Question to the Department for Education:

To ask the Secretary of State for Education, whether her Department accounted for additional (a) heating and (b) travel costs experienced in rural areas in calculating the minimum funding floor for the early years supplementary grant for September 2023.

The government recognises the current pressures faced by early years providers. That is why we are providing additional funding, through the early years supplementary grant (EYSG) from September 2023, for local authorities to increase the amount of funding paid to childcare providers for delivering the existing childcare entitlement offers.

With the additional funding provided through the EYSG, the minimum funding floor for the 3 and 4-year-old hourly funding rate will increase from £4.87 to an effective £5.20 per hour, in line with the expected increase in the effective combined national average rate (which will increase from £5.29 to £5.62 per hour).

The EYSG will be subject to conditions of grant which we expect to publish in September. The department’s intention is that local authorities must pass on the EYSG in full to early years providers.

In order to recognise cost variations between local authority areas, the department has used the existing funding formulae for 2, 3 and 4-year-olds to determine the EYSG rates for individual local authorities. This means there will be variation around the average increases stated below.

The existing funding system for 3 and 4-year-olds requires local authorities to set a local funding formula, which includes additional funding supplements. In their local formula, local authorities must have a deprivation supplement for 3 and 4-year-olds and are permitted to use other discretionary funding supplements, one of which is to recognise additional costs associated with rurality or sparsity, to enable local authorities to support providers serving rural areas less likely to benefit from economies of scale.