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Funding free early education entitlement for two-year-olds - information for providers

Free early years education can be delivered by early years providers who are registered with us and deliver the Early Years Foundation Stage (EYFS).

If you are a parent looking for information on funded childcare please visit Funded childcare sessions for two year olds (Play and Learn)

If you deliver EYFS you will be regulated and inspected by Ofsted for the quality of education at your setting which can be delivered at:

  • a council maintained nursery school
  • a council maintained nursery unit within a primary school
  • a governor-led nursery
  • a private nursery
  • an independent school nursery
  • a registered childminder

A list of registered providers can be found on the County Durham Families Information Service website.

Changes to two year old funding came into effect on 1 April 2024.

Your setting can receive up to 15 hours free education per week for 38 weeks (a maximum of 570 hours) of the year, although parents or carers can choose to stretch their funding over more weeks and receive less hours per week providing your setting can accommodate this.

15 hours of free early years education is available for two-year-olds provided they meet certain eligibility criteria. See our Funded childcare sessions for two year olds (Play and Learn) page for details of eligibility for parents/carers.

Funding rate 2024-25

The hourly rate for two year olds from 1 April 2024 to 31 March 2025 is:

  • Two Year Old Disadvantaged Rate is £7.32 per hour
  • Two Year Old Working Family Rate is £7.13 per hour

The maximum amount of funding available funding period is:

Two year old - disadvantaged family

Funding Period


Two Year old Disadvantaged Total

Summer (1 April to 31 August)

13 weeks * 15 hours = 195 hours * £7.32


Autumn (1 September to 31 December)

14 weeks * 15 hours  = 210 hours * £7.32


Spring (1 January to 31 March)

11 weeks * 15 hours  = 165 hours * £7.32


Two year old - working family

Funding Period


Two Year Old Working Family Total

Summer (1 April to 31 August)

13 weeks * 15 hours = 195 hours * £7.13


Autumn (1 September to 31 December)

14 weeks * 15 hours  = 210 hours * £7.13


Spring (1 January to 31 March)

11 weeks * 15 hours  = 165 hours * £7.13


In total there are 38 funded weeks available in a financial year.

These hours can be stretched to receive fewer hours across more weeks - Contact Childcare places for more information.

You should be aware that if parents/carers of funded children exceed their maximum funded entitlement, then they will be subject to charges as per the terms and conditions of the contract agreed between you.

How to claim funding

You need to be registered with the council in order to receive funding. Contact Childcare places for a registration form.

  • If you are a childminder, private voluntary or independent setting (PVI) or a governor-led nursery based in a maintained school within County Durham then they should also complete an Early Years Provider Agreement at the beginning of every academic year (or when they first register with us) in order to receive funding. By signing the Provider Agreement, you are agreeing to the terms and conditions of the agreement. See our Useful forms for early years providers page for a copy of the agreement.
  • You will also need to send us details of your nominated bank account so we can make BACS payments directly into your account. See our Useful forms for early years providers page for a copy of the BACS form.
  • You will need to have a user ID set up for the Provider Portal.  All requests for funding are processed through the Provider Portal which is an online system. We can provide training on how to use the portal plus early years financial guidance. There is also a user guide available. See our Early years and childcare providers portal page.

Declaration forms

Parents/carers of qualifying funded children should be asked to complete a declaration form. See our Useful forms for early years providers page.

Frequency of submissions

You are entitled to receive an interim payment prior to the start of each funding period. You must calculate how many hours per week you are going to be providing for funded children for this age group. This must be sent to us using the Provider Portal by the published deadline. A payment will then be made based at 75% of the expected total for the first day of that funding period (you can choose to receive monthly or termly interim payments - see below).

The Provider Portal will then re-open from the first day of the new funding period up to and including the first week after the half-term holidays (excluding spring term which is before the half-term holidays) for you to import your details of all the funded children and their funded hours so that the overall funding total can be calculated and a balance payment processed (actual total minus interim total already paid = balance).

See the provider payment table on our Useful forms for early years providers page.

If there are any amendments (new starters, leavers or changes in funding hours per week) to your claim for funding period after the actual headcount submission period has closed, then you can submit an in-term funding adjustment for any changes using the Provider Portal.

Frequency of payments

You can choose whether to receive monthly or termly interim payments. If you select monthly then you will receive your 75% interim payment across three monthly payments for summer and autumn funding period (and two for spring funding period), followed by your actual balance payment later in that funding period.

If you choose to be paid termly then your 75% interim payment is made for the first day of the funding period, followed by your actual balance payment later in that funding period. 

Stretched funding

Parents can opt to "stretch" their child's funding across the whole year rather than access the term-time total of 38 weeks if your setting can accommodate this request. A qualifying child can still only access the same number of funded hours (570). They can access fewer hours per week, but these can be taken over more funded weeks. For example, 570 hours taken over 50 weeks equates to 11.40 hours per week.

Parents/carers should contact you to discuss this. They should be aware that if their funded child exceeds their maximum funded entitlement, then they will be subject to charges as per the terms and conditions of the contract agreed between you.

How parents access the funded entitlement

Your setting is encouraged to offer flexible packages of funded hours, subject to the following standards:

  • no session to be longer than 10 hours
  • no minimum session length (subject to the requirements of registration on the Ofsted Early Years Register)
  • no session before 6.00am or after 8.00pm
  • a maximum of two sites in a single day
  • a maximum of three registered settings in any one term

You should be aware that funded places can be delivered:

  • up to 52 weeks of the year
  • outside maintained school term times
  • at weekends

What can and cannot be charged for when using funded childcare

The DfE state that all parents who are eligible should be able to access a funded childcare place, which must be delivered completely free of charge. This is set out in paragraph A1.30 of the current statutory guidance and A1.33 of the updated statutory guidance applicable from 1 April 2024.

What is allowed - consumables and additions:

  • Government funding is intended to deliver 15 or 30 hours a week of free, high quality, flexible childcare. It is not intended to cover the costs of meals, other consumables, additional hours or additional services. Providers can charge for meals and snacks as part of a free entitlement place and they can also charge for consumables, such as nappies or sun cream, and for additional services such as trips and specialist tuition. (Paragraph A1.30 of the statutory guidance).
  • If a parent is unable to pay for consumables, or if a parent wishes to provide their own, then the parent and provider can discuss alternative options. This could include allowing parents to supply their own meals or nappies, or waiving or reducing the cost of meals and snacks.
  • Charges for consumables or additional services should not be made a condition of accessing a free place. (As set out in paragraph A1.33 of the guidance.)

What is not allowed:

  • Councils should ensure that providers do not charge parents "top-up" fees (any difference between a provider's normal charge to parents and the funding they receive from the council to deliver free places).
  • Core costs of running a business that delivers government-funded childcare are not consumables used by the child or additional services provided to the child. These include, but are not limited to, insurance, Ofsted registration, maintenance, business rates, training costs, rent and energy bills. These are core costs of running a business and parents should not be charged.

Additional funding for two year old funded children

Additional funding is also available to some two year old funded children depending upon the circumstances of the child and their family. You need to ensure that the correct detail is completed on the parent/carer declaration form and that consent has been given to do the necessary eligibility checks where appropriate.

Early Years Pupil Premium (EYPP)

Some children may qualify to receive EYPP. This is payable at a rate of 68p per hour and this additional funding is used solely to benefit the child's education at the setting they attend. The additional funding for EYPP will be paid with the actual balance. Children who qualified in a previous term will automatically qualify for the current term. 

For a two year old child to qualify for EYPP:

  • the parent/carer must meet at least one of the following criteria:
    • Income Support
    • Income-based Job Seeker's Allowance
    • Income-related Employment and Support Allowance
    • Support under Part IV of the Immigration and Asylum Act 1999
    • the guaranteed element of State Pension Credit
    • Child Tax Credit (provided they're not also entitled to Working Tax Credit and have an annual gross income of no more than £16,190)
    • Working Tax Credit run-on, which is paid four weeks after they stop qualifying for Working Tax Credit
    • Universal Credit (household income must be less than £7,400 a year after tax, not including any benefits - this is assessed on up to three of the parents most recent Universal Credit assessment periods)
  • the child is currently being looked after by a local council in England or Wales
  • the child has left care in England or Wales through:
    • an adoption
    • a Special Guardianship Order
    • a Child Arrangement Order

Disability Access Fund (DAF)

If a child receives Disability Living Allowance (DLA) then they may be eligible to receive DAF. This is a one-off payment made to early years providers of £910 per calendar year and parents will need to give proof of eligibility to you to verify and claim through the synergy provider portal. The purpose of DAF is to support early years providers to make reasonable adjustments and build the capacity of their setting to support children with disabilities. If a qualifying child has split provision, then the parents need to nominate the setting they wish to receive the funding.

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