Early Years National Funding Formula (EYNFF) – 2025-26 - consultation

Share Early Years National Funding Formula (EYNFF) – 2025-26 - consultation on Facebook Share Early Years National Funding Formula (EYNFF) – 2025-26 - consultation on Twitter Share Early Years National Funding Formula (EYNFF) – 2025-26 - consultation on Linkedin Email Early Years National Funding Formula (EYNFF) – 2025-26 - consultation link

Consultation has concluded

Purpose

This consultation asks providers for their views on the following areas:

  • The funding principles for 3- and 4-year-olds under the Early Years National Funding Formula (EYNFF)
  • The funding principles for 2-year-olds and Under 2’s under the Early Years National Funding Formula (EYNFF)
  • The Special Educational Needs (SEN) Inclusion Fund proposed adjustments.


Background and overview:

The Early Years National Funding Formula (EYNFF) was introduced in April 2017. Each year the Government publishes guidance setting out the overall framework, funding rates and expectations on local authorities in implementing the EYNFF.

From 2025-26 Local authorities will be required to allocate 96% of funding to providers.

Local authorities (LA) are required to consult providers on annual changes to their local formula.

National rates advised by central government have increased for 2025-26. This includes increases for existing entitlements and newly introduced funding entitlements that started in April 2024.

All 3- and 4-year-old children in England and Wales are entitled to 15 hours of free nursery education per week, 38 weeks a year until they reach statutory school age. Parents may choose to take this up in a maintained school nursery or in a private, voluntary, or independent sector (PVI) early year setting or with a childminder.

Currently the Early Years Block within the Dedicated Schools Grant (DSG) funds the universal provision for all 3- and 4-year-old children, Early Years provision for families of 2-year-old children receiving additional support and additional funding for working parents of children from 9 months to 4-years-old. Funding is also currently used to support the costs for children with emerging levels of Special Educational Needs, Disabilities and Deprivation.

From 1 April 2024 the government introduced an additional 15 hours per week of free childcare for working parents of 2-year-olds. From 1 September 2024 this was extended for all working parents of children from 9 months to 2 years. The aim was to reduce the cost of childcare for working families and break down the barriers to work, so that parents who want to return to work or work more hours can do so.

On the 10 December 2024 the Education and Skills Funding Agency (ESFA) published the latest Early Years funding measures to support education and help parents with childcare in 2025-26.

The early years entitlements are:

(All entitlements are 38 weeks a year unless stretched)

  • From 1 September 2025, the 15 hours of free childcare for eligible working parents of children from 9 months up to 2-years-old will be extended to 30 hours per week.
  • From 1 September 2025, the 15 hours of free childcare for eligible working parents of 2-year-old children will be extended to 30 hours per week.
  • The 15 hours of free childcare for families of 2-year-olds receiving additional support (formerly known as the 2-year-old disadvantaged entitlement) will continue in 2025-26
  • The universal 15 hours of free childcare for all 3 and 4-year-olds will continue in 2025-26
  • The additional 15 hours of free childcare for working parents of 3 and 4-year-olds will also continue in 2025-26

As in previous years additional funding will be available in 2025-26

  • Maintained nursery school (MNS) supplementary funding for 3 and 4-year-olds
  • The disability access fund (DAF) for eligible children accessing the early years entitlements
  • The early years pupil premium (EYPP) for eligible children and children we care for accessing the early years entitlements.

This staggered approach gives childcare providers time to prepare for the changes, ensuring there are enough providers ready to meet demand.


National Funding Formula Guidance

The LA currently retains less than 4% of the early years entitlements for 3 and 4-year-olds. The retained funding supports the following:

  • Quality and improvement support for individual settings
  • Subsidised Early Years Training Programme
  • Work with Early Years and Childcare providers to ensure they can deliver sustainable provision and can expand to meet demand
  • Support to families in accessing early years and childcare provision and the early years entitlements
  • Administration of the early years entitlements
  • Supporting access to early years and childcare provision for children with emerging and complex needs.

In 2024, the DfE extended the ability for LAs to centrally retain funds for all early years entitlements (previously 3 and 4-year-old entitlements only), to include 2-year-old additional support and working parent entitlements and the under 2's entitlements.

The DfE have set the maximum central retention at 4% in 2025-26 (previously 5% in 2024-25), with the intention to reduce to 3% across all entitlements once the new entitlements are embedded.

The LA will be proposing to Schools Forum to continue retaining up to 4% of the hourly funding rate allocated for the 3 and 4-year-old entitlements, 2-year-old entitlements for families receiving additional support and working parents and under 2's entitlements to support the increasing resource required in 2025-26.

The proportion of funding retained centrally (up to the maximum of 4%) is decided by the Council and Schools Forum.

Oxfordshire recognises the difficult climate that many early years providers have faced. The council recognises the importance of continuing to offer a realistic funding rate and of continuing with high levels of inclusion support at a time that has been most testing for our provisions. The council aims to ensure a fair and equitable offer, which meets the needs of Oxfordshire children.


Contingency Fund

LAs can set aside contingency funding as part of their local budgetary process to help manage fluctuations in take-up. Any underspend from an LA’s early years budget must remain within the education budget.

With the new entitlements introduced in 2024-25 and 2025-26, the LA proposes an allocation from each of the entitlements to the Contingency Fund.


Early Years Funding Payment Arrangements

Due to the recent expansion of early years entitlements, early years providers have seen an increase in their income from early years funding provided by the Department for Education (DfE) and claimed through the LA. LAs are required to regularly review how they pay providers to ensure that it continues to meet the needs of all providers in their area.


In Oxfordshire, the current payment pattern delivers 60% of the expected funding at the start of the term, with a balancing payment after headcount. This means that providers receive most of their early years funding income at the start of the term.

The final amount is paid earlier than it would be if paid monthly, provided that headcount and estimated returns are submitted on time.

The council are reviewing the payment software currently used, and the consultation is seeking provider input on whether we should investigate introducing monthly payments in the next 12 months. A monthly payment pattern is likely to consist of 12 payments made before the end of each month based on provider submissions.


Timescales

On 10 December 2024, the Department for Education (DfE) announced the local authority hourly funding rates for April 2025 to March 2026 and can be found here: Early years funding: 2025 to 2026 - GOV.UK. The allocations, proposed provider rates and the outcome of this consultation, will be reported to Oxfordshire's Schools Forum on 11 February 2025: https://www.oxfordshire.gov.uk/residents/schools/our-work-schools/oxfordshire-schools-forum

There then follows political ratification and final rates will be communicated to providers by 28 February 2025

The timetable is challenging for all involved. The consultation will close on 20 January 2025 at 9am. We encourage providers to engage in this consultation and thank you in advance for your contributions.


Proposed arrangements for funding received from the Government for the EYNFF in Oxfordshire are:

3-and-4-year-old Entitlement

The EYNFF funding rate from the Government to Oxfordshire in 2025-26 will increase from £5.80 to £6.00 per hour, however this is prior to any allocation to central retention; allowable supplements, and/or contingency fund.

We are therefore unable to confirm the providers' hourly rate for 3 and 4-year-olds at this time as it will be dependent on the outcome of the Schools Forum decision on central retention, and the outcome of the proposals in this consultation.

Supplementary funding for Maintained Nursery Schools (MNS) – This was originally introduced to protect 2016 to 2017 funding rates, prior to the introduction of the EYNFF, for universal hours only. The supplementary funding hourly rate for maintained nursery schools will increase by £0.63 from £4.64 to £5.27 per universal hour in FY 2025-26 (including Teachers pay and pension uplift), reflecting increased Government funding.

Discretionary Supplements that are not currently used in Oxfordshire are:

  • Flexibility
  • Rurality/Sparsity

Teachers’ Pay and Pensions element - Schools previously received Teachers Pay Grant and Teacher’s Pension Employer Contribution Grant to help meet increased costs arising from the Teachers’ pay awards and higher employers pension contributions from 2018. The last year of these grants being paid separately was FY 2022-23 and the government now passes this funding on through the EYNFF.

