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<p>The Government is investing £1 billion extra every year for the early years entitlements,
including over £300 million a year to increase local authorities hourly funding rates.
Local authorities are required to pass the vast majority of their funding on to early
years providers so that they can deliver the 30 hours of childcare for working parents
and other entitlements on a sustainable and high-quality basis.</p><p>The Government’s
increased level of funding is based on the “Review of Childcare Costs” which looked
at both the current costs of childcare provision and the implications of future cost
pressures including the National Minimum Wage and the National Living Wage. Recent
research conducted by Frontier Economics, calculated the average hourly costs of providing
childcare for three and four year olds, and the Government’s new funding rates compare
very favourably to these.</p><p>We will keep under review the data underpinning the
new Early Years National Funding Formula, which is used to distribute funding for
the early years entitlements.</p><p>The Government is also providing guidance, tools
and support for providers to help make their businesses more financially sustainable
and operate efficiently.</p>
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