What is the Early Years National Funding Formula (EYNFF)?

The Early Years National Funding Formula (EYNFF) is set annually by the Department for Education (DfE) and determines the base hourly rate that local authorities (LAs) must pass to providers for funded childcare hours.

The DfE allocates a different hourly rate for each LA, reflecting local cost differences. LAs then apply a minimum pass-through requirement — typically 95% of their allocation — to ensure most of the funding reaches providers directly.

Rates are split by age band: under 2s attract the highest rate (reflecting the higher staff-to-child ratios required), followed by 2 year olds, then 3 to 4 year olds. For 2026/27, the national average for 3 to 4 year olds is £6.72/hr, though rates range considerably across LAs.

The EYNFF also includes a special educational needs (SEN) inclusion fund and a disability access fund to help providers support children with additional needs.

Funding rates are uplifted each April. The 2026/27 rates represent a significant increase over previous years as the government has expanded entitlements to younger age groups and sought to bring rates closer to actual provider costs.

Parents do not interact with the EYNFF directly — the rate determines how much the provider is paid by the LA, not what parents receive in cash. The practical impact is that higher EYNFF rates mean providers have less reason to charge top-up fees.