To continue to address teachers’ pay and pension funding, following consultation, Oxfordshire implemented the use of a discretionary Quality Supplement in 2023-24 as a mechanism to pass on funding. This mechanism was continued in 2024-25

We propose to continue to use the Quality Supplement for Teachers’ Pay and Pensions element in 2025-26


2-year-old Entitlement

The EYNFF funding rate from the Government to Oxfordshire in 2025-26 will be the same for both the entitlements, working parent entitlements and for families in recent of additional support.

The EYNFF funding rate from the Government to Oxfordshire in 2025-26 will increase from £8.15 to £8.38 per hour (an increase of £0.23), however this is prior to any allocation to central retention, allowable supplements and/or contingency fund.

We are therefore unable to confirm the providers' hourly rate for 2-year-olds at this time as it will be dependent on the outcome of the Schools’ Forum decision on central retention, and the outcome of the proposals in this consultation.

The DfE have confirmed that LAs can choose to allocate the funding for both additional support and working parent entitlements with a single local 2-year-old formula, or to have separate local formulae for the two different entitlements.

The LA proposes to continue to have a single local formula for both 2-year-old entitlements, the additional support, and the working parent entitlements. We expect that a high proportion of children eligible under the additional support criteria will benefit from increased funding under the introduction of EYPP and Deprivation supplement (as set out below)

The optional supplements for the 2 year old formula are :

  • Deprivation
  • Flexibility
  • Rurality/Sparsity
  • Quality

The DfE expect funding for deprivation to be reflected in LAs approach to funding for the 2-year-old and under 2’s entitlements. Therefore, the LA proposes to continue to include Deprivation as a supplement within the 2-year-old formula.


Under 2’s Entitlement

The EYNFF funding rate from the Government to Oxfordshire in 2025-26 will increase from £11.06 to £11.35 per hour (an increase of £0.29), however this is prior to any allocation to central retention, allowable supplements and/or contingency fund.

We are therefore unable to confirm the providers' hourly rate for 2-year-olds at this time as it will be dependent on the outcome of the Schools’ Forum decision on central retention, and the outcome of the proposals in this consultation.

The optional supplements for the local 2-year-old formula are:

  • Deprivation
  • Flexibility
  • Rurality/Sparsity
  • Quality

The DfE expect funding for deprivation to be reflected in LAs approach to funding for the 2-year-old and under 2’s entitlements. Therefore, the LA proposes to continue to include Deprivation as a supplement within the under 2’s formula.


Supplements for under 2's, 2-year-olds and 3-and-4 year-olds

Early Years Pupil Premium (EYPP) – The national rate per eligible child (up to a maximum 570 hours per year), will increase from 68p to £1.00 per hour (an increase of £0.32) in 2025-26. The funding is for under 2's, 2-year-olds and for 3-and-4-year-olds.

Mandatory deprivation supplement – This continues to be mandatory in 2025-26 and the Local Authority will maintain the rate at 47p per child per hour. The funding is for under 2's, 2-year-olds and for 3-and-4-year-olds.

Disability Access Fund (DAF) - The national rate for DAF is increasing in 2025-26 from £910 per eligible child per year to £938 (an increase of £28.00). The funding is for under 2's, 2-year-olds and for 3-and-4-year-olds who are not in Reception classes that are claiming the Disability Living Allowance (DLA).


Meeting the needs of children with emerging Special Educational Needs

LAs have been required to have a SEN Inclusion Fund (SENIF) to support children who are eligible for entitlements, targeted at children with lower level and emerging SEN. In Oxfordshire, the current rate is £38.50 per week and paid to schools and settings indicating the number of children using the description ‘SEN support’ on their headcount return.

The current allocation to the SEN Inclusion Fund is insufficient to meet the needs of the current entitlement cohort. The LA proposes to increase the SEN Inclusion Fund budget and reduce the contingency budget to support the SENIF funds due to the growth in need.

The DfE requirement is to have a SEN Inclusion budget to fund the entitlements for all eligible children.

The LA proposes that the SEN Inclusion Fund rate for all eligible children is set at £38.50 per week


Have your say

We’d like to hear what you think about our Early Years National Funding Formula (EYNFF) – 2025-26.

Please fill in our online survey by clicking the ‘TAKE SURVEY’ button below.

