Today (15 December) the Department for Education (DfE) has announced new early years funding rates for 2026/27 in England. The early years funding rates that providers receive vary by age group and by local authority, reflecting the differing costs of delivering provision. The increase for all three rates for 2026/27 is above the rate of inflation.  

The average hourly rates for 2026/27 are: 

• £12.04 for under-twos (4.28% increase) 
• £8.90 for two-year-olds (4.36% increase) 
• £6.42 for three- and four-year-olds (4.95% increase) 

Local authority pass-through rate 

The DfE has also announced a 97% “pass through” rate for local authorities in England from April 2026, an increase of 1% from the current rate of 96%. This is the proportion of funding that local authorities must pass on to providers in their area. Local authorities are expected to announce their individual funding rates and other funding supplements by 28 February 2026 at the latest.

Early Years Pupil Premium

Early Years Pupils Premium will increase by 15% to £1.15 in addition to last year’s 45% uplift, to provide additional support for disadvantaged children. This equates to £655.50 per eligible child per year, bringing it closer in line to Pupil Premium for schoolchildren which is currently set at £1,515.  

Childminder funding  

Coram PACEY recently raised concerns about the implications of the current funding model for childminders in England – particularly the significant drop in funding they face when a child turns three. 70% of childminders told us the current approach for early years funding does not work well for their childminding business and 90% called for rates to recognise that childminders operate differently to group settings.  

Ka Lai Brightley-Hodges, Head of Coram PACEY comments:  

“We welcome the uplift to funding rates, which will go some way to provide relief for providers in the next financial year. However, the funding rate for three- and four-year-olds still remains below the true cost of delivery, and we know that many childminders have already withdrawn, or are planning to withdraw, places for this age group as a result of the financial cliff-edge that they face when a two-year-old turns three. This is especially disheartening as these are often children they have cared for from an early age, building strong bonds and a relationship with the family. 

The 15% increase to the Early Years Pupil Premium (EYPP) will benefit disadvantaged children and brings the rate closer to the equivalent funding that eligible school-aged children receive. More work is needed to address low awareness and take-up of EYPP among childminder providers, so that eligible children can fully benefit. A number of barriers may be contributing – including limited awareness of supplements, challenges around data collection, identifying and processing eligible children, and inconsistencies in support. We will be working with childminders and local authorities to help increase take-up. 

While today’s announcements are a positive step in recognising the financial pressure providers are facing, we are urging the Department for Education to go further in addressing the specific challenges felt by registered childminders as part of next year’s funding review. We are concerned that ongoing financial pressures, alongside other issues such as local planning constraints and newly emerging confusion around childminder expenses are having a significant impact on the sector. Without timely action and targeted investment, the decline in Ofsted-registered childminder numbers will continue.”