Early years entitlements expansion and wraparound programme sector update

Early years entitlements expansion and wraparound programme - updated January 2024

1. From April 2024, eligible working parents of 2-year-olds will be able to access 15 hours of early education and childcare funding per week (over 38 weeks a year) from the term after their child’s 2nd birthday.

2. From September 2024, eligible working parents of 9-month-old children will be able to access 15 hours of early education and childcare funding per week (over 38 weeks a year) from the term after their child turns 9-months.

3. From September 2025, eligible working parents will be able to access 30 hours per week (over 38 weeks a year) for children aged 9-months old up until the child starts school.

4. Eligibility for the expanded entitlements will be the same criteria as it is now for the 3 and 4YO extended entitlements. Please see the 30 hours funded childcare page for more information.

5. Eligible working families whose children are aged 2 on the 31 March 2024 (i.e. children born between 01 April 2021 and 31 March 2022) will be able to access 15 hours from 1 April 2024 providing they have a received a valid eligibility code by 31 March 2024.

6. Eligible working families whose children have reached 9 months old by 31 August 2024 (i.e. born between 01 September 2022 and 30 November 2023) will be able to access 15 hours from 1 September 2024, providing they have received a valid eligibility code by 31 August 2024.

7. Eligible working families whose children are at least 9-months old on the 31 August 2025 will be able to access 30 hours from 1 September 2025 providing they have a received a valid eligibility code by 31 August 2025. Working families will be able to continue to access the 30 hours until children start school providing they remain eligible and have a valid eligibility code.

8. Working families are only legally entitled to start claiming the early years entitlements for age eligible children the term after the date they receive a decision/code from HMRC. This means families will need to receive a valid eligibility code by the termly deadlines of 31 March, 31 August, and 31 December in order to take up the expanded entitlements in the next term i.e. the same as it is now for the 3 and 4 year-old 30-hour codes.

9. Families will still be required to reconfirm every three months as per current policy, via the Childcare Service, regardless of whether their child has started their place yet.

10. Families that fail to re-confirm their eligibility will not be able to access a funded place beyond the end of the grace period – see more detail on grace periods below.

11. There are no changes to the eligibility criteria for disadvantaged 2-year-old families. Please see the Funded childcare for 2 year olds page for more information.

12. Eligibility checks for disadvantaged 2-year-olds will continue to be administered by Lancashire County Council and families will continue to be issued with a 'golden ticket' letter that will contain a unique voucher code.

13. All providers must continue to take a copy of the 2-year-old letter that is issued by Lancashire County Council for all disadvantaged 2-year-olds before the child takes up their funded place. Providers cannot offer a place until they have seen this letter.

14. From April 2024, there may be some circumstances where households meet the eligibility criteria for both the disadvantaged 2-year-old entitlement and the 2-year-old working parent entitlement. In these circumstances, households can only be in receipt of one of the entitlements i.e. can only access 15 hours in total.

15. If families are eligible under both criteria, they should be directed to apply via the disadvantaged 2-year-old route, because the child will retain the 15 hours entitlement regardless of any changes in family circumstances.

16. The application process for the new expanded entitlements will be the same as the current application process for 3&4year-olds extended entitlements, with HMRC continuing to determine eligibility via the Childcare Service and issuing the eligibility codes.

17. Working parents of 2-year-olds will be able to apply for their eligibility codes via HMRC Childcare Service from 2 January 2024. Parents have until 31 March 2024 to apply for a code, the best time to apply being mid-January to the end of February, in case they need to provide further information to support their application.

Important note:
Where a family already has an account with the HMRC Childcare Service because they are in receipt of Tax Free Childcare, they will only be able to apply for the working families 2 year old code when their reconfirmation window opens.

The application system requires that parents reconfirm their eligibility for Tax Free Childcare and working parent entitlements every 3 months. Parents have a 4 week window before the end of their 3 month period when they can reconfirm.

Due to the 3 month eligibility period, parents who reconfirmed their Tax Free Childcare eligibility before 2 January 2024, cannot apply for a code to access the new 2 year old working families entitlement until their reconfirmation window next opens.

If a parent’s reconfirmation window opens on or after the 15 February 2024, they will receive a letter from HMRC before this date with a code. The letter will provide a valid temporary code and instructions on how to use it to claim their entitlement.

18. Providers will be able to check eligibility codes for the expanded entitlements via the on-line Provider Portal, in the same way that they do now for the 3&4year-olds extended entitlements. This will be available from 2 January 2024.

Please note: the tab is still likely to be called 30H eligibility checker and codes are still likely to be called 30H codes, as we do not think this can be updated until we receive the upgraded the system towards the end of February 2024. However, we have been assured the exiting 30H checker will work for the new cohort of 2 year old families & codes.