Purpose

This consultation asks providers for their views on the following areas:

  • The funding principles for 3- and 4-year-olds under the Early Years National Funding Formula (EYNFF)
  • The funding principles for 2-year-olds and Under 2’s under the Early Years National Funding Formula (EYNFF)
  • The Special Educational Needs (SEN) Inclusion Fund proposed adjustments.


Background and overview:

The Early Years National Funding Formula (EYNFF) was introduced in April 2017. Each year the Government publishes guidance setting out the overall framework, funding rates and expectations on local authorities in implementing the EYNFF.

From 2025-26 Local authorities will be required to allocate 96% of funding to providers.

Local authorities (LA) are required to consult providers on annual changes to their local formula.

National rates advised by central government have increased for 2025-26. This includes increases for existing entitlements and newly introduced funding entitlements that started in April 2024.

All 3- and 4-year-old children in England and Wales are entitled to 15 hours of free nursery education per week, 38 weeks a year until they reach statutory school age. Parents may choose to take this up in a maintained school nursery or in a private, voluntary, or independent sector (PVI) early year setting or with a childminder.

Currently the Early Years Block within the Dedicated Schools Grant (DSG) funds the universal provision for all 3- and 4-year-old children, Early Years provision for families of 2-year-old children receiving additional support and additional funding for working parents of children from 9 months to 4-years-old. Funding is also currently used to support the costs for children with emerging levels of Special Educational Needs, Disabilities and Deprivation.

From 1 April 2024 the government introduced an additional 15 hours per week of free childcare for working parents of 2-year-olds. From 1 September 2024 this was extended for all working parents of children from 9 months to 2 years. The aim was to reduce the cost of childcare for working families and break down the barriers to work, so that parents who want to return to work or work more hours can do so.

On the 10 December 2024 the Education and Skills Funding Agency (ESFA) published the latest Early Years funding measures to support education and help parents with childcare in 2025-26.

The early years entitlements are:

(All entitlements are 38 weeks a year unless stretched)

  • From 1 September 2025, the 15 hours of free childcare for eligible working parents of children from 9 months up to 2-years-old will be extended to 30 hours per week.
  • From 1 September 2025, the 15 hours of free childcare for eligible working parents of 2-year-old children will be extended to 30 hours per week.
  • The 15 hours of free childcare for families of 2-year-olds receiving additional support (formerly known as the 2-year-old disadvantaged entitlement) will continue in 2025-26
  • The universal 15 hours of free childcare for all 3 and 4-year-olds will continue in 2025-26
  • The additional 15 hours of free childcare for working parents of 3 and 4-year-olds will also continue in 2025-26

As in previous years additional funding will be available in 2025-26

  • Maintained nursery school (MNS) supplementary funding for 3 and 4-year-olds
  • The disability access fund (DAF) for eligible children accessing the early years entitlements
  • The early years pupil premium (EYPP) for eligible children and children we care for accessing the early years entitlements.

This staggered approach gives childcare providers time to prepare for the changes, ensuring there are enough providers ready to meet demand.


National Funding Formula Guidance

The LA currently retains less than 4% of the early years entitlements for 3 and 4-year-olds. The retained funding supports the following:

  • Quality and improvement support for individual settings
  • Subsidised Early Years Training Programme
  • Work with Early Years and Childcare providers to ensure they can deliver sustainable provision and can expand to meet demand
  • Support to families in accessing early years and childcare provision and the early years entitlements
  • Administration of the early years entitlements
  • Supporting access to early years and childcare provision for children with emerging and complex needs.

In 2024, the DfE extended the ability for LAs to centrally retain funds for all early years entitlements (previously 3 and 4-year-old entitlements only), to include 2-year-old additional support and working parent entitlements and the under 2's entitlements.

The DfE have set the maximum central retention at 4% in 2025-26 (previously 5% in 2024-25), with the intention to reduce to 3% across all entitlements once the new entitlements are embedded.

The LA will be proposing to Schools Forum to continue retaining up to 4% of the hourly funding rate allocated for the 3 and 4-year-old entitlements, 2-year-old entitlements for families receiving additional support and working parents and under 2's entitlements to support the increasing resource required in 2025-26.

