Public funding of early years education in England

Early years education has had a high policy and political profile in England in recent years. This is related to its potential to improve children’s educational outcomes and support parental employment.

This project examined government expenditure, policy and local implementation of funding policy. It also looked closely at current government proposals to introduce a new national early years funding formula.

It concluded that if the proposed reforms go ahead, some early years education providers will see increases in rates paid, while others will face cuts. In addition, in some areas providers employing more highly qualified staff will lose funding, while other providers without qualified staff would gain.

Key findings:
  • In two-thirds of areas, local authorities paid different hourly ‘base rates’ to different types of providers.
  • In around half of areas additional supplementary payments were made to higher quality early education providers.
  • Providers could be paid at a large number of different rates. In one authority, owing to the use of various incentives to improve provision, this meant the local funding formula could pay different providers at 56 different rates.

The researchers analysed government policy on the funding of free early education and key changes since the late 1990s. They also analysed expenditure on free early education by local authority area, including the budgeted expenditure per child in different types of setting and the proportion of funding allocated for deprivation, quality, flexibility and sustainability.

In addition, interviews were carried out with local authority officers, members of schools forums and early years providers. These focused on the funding formula’s role in maintaining continuity with the past, influencing present behaviour and its implications for the future.