19. As with current policy, if parents lose eligibility, or fail to reconfirm by the specified deadline and their child is already in a funded place, they will enter a grace period and will be able to retain their place for a short period

20. If their child is not already in a funded place, the grace period is not applicable, and the parent will not be able to use the code/funding

21. If a child changes settings whilst in the grace period, the code will not be valid at the new setting, as the grace period only relates to the setting the child was attending when they fell into the grace period

22. We will undertake grace period audits twice a term for children that have started to access a funded place, and will notify providers when this has been undertaken, as we do now for 3 and 4year old 30-hour codes

23. Providers must inform parents they are in the grace period so that they can renew their codes, otherwise funding will cease at the end of the grace period

24. When a child first starts to access their funded place, providers must ensure the parent is not in the grace period as the code will not be valid

25. The government have made some recent announcements about additional funding for early years entitlements over the coming years. For 2024/25, there is an additional £650m being made available nationally due to the roll out of extended entitlements.

The Schools Forum Early Years Block Working Group has met on 11 December 2024to look at the Lancashire implications of the government announcements and asked that some early information be circulated to early years providers about the proposed funding rates locally from April 2024.

The proposed rates are detailed below, however, these are still subject to confirmation through the School's Budget setting process, and final confirmation will be provided in the new year once final decisions have been taken.

Funding Type DfE Published Base Rate for Lancashire Base Rate for Lancashire Providers
3&4 Year Olds £5.47 £5.41
2 Year Olds £7.54 £7.10
Under 2's £10.27 £9.51

In addition to the hourly base rate, providers will also be paid the relevant deprivation supplement (where applicable) for all age groups from April 2024. This will be added to the hourly base rate for Lancashire providers, as it is currently for 3&4 year old children. See point 28 below for more information.

Important note:

Lancashire does not retain any of the funding it receives from the Government to pay for centralised services. We are currently the only authority not to 'top slice' even though all local authorities are allowed to retain 5% of their total Dedicated Schools Grant (DSG) allocation if they choose to do so.

The hourly rate that local authorities receive also pays for the deprivation supplement, the SEN Inclusion Fund and supplementary hours (i.e. claims for children that start or increase their hour's part way through the term). This is why there is difference between the DfE published base rate for Lancashire and the hourly 'base' rate for Lancashire providers.

26. The DfE launched a consultation on 21 July 2023, on the proposed approach to funding for 2-year-olds and under 2's from 2024-25. The funding consultation closed on 8 September 2023.

27. The DfE published the outcome of the funding consultation on 29 November 2023 on GOV.UK.

28. As detailed in the Government's response to the funding consultation, deprivation funding will be applied to all funded children, based on the postcode of the child i.e. all eligible 2-year-olds and under 2's, not just the 3&4 year olds as it is now. The deprivation supplements will be calculated based on postcodes to calculate an average rate per setting. The relevant hourly deprivation will be paid on top of the Lancashire Provider hourly base rate detailed under point 25 above.

From April 2024 the hourly deprivation supplements for each of the age ranges will be as follows:

  • Under 2's - £0.00-£1.77
  • 2 year olds - £0.00-£1.21
  • 3&4 year old - £0.00-£0.40

Until child level postcode data, for 2 year olds and under, becomes available the deprivation rates will be calculated using the provider postcode. Individual deprivation rates for 2 year olds and under will be included in the providers annual budget statements that are sent out from Schools Finance in February 2024.

29. As detailed in the Government's response to the funding consultation, EYPP will be paid against the universal hours for all eligible children i.e. all eligible 2-year-olds and under, not just the 3&4-year-olds as it is now.

The hourly rate for EYPP will rise to £0.68 per hour from 1 April 2024 (increasing from £0.66 per hour currently).

30. As detailed in the Government's response to the funding consultation, DAF will be paid for all eligible children i.e. all eligible 2-year-olds and under, not just the 3&4-year-olds as it is now.

The annual DAF payment will rise to £910 from 1 April 2024 (increasing from £858.92 currently).

31. Settings will be able to offer the expanded entitlements on a term time only or stretched basis in the same way that they currently can for the existing entitlements.

32. Providers will continue to claim funding through the normal census and headcount processes.

33. The on-line Provider Portal and School Census systems will be updated to enable schools and settings to claim the new expanded entitlements for 2-year-olds from April 2024.

34. From September 2024 the systems will be updated to enable schools and settings to claim the new expanded entitlements for children aged 9-months plus.

35. The user guides will be updated accordingly to reflect these changes.

36. The Council has received feedback from a small number of nurseries and several childminders raising concerns about the current payment terms.

We are currently reviewing the existing payment terms to determine how these can be improved/changed. We will be undertaking a formal consultation on alternative options during March after options have been discussed with Schools Forum.

System capabilities and the Council's capacity to administer payments to the sector will also need to be considered as part of the review.

Any proposed changes will be agreed through the Schools Forum once the consultation has closed and responses analysed. If changes are agreed, these will be implemented from September 2024.