The proportion of funding retained centrally (up to the maximum of 4%) is decided by the Council and Schools Forum.

Oxfordshire recognises the difficult climate that many early years providers have faced. The council recognises the importance of continuing to offer a realistic funding rate and of continuing with high levels of inclusion support at a time that has been most testing for our provisions. The council aims to ensure a fair and equitable offer, which meets the needs of Oxfordshire children.


Contingency Fund

LAs can set aside contingency funding as part of their local budgetary process to help manage fluctuations in take-up. Any underspend from an LA’s early years budget must remain within the education budget.

With the new entitlements introduced in 2024-25 and 2025-26, the LA proposes an allocation from each of the entitlements to the Contingency Fund.


Early Years Funding Payment Arrangements

Due to the recent expansion of early years entitlements, early years providers have seen an increase in their income from early years funding provided by the Department for Education (DfE) and claimed through the LA. LAs are required to regularly review how they pay providers to ensure that it continues to meet the needs of all providers in their area.


In Oxfordshire, the current payment pattern delivers 60% of the expected funding at the start of the term, with a balancing payment after headcount. This means that providers receive most of their early years funding income at the start of the term.

The final amount is paid earlier than it would be if paid monthly, provided that headcount and estimated returns are submitted on time.

The council are reviewing the payment software currently used, and the consultation is seeking provider input on whether we should investigate introducing monthly payments in the next 12 months. A monthly payment pattern is likely to consist of 12 payments made before the end of each month based on provider submissions.


Timescales

On 10 December 2024, the Department for Education (DfE) announced the local authority hourly funding rates for April 2025 to March 2026 and can be found here: Early years funding: 2025 to 2026 - GOV.UK. The allocations, proposed provider rates and the outcome of this consultation, will be reported to Oxfordshire's Schools Forum on 11 February 2025: https://www.oxfordshire.gov.uk/residents/schools/our-work-schools/oxfordshire-schools-forum

There then follows political ratification and final rates will be communicated to providers by 28 February 2025

The timetable is challenging for all involved. The consultation will close on 20 January 2025 at 9am. We encourage providers to engage in this consultation and thank you in advance for your contributions.


Proposed arrangements for funding received from the Government for the EYNFF in Oxfordshire are:

3-and-4-year-old Entitlement

The EYNFF funding rate from the Government to Oxfordshire in 2025-26 will increase from £5.80 to £6.00 per hour, however this is prior to any allocation to central retention; allowable supplements, and/or contingency fund.

We are therefore unable to confirm the providers' hourly rate for 3 and 4-year-olds at this time as it will be dependent on the outcome of the Schools Forum decision on central retention, and the outcome of the proposals in this consultation.

Supplementary funding for Maintained Nursery Schools (MNS) – This was originally introduced to protect 2016 to 2017 funding rates, prior to the introduction of the EYNFF, for universal hours only. The supplementary funding hourly rate for maintained nursery schools will increase by £0.63 from £4.64 to £5.27 per universal hour in FY 2025-26 (including Teachers pay and pension uplift), reflecting increased Government funding.

Discretionary Supplements that are not currently used in Oxfordshire are:

  • Flexibility
  • Rurality/Sparsity

Teachers’ Pay and Pensions element - Schools previously received Teachers Pay Grant and Teacher’s Pension Employer Contribution Grant to help meet increased costs arising from the Teachers’ pay awards and higher employers pension contributions from 2018. The last year of these grants being paid separately was FY 2022-23 and the government now passes this funding on through the EYNFF.

To continue to address teachers’ pay and pension funding, following consultation, Oxfordshire implemented the use of a discretionary Quality Supplement in 2023-24 as a mechanism to pass on funding. This mechanism was continued in 2024-25

We propose to continue to use the Quality Supplement for Teachers’ Pay and Pensions element in 2025-26


2-year-old Entitlement

The EYNFF funding rate from the Government to Oxfordshire in 2025-26 will be the same for both the entitlements, working parent entitlements and for families in recent of additional support.

The EYNFF funding rate from the Government to Oxfordshire in 2025-26 will increase from £8.15 to £8.38 per hour (an increase of £0.23), however this is prior to any allocation to central retention, allowable supplements and/or contingency fund.

