£9.5 billion investment into early years sector

The government is investing a record £9.5 billion into the early years sector so more high quality and affordable childcare places can be offered.

The average funding rates will increase by 4.3% for under 2s, and by almost 5% for 3-and-4-year-olds.

The government is also making sure even more of the money reaches the nurseries and childminders delivering high-quality day to day care, with councils barred from keeping back more than 3% for central services.

Secretary of State for Education Bridget Phillipson said: "We are delivering a record £9.5 billion investment in early years, with nurseries and childminders receiving higher hourly funding rates. This is more money going straight to the frontline, helping providers grow, improve and offer every child the best possible start."

On average, local authorities will receive funding increases of 4.95% for three- and four-year-olds, 4.4% for two-year-olds, and 4.3% for children aged nine months to two years.

The government has also announced a further increase to the Early Years Pupil Premium (EYPP) to provide additional support for disadvantaged children, ensuring all children can benefit from high-quality early education regardless of their background. EYPP will rise by 15% to £1.15 per hour in 2026–27, equivalent to up to £655 per eligible child per year.

Chief Executive of NDNA Tim McLachlan said: "We are pleased that the government has listened to the early years sector and will pay above inflation increases to hourly funding rates which should help providers to pay the statutory wage uplift for the majority of practitioners. With the mandatory pass-through rate set at 97% for next year, nurseries who are struggling with rising costs should notice the difference.

"Staffing costs make up the bulk of nurseries’ outgoings. With the government purchasing 80% of early years places, it’s vital they get the funding rates right so that nurseries can deliver these places, remain sustainable and invest in their staff to deliver high quality provision for our children."