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<p>On 15 March 2023, my right hon. Friend, the Chancellor of the Exchequer, announced
that the hourly rates for the entitlements will be substantially uplifted, on top
of the investments announced at the Autumn Budget and Spending Review 2021 and on
16 December 2022.</p><p>On 16 December, the department announced indicative funding
allocations in 2023/24 for local authorities for the 2, 3, and 4-year-old entitlements,
totalling £3.927 billion. We will now provide £204 million of additional funding from
September 2023, increasing to £288 million by 2024/5, for local authorities to further
increase hourly rates paid to childcare providers, with further uplifts to follow
each year. This will include an average of 30% increase in the 2-year-old rate from
September 2023 and mean that in 2024, the average hourly rate for 2-year-olds will
be more than £8 per hour, and around £11 per hour for under 2s. The average 3- and
4-year-old rate will rise in line with inflation to over £5.50 per hour from September
2023, with further uplifts beyond this.</p><p>This funding is in addition to the £4.1
billion that the government will provide by 2027/28 to facilitate the expansion of
the new free hours offer, under which all eligible working parents in England will,
by September 2025, be able to access 30 hours of free childcare per week, for 38 weeks
of the year, from when their child is 9 months old to when they start school.</p><p>The
department will provide further details of the distribution of the uplifted funding
to local authorities for 2023/24 and for 2024/25, including average hourly rates for
the 2, 3 and 4-year-old entitlements, which are demand-led, in due course.</p><p>Average
hourly rates for the 2023/24 financial year, not including the abovementioned uplifts,
were published on 16 December 2022, and are reproduced in the table below, which also
includes average hourly rates for 2022/23.</p><table><tbody><tr><td><p>Entitlement:</p></td><td><p>2022
to 2023<br> (£)</p></td><td><p>2023 to 2024 (£)</p></td></tr><tr><td><p>3 and 4-year-old
Universal Hours entitlement, average hourly funding rate</p></td><td><p>£5.06</p></td><td><p>£5.31</p></td></tr><tr><td><p>3
and 4-year-old Additional Hours entitlement, average hourly funding rate</p></td><td><p>£4.98</p></td><td><p>£5.23</p></td></tr><tr><td><p>3
and 4-year-old entitlements, combined average hourly funding rate</p></td><td><p>£5.04</p></td><td><p>£5.29</p></td></tr><tr><td><p>2-year-old
entitlement, average hourly funding rate</p></td><td><p>£5.77</p></td><td><p>£6.00</p></td></tr></tbody></table><p>Notes
on the averages:</p><ol><li>1 Part Time Equivalent (PTE) is equivalent to 15 hours
of childcare.</li><li>National average hourly funding rates are subject to change
when allocations are updated to make use of Jan 2023 PTEs and Jan 2024 PTEs, i.e.,
if these have different PTE distributions between local authorities.</li><li>For 2022-23,
the 3- and 4-year-old entitlement average funding rate is made up from a Universal
Hours average of £5.06 and an Additional Hours average of £4.98. Both these entitlements
are funded on the same EYNFF funding rates at LA-level, but they have different PTE
distributions between LAs, e.g., Universal Hours has a higher proportion of total
PTEs in London LAs, which leads to different national averages. These figures are
based on initial allocations.</li><li>For 2023-24, the 3- and 4-year-old entitlement
average funding rate is made up from a Universal Hours average of £5.31 and an Additional
Hours average of £5.23. Both these entitlements are funded on the same EYNFF funding
rates at LA-level, but they have different PTE distributions between LAs, e.g., Universal
Hours has a higher proportion of total PTEs in London LAs, which leads to different
national averages. These figures are based on indicative allocations.</li><li>The
3- and 4-year-old average figures for 2022-23 do not include funding for the Teachers
Pay Grant and Teachers Pension Employer Contributions (TPPG), which from 2023-24 has
been included in the hourly rate.</li></ol><p> </p><p> </p>
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