NORTH YORKSHIRE COUNCIL

CORPORATE DIRECTOR – CHILDREN AND YOUNG PEOPLE’S SERVICE MEETING WITH EXECUTIVE MEMBERS FOR CHILDREN AND YOUNG PEOPLE

1 APRIL 2025

EARLY YEAR EXPANSION GRANT

REPORT OF THE CORPORATE DIRECTOR – CHILDREN AND YOUNG PEOPLE’S SERVICE

1.0 PURPOSE OF THE REPORT

1.1 This report asks the Corporate Director - Children and Young People’s Service, in conjunction with the Executive Members for Children and Young People, to agree recommendations in respect of the distribution of the Department for Education (DfE) Early Years Expansion Grant 2025-26 (EYEG 2025-26) for the 2025/26 financial year for early years providers.

2.0 BACKGROUND

2.1 Early Years Expansion Grant

In December 2024, the DfE announced the early years expansion grant, which, nationally, will provide an additional £75 million of funding to support the early years’ sector as it prepares to deliver the final phase of expansion of the working parent entitlement from September 2025. North Yorkshire Council will receive an EYEG 2025-26 funding allocation of £897.6k; the funding allocation is based on £74.10 per part time equivalent (PTE) for 2-year-olds (working parent and families receiving additional support (FRAS)) and £102.60 per PTE for under 2-year-olds (working parent). The NYC 2-year-old rate is the second lowest national funding rate (received by 36 local authorities); the national average funding rate is £91.65 per PTE (national funding rates range from £119.70 to £68.40 per PTE). The NYC under 2-year-old rate is the third lowest national funding rate (received by 37 local authorities); the national average funding rate is £110.63 / PTE (national funding rates range from £165.30 to £91.20 per PTE).

2.2 The conditions of grant for the EYEG 2025-26:

· Allow local authorities to distribute early years expansion grant funding as suggested by DfE, or they can develop a bespoke approach tailored to support specific growth needs in their area.

· Require local authorities to notify providers of their allocations from the early years’ expansion grant within 6 weeks of local authority funding allocations being confirmed by DfE, that is by 10 April 2025.

· Require local authorities to ensure that the early years expansion grant is distributed in a clear and transparent manner, so that providers understand how allocations have been determined locally, especially when they differ from DfE’s suggested route.

· Provide options for the allocation of the grant funding. The DfE have provided recommended approaches as to how local authorities can allocate the funding locally, as follows:

A) Distribute their total allocation between providers as a flat rate per-PTE, according to the number of 2-year-olds and under 2s taking up the early education entitlements in settings.

B) Use their local 2-year-old and under 2s local funding formulae to determine provider-level funding.

Alternatively, local authorities can create a specific local approach to target funding on specific growth needs in their area. Any bespoke models adopted should reflect the crucial role that private, voluntary, and independent providers, including childminders, play in local expansion plans and take into account the full funding context for 2025-26, including the funding delivered to school-based settings through the 2025-26 National Insurance contributions grant. Further, where any bespoke approach provides funding based on 2-year-old places, in their count of PTEs, local authorities must include those taking up the FRAS entitlements.

· Require local authorities to pay providers before the end of August 2025, to give providers certainty once they start to incur costs ahead of the September 2025 expansion.

· State local authorities do not need to consult with their Schools Forum on passing on the early years’ expansion grant funding to early years providers. Nonetheless, the DfE encourage local authorities to be clear with providers and engage with them early to share details of how and when they plan to allocate funding, where this is possible and does not create excessive delays in finalising allocations and making payments to providers.

· Require all funding received via this early years’ expansion grant to be distributed to eligible early years providers and, regardless of distribution method, must not be used for contingency purposes or local authority central or administration costs.

· Require local authorities to ensure that early years’ expansion grant funding is only allocated to early years providers delivering the government’s childcare entitlements.

· State the DfE will work with local authorities to understand how the early years expansion grant has been used to support delivery of the September 2025 delivery milestone. This will include collecting information on the approach local authorities have taken to allocate funding to providers, including average amounts per provider and proportion of providers in each area receiving funding through the grant. The DfE will also collect information from local authorities on how providers in their area have used early years expansion grant funding.

· Confirm that funding allocations are final with no adjustment to the early years’ expansion grant allocations.

3.0 PROPOSED DISTRIBUTION OF THE EYEG 2025-26

3.1 The local authority, having regard to the requirements and timescales detailed in the conditions of the EYEG 2025-26, proposes to allocate the grant funding based on an amount per PTE for 2-year-olds (both 2-year-olds of working parents and 2-year-olds of FRAS entitlements) and an amount per PTE for under 2-year-olds of working parents. In calculating the PTE grant funding values, the local authority seeks to broadly mirror the DfE funding allocation values. The proposed allocation methodology will be based on:

· The total PTE per provider for 2-year-olds (working parent and FRAS) and for under 2-year-olds (working parent) being based on the Spring 2025 actual headcount. The calculated PTE per provider will be adjusted to reflect the increase in the funded entitlement for the working parent children from 15 hours per week to 30 hours per week from 1 September 2025.

· For new providers, delivering funded provision for 2-year-olds and under 2-year-olds, from the Summer 2025 term, the PTE will be based on the hours recorded on the provider estimate submitted to the local authority for the Summer 2025 term for these categories of children.

· The provider delivering funded entitlement early years provision in the Summer 2025 and Autumn 2025 terms i.e. the provider has submitted an early years’ headcount for the Summer 2025 term and an estimate of the funded early years entitlement hours to be delivered for the Autumn 2025 term.

· Providers commencing the delivery of early years funded entitlements in the Autumn 2025 term will not be eligible to receive EYEG 2025-26 funding. Where a provider ceases the delivery of early years funded entitlements in the Spring 2026 term, any EYEG-2025-26 funding paid will not be clawed back.

3.2 The local authority has identified that the actual number of PTE in North Yorkshire, as per the Spring 2025 headcount and the Summer 2025 estimates for new providers, is higher than the number of PTE used by the DfE to undertake the calculation of the grant funding allocation. In this respect, the local authority has had to adjust the PTE funding value in order to remain within the overall grant allocation funding envelope. The proposed EYEG-2025-26 grant funding allocations to be paid by North Yorkshire Council to early years providers are £68.69 per PTE for 2-year-olds (working family and FRAS funded entitlements) and £98.24 per FTE for under 2 year olds (working family funded entitlement).

3.3 The local authority is scheduled to receive the EYEG 2025-26 grant funding allocation from the DfE in July 2025. The EYEG-2025-26 grant funding will be paid to early years providers in August 2025.

4.0 FINANCIAL IMPLICATIONS

4.1 The required funding for the proposal is provided from the ringfenced EYEG 2025-26 for early years providers. There is no direct impact on the Council’s budget from this proposal.

5.0 LEGAL IMPLICATIONS

5.1 No specific legal implications are identified as a result of the recommendations contained within this report.

6.0 EQUALITIES IMPACT ASSESSMENT

6.1 An Equalities Impact Assessment screening form is attached at Appendix 1.

7.0 CLIMATE CHANGE IMPACT ASSESSMENT

7.1. No climate change or environmental implications have been identified, through the completion of Climate Change Impact Assessments (Initial Screening Form), with the proposal outlined in this report. Please see Appendix 2

8.0 REASONS FOR RECOMMENDATIONS

8.1 The local authority must determine a distribution methodology for the EYEG 2025-26 to early years providers. The proposed distribution methodology reflects the DfE recommended approach for local distribution.

9.0 RECOMMENDATIONS

9.1 The Corporate Director – Children and Young People’s Service, in conjunction with the Executive Members for Children and Young People, are asked to agree the recommendation, as detailed in section 3, for the EYEG 2025-26 on the basis of £68.69 per PTE for 2-year-olds (working family and FRAS funded entitlements) and £98.24 per FTE for under 2 year olds (working family funded entitlement). The PTE will be calculated based on the Spring 2025 headcount for existing providers and the Summer 2025 estimates for new providers.

Sir Stuart Carlton

Corporate Director – Children and Young People’s Service

Report prepared by: Howard Emmett, Assistant Director - Resources