Guidance

Early years 2022 to 2023 hourly funding rates for 2, 3 and 4-year-olds: technical note

Published 25 November 2021

Applies to England

1. Introduction

This technical note describes the methodology for calculating the 2022 to 2023 hourly funding rates for both the 2-year-old entitlement and the 3 and 4-year-old entitlements (the universal 15 hours entitlement and the additional 15 hours entitlement for eligible children of working parents). It also outlines the funding rate uplift calculations for: supplementary funding for maintained nursery schools; early years pupil premium; and the disability access fund.

The 2022 to 2023 indicative allocations for the early years block will be announced in the dedicated schools grant allocations (DSG) table in December 2021.

This document accompanies a 2022 to 2023 funding rates spreadsheet, which includes:

• a table showing the 2022 to 2023 hourly funding rates for 2-year-olds for each local authority
• a table showing the 2022 to 2023 hourly rates for 3 and 4-year-olds for each local authority
• a step-by-step table that shows how each local authority’s 2022 to 2023 funding rates have been derived

The Isles of Scilly and City of London have been excluded from this table, as these local authorities receive a central grant from the government, which will include funding for early years.

2. Calculating hourly funding rates for 2-year-olds

The early years national funding formula: funding rates and step-by-step calculation for 2021 to 2022 which can be found on the early years funding 2021 to 2022 are the starting point for calculating the 2022 to 2023 hourly funding rates for 2-year-olds.

The 2022 to 2023 hourly funding rates for 2-year-olds are then calculated by applying a 21 pence increase for all local authorities.

3. Calculating hourly funding rates for 3 and 4-year-olds

In December 2016, we published the 2017 to 2018 early years national funding formula (EYNFF) hourly rates and allocations, with and without transitional protections and capping, together with a step-by-step guide on how they were derived.

The EYNFF rates for 2018 to 2019 and 2019 to 2020 are available on the same web page along with step-by-step guides. The rates and step-by-step guide for 2020 to 2021 are available on this page, and the rates and step-by-step guide for 2021 to 2022 are available on this page.

When the EYNFF was introduced, a loss cap protection was applied to ensure that no area could lose more than 10% from their 2016 to 2017 funding baseline, and a minimum funding floor was also applied to ensure that no areas saw less than £4.30 per hour.

Between 2017 to 2018 and 2019 to 2020 no significant changes were made to the EYNFF. Local authorities protected by transitional protections saw those protections unwind, whilst rates remained the same for other local authorities.

In 2020 to 2021, almost all local authorities had an 8 pence uplift to their rates and the minimum funding floor was increased to £4.38.

In 2021 to 2022, almost all local authorities had a 6 pence uplift to their rates and the minimum funding floor was increased to £4.44.

The starting point for calculating 2022 to 2023 rates is the 2021 to 2022 funding rates before both protections are applied. See the 3 to 4year-old step-by-step table, column F.

The hourly rates for all local authorities are then uplifted from this starting point by 17 pence.

We then top up all rates that are below £4.61 to the new minimum funding floor of £4.61.

Finally, for those local authorities protected by the loss cap protection, we then top up their funding rates to ensure that all local authorities receive at least the same funding rate as in 2021 to 2022. Note - this step may not always be necessary if the increase in starting point rates, or minimum funding floor, has already uplifted their 2022 to 2023 funding rate above their 2021 to 2022 funding rate.

For further detail on derivation of the 2022 to 2023 rates please refer to the accompanying 2022 to 2023 EYNFF funding rates spreadsheet.

4. Supplementary funding for maintained nursery schools

Since the introduction of the EYNFF, local authorities have received supplementary funding for maintained nursery schools on top of their EYNFF allocation, to protect their MNS funding at their 2016 to 2017 level for the universal 15 hours.

The 2021 to 2022 supplementary funding rates are the starting point for calculating the 2022 to 2023 supplementary funding rates. These are uplifted by 3.47% and then rounded to 2 decimal places, which is equivalent to the increase in the 3 and 4-year-old hourly funding rates. These 2022 to 2023 hourly MNS supplementary funding rates will be published in the indicative EY Block DSG allocations in December 2021.

5. Early years pupil premium and disability access fund

The national funding rate for early years pupil premium will increase by 7 pence, from 53 pence to 60 pence per eligible child per hour.

The national funding rate for disability access fund will increase by £185, from £615 to £800 per eligible child per year.