37. Due to the increased numbers of children accessing the funded entitlements in April and September all providers will be invited to submit an estimate of hours for the summer and autumn term. The estimate of hours submitted by providers will be used to calculate the interim payments moving forwards, rather than using the previous terms headcount hours. This will ensure that providers receive interim payments that reflect the increased numbers of children accessing a funded place from April onwards.

Important note:
Guidance will be sent to all providers early March with instructions on how to submit their estimates via the Provider Portal. It is imperative that providers submit an on-line estimate otherwise the interim will still be calculated using the Spring 2024 hours claimed at headcount.

We cannot change the interim payment once it has been made if providers do not submit an estimate. This means that providers will then have to wait until the final balances for the payments to be adjusted once the actual headcount claims have been processed for the summer term headcount.

38. The new statutory guidance was published on the 2 January 2024. There are minimal changes other than the inclusion of the new cohorts of children that can claim the funded entitlements from April 2024 onwards. As such we do not envisage any significant changes to the Funding Agreement.

However, the Funding Agreement will need to be updated if any changes to the payment terms are agreed. As such we will await the outcome of the payment consultation before issuing the new Funding Agreement. The new Funding Agreement will be issued during the summer term once any changes have been formally agreed through Schools Forum.

Important Note Regarding Charges for Meals, Consumables, Additional Hours & Services:

You may be aware that the wording in the statutory guidance has been changed very slightly in relation to charging parents for optional services, meals, or consumables, as it no longer refers to the charges being 'voluntary'. However, the new guidance still makes the following explicitly clear:

  • A1.31 Providers can charge for meals and snacks as part of a free entitlement place and that they can also charge for consumables, such as nappies or sun cream, and for services such as trips and specialist tuition. Local authorities should ensure that providers are mindful of the impact of additional charges on parents, especially the most disadvantaged.

Providers, who choose to offer the free entitlements, are responsible for setting their own policy on providing parents with options for alternatives to additional charges, including allowing parents to supply their own meals or nappies, or waiving or reducing the cost of meals and snacks.

  • A1.33 The local authority should not intervene where parents choose to purchase additional hours of provision or additional services, provided that this is not a condition of accessing a free place.
  • A1.34 Ensure that providers deliver the free entitlements consistently, so that all children within a setting accessing any of the free entitlements receive the same quality and access to provision, regardless of whether they choose to pay for optional hours, services, meals, or consumables.
  • A1.36 All parents, including disadvantaged families, have fair access to a free place, which must be delivered completely free of charge. Providers cannot charge parents “top-up” fees (any difference between a provider’s normal charge to parents and the funding they receive from the local authority to deliver free places).

Although the word 'voluntary' has been removed, the guidance is still very clear that any charges must be optional to parents and cannot be a condition of taking up a funded place. Providers who are choosing to charge for meals/consumables etc must ensure they do so in line with this guidance and ensure that alternative options are available for parents who do not wish to pay the additional charges. The local authority has a duty to ensure the funded entitlements are being delivered in line with this guidance.

39. The Government have announced they will be providing £100 million of capital funding. This is based on £80 million for the expansion of the funded entitlements and £20 million for expansion of wraparound provision.

40. Individual local authority capital allocations were published on 30 November 2023. Lancashire has been allocated just over £2.5m. 80% of the allocation will be for expansion of the funded entitlements and 20% will be for expansion of wraparound provision.
More information about the criteria and how providers can apply for the funding will follow in the coming months.

41. The government is investing £289m to enable schools and local areas to set up wraparound childcare provision from 8am – 6pm.

42. Local authorities will be able to decide how best to use the grant funding to achieve the programme outcomes. This could include allocating funding to schools and/or PVIs, including childminders, to contribute to the start-up, expansion and running costs of provision, as well as costs for staffing, training, and resources.

43. Local authorities will be able to decide how to disperse the grant funding and will need to set out a transparent process for dispersing funding to childcare providers / schools and ensure robust funding agreements are in place.

44. Funding can be used to contribute towards running costs while demand is growing, before provision is made self-sustainable through parental payments, taking away any short-term financial risk to providers.

45. Individual local authority grant allocations were published at the end of October along with a programme handbook that specifies how the wraparound grant can be used.

46. Local authorities are required to submit a delivery plan in February 2024 to the DfE before funding is released in May 2024

47. Lancashire's wraparound grant allocation is as follows:

2023-24: £53,452.87

2024-25: £4,217,513.31

2025-26: £1,942,637.41(provisional)

More information about the criteria and how providers can apply for the funding will follow in the coming months.

48. Childcare Choices have developed a communications toolkit to help get messages out to parents about the new entitlements. The toolkit provides lots of useful resources that can be shared with parents to help them understand the range of childcare support available including information about the early education entitlements and other government help with childcare costs.

Please use the Childcare Choices toolkit to help parents and yourselves gain a better understanding of the changes and entitlements available