We are therefore unable to confirm the providers' hourly rate for 2-year-olds at this time as it will be dependent on the outcome of the Schools’ Forum decision on central retention, and the outcome of the proposals in this consultation.

The DfE have confirmed that LAs can choose to allocate the funding for both additional support and working parent entitlements with a single local 2-year-old formula, or to have separate local formulae for the two different entitlements.

The LA proposes to continue to have a single local formula for both 2-year-old entitlements, the additional support, and the working parent entitlements. We expect that a high proportion of children eligible under the additional support criteria will benefit from increased funding under the introduction of EYPP and Deprivation supplement (as set out below)

The optional supplements for the 2 year old formula are :

  • Deprivation
  • Flexibility
  • Rurality/Sparsity
  • Quality

The DfE expect funding for deprivation to be reflected in LAs approach to funding for the 2-year-old and under 2’s entitlements. Therefore, the LA proposes to continue to include Deprivation as a supplement within the 2-year-old formula.


Under 2’s Entitlement

The EYNFF funding rate from the Government to Oxfordshire in 2025-26 will increase from £11.06 to £11.35 per hour (an increase of £0.29), however this is prior to any allocation to central retention, allowable supplements and/or contingency fund.

We are therefore unable to confirm the providers' hourly rate for 2-year-olds at this time as it will be dependent on the outcome of the Schools’ Forum decision on central retention, and the outcome of the proposals in this consultation.

The optional supplements for the local 2-year-old formula are:

  • Deprivation
  • Flexibility
  • Rurality/Sparsity
  • Quality

The DfE expect funding for deprivation to be reflected in LAs approach to funding for the 2-year-old and under 2’s entitlements. Therefore, the LA proposes to continue to include Deprivation as a supplement within the under 2’s formula.


Supplements for under 2's, 2-year-olds and 3-and-4 year-olds

Early Years Pupil Premium (EYPP) – The national rate per eligible child (up to a maximum 570 hours per year), will increase from 68p to £1.00 per hour (an increase of £0.32) in 2025-26. The funding is for under 2's, 2-year-olds and for 3-and-4-year-olds.

Mandatory deprivation supplement – This continues to be mandatory in 2025-26 and the Local Authority will maintain the rate at 47p per child per hour. The funding is for under 2's, 2-year-olds and for 3-and-4-year-olds.

Disability Access Fund (DAF) - The national rate for DAF is increasing in 2025-26 from £910 per eligible child per year to £938 (an increase of £28.00). The funding is for under 2's, 2-year-olds and for 3-and-4-year-olds who are not in Reception classes that are claiming the Disability Living Allowance (DLA).


Meeting the needs of children with emerging Special Educational Needs

LAs have been required to have a SEN Inclusion Fund (SENIF) to support children who are eligible for entitlements, targeted at children with lower level and emerging SEN. In Oxfordshire, the current rate is £38.50 per week and paid to schools and settings indicating the number of children using the description ‘SEN support’ on their headcount return.

The current allocation to the SEN Inclusion Fund is insufficient to meet the needs of the current entitlement cohort. The LA proposes to increase the SEN Inclusion Fund budget and reduce the contingency budget to support the SENIF funds due to the growth in need.

The DfE requirement is to have a SEN Inclusion budget to fund the entitlements for all eligible children.

The LA proposes that the SEN Inclusion Fund rate for all eligible children is set at £38.50 per week


Have your say

We’d like to hear what you think about our Early Years National Funding Formula (EYNFF) – 2025-26.

Please fill in our online survey by clicking the ‘TAKE SURVEY’ button below.

  • CLOSED: This survey has concluded.

    Early Years National Funding Formula (EYNFF) – 2025-26 - consultation

    Consultation has concluded
    Share Early Years National Funding Formula (EYNFF) – 2025-26 - consultation on Facebook Share Early Years National Funding Formula (EYNFF) – 2025-26 - consultation on Twitter Share Early Years National Funding Formula (EYNFF) – 2025-26 - consultation on Linkedin Email Early Years National Funding Formula (EYNFF) – 2025-26 - consultation link