Decision details

Early Years Provider Funding Rates 2023/24

Decision Maker: Corporate Director Children and Young People's Services

Decision status: Recommendations approved

Is Key decision?: Yes

Is subject to call in?: Yes


To consider the results of the funding consultation undertaken with early years providers operating within North Yorkshire and to approve recommendations to change the funding rates paid to early years’ providers for the funded entitlement for 3


To increase the provider base funded rate for:
- the universal and extended funded entitlement for 3 & 4 year olds from £4.31 per hour to £4.57 per hour for the 2023/24 financial year.
- disadvantaged 2 year olds from £5.51 to £5.64 for the 2023/24 financial year

Reasons for the decision:

The Early Years National Funding Formula provides a local authority funding rate for three and four olds in North Yorkshire at the funding floor level of £4.61 per hour. This funding rate provided the calculation basis for the 2022/23 three and four year old Early Years DSG allocation. The local authority hourly funding rate covers both the costs of provider funding and any central services related to early years provision that are provided free at the point of delivery.
On the 16th December 2022, the DfE announced an increase in the early years’ local authority funding rate for the 2023/24 financial year. The funding rate for three- and four-year olds in North Yorkshire (i.e. the amount received by the local authority) will increase by 26p per hour 1 The National Living Wage (NLW) will rise to £10.42 from 1 April 2023, an increase of 92 pence or 9.7%. OFFICIAL from £4.61 per hour to £4.87 per hour (the minimum funding floor). The increase in funding for three- and four-year olds reflects the mainstreaming of the teachers’ pay and pension grant equating to 5p per hour and 21p related to the funding increase outlined in the Spending Review announcements and the updating of the underlying data to the latest available datasets. The level of funding for disadvantaged two-year olds will also increase by 13p per hour from £5.57 per hour to £5.70 per hour (representing a 2.3% increase). Early years’ pupil premium will increase by 2p per hour (3 & 4 year universal entitlement hours only) from 60p per hour to 62p per hour (representing a 3.3% increase) and disability access funding will increase by £28 per annum from £800 per annum to £828 per annum (representing a 3.5% increase)
The regulations accompanying the Early Years National Funding Formula restrict the level of three- and four-year old funding which can be retained for the delivery of centrally managed services associated with early years’ provision. The level of funding allowed to be retained is 5%. There are no regulations restricting the level of two-year old funding which can be retained by the local authority. 2.5 In addition to the three- and four-year old funding, the Early Years DSG allocation also includes funding for disadvantaged two year olds, early years pupil premium, disability access funding and maintained nursery school supplementary funding. 2.6 The three- and four-year old funding rate paid to early years providers consists of a base funding rate and funding supplements. The provider base funding rate for 2022/23 is £4.31 per hour. Within North Yorkshire, funding supplements are currently paid for deprivation, which is a mandatory funding supplement, and sparsity

Alternative options considered:


Publication date: 14/03/2023

Date of decision: 14/03/2023

Effective from: 22/03/2023

Accompanying Documents: