demonstrates, I think, our commitment to properly funding our early years settings to continue to deliver on this vital mission.

Hourly rates vary between local authorities, reflecting the relative needs of the children and the different costs of delivering provision across the country. Those rates are calculated using the early years national funding formula, which is used to target funding to local authorities where it is needed most. We believe that that approach is fair, efficient and transparent. Of course, we keep funding rates under review, and I assure the hon. Member that the team will have listened carefully to her points today. She may also be interested to know that, as we committed in the best start in life strategy, we plan to review early years funding and consult on changes to how we distribute that funding. I would welcome her contribution to that review. The consultation will begin imminently, and I ask her and everybody here today to encourage their constituents to feed into it.

We are also investing to help children from disadvantaged backgrounds and with additional needs to ensure that every child, no matter their circumstances, has the best start in life. On top of the largest ever uplift to the early years pupil premium in 2025-26, this year we increased early years pupil premium rates by 15%, equivalent to up to £655 per eligible child per year. We also expect to spend over £90 million on maintained nursery school supplementary funding in 2026-27. The best start in life strategy sets out our plan to boost uptake of the 15-hour entitlements to two, three and four-year-olds by working with local authorities and family hubs and tracking data through the local outcomes framework.

The hon. Member for North East Hampshire mentioned the vital issue of SEND. To support children with SEND, a further £47 million is being provided in 2026-27 to support greater inclusion of children with special educational needs and disabilities as part of our three-year £1.6 billion inclusive mainstream fund. That is on top of mandatory SEN inclusion funds, through which providers can access support for children with early and emerging needs in their settings. Through the disability access fund, eligible children can also receive £975 per child per year to support reasonable adjustments.

Early years settings will also benefit from a dedicated early years offer within a £200 million national training package and access to specialist advice from health and education professionals through Experts at Hand. I assure the hon. Member that we are working tirelessly on this vital issue to ensure that every child with additional needs gets the help and support they need.

The hon. Lady also talked about the vital importance of the workforce. We know that we must invest in the workforce to ensure the best possible future for the early education system in this country. That is one reason why, earlier this month, we launched a £4,500 payment to attract and retain qualified nursery teachers in the communities that need them most, starting in 10 areas and expanding to 30 later this year. The scheme will boost outcomes for children and allow more families to access their funded childcare entitlement. Alongside that, we committed in the BSIL strategy to continue supporting the sector to grow and professionalise, and I assure Members that work on that is continuing at pace.

Our record expansion of childcare means that the Government now fund around 80% of childcare hours in the country, which is a remarkable figure. In effect, it means that we have created a new public service, and we must ensure that that public service is working for providers, parents and children. We announced at the autumn Budget 2025 that the Department is leading a review of early education and childcare support, provided by different parts of the Government. Our review will set out a new vision for the early education and care system—one that builds children’s life chances and supports parents’ work choices, and one that is simpler and easier to use for both providers and parents, improving access and the impact of the Government’s investment in children and families.

I look forward to engaging with colleagues from across the House as we make progress on that review. I also look forward to engaging widely with the sector, which is wonderfully diverse. It is important for me to say at the Dispatch Box how much we value the many private and voluntary nurseries that are operating at a brilliant level to provide such a great service for our children and young people. They will be at the heart of the review and of any future system.

I conclude by thanking all Members for their thoughtful contributions. It is clear that we share a common goal to ensure that every child has the best possible start in life and that every family can access high-quality, affordable and flexible childcare. Despite our record funding, I recognise the challenges faced by some in the sector, particularly the costs that providers face and funding distribution. That is why we are continuing to work closely with them to refine our funding approach through consultation and to always make sure that we are listening, so I am grateful to the hon. Member for North East Hampshire. Through our consultation and review, we can ensure that our early education system fulfils the ambition that we all have for it. This is about more than childcare; it is about opportunity and life chances. I remain confident that, working together, we can deliver a system that truly meets the needs of every child and every family.

Question put and agreed to.