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Regulation 38 Early years 97% requirementI1

England and Wales

(1)

In determining budget shares and amounts allocated in accordance with regulation 12(9), a local authority must comply with the formula set out in paragraph (2) separately for each relevant group.

(2)

The formula is (A – B) / C is no less than 97% of D, where—

(a)

A is the total of—

(i)

all budget shares and amounts determined by the local authority under regulation 12(9) in respect of the relevant group;

(ii)

any amount deducted by the local authority under paragraph 27 of Schedule 2 (early years contingency fund), which it intends to distribute to early years providers in respect of the relevant group; and

(iii)

any amount of the local authority’s special educational needs inclusion fund which the local authority intends to distribute to early years providers in respect of the relevant group;

(b)

B is the total of—

(i)

where the calculation is being made in respect of three and four year olds, the maintained nursery school supplement;

(ii)

any amount included in accordance with regulation 35(1) or (6) (early years pupil premium) in respect of the relevant group; and

(iii)

any amount included in accordance with regulation 36(1) (disability access fund) in respect of the relevant group;

(c)

C is the total number of hours of attendance of children in the relevant group predicted by the local authority under regulation 33(1) (special arrangements for early years pupils and children); and

(d)

D is—

(i)

in relation to three and four year olds, the hourly unit funding rate specified in relation to the local authority in the column headed “2026 to 2027 3 and 4-year-old funding rate without termly funding adjustment” of the table entitled “3 and 4-year-old entitlements 2026 to 2027 hourly funding rates”f1; and

(ii)

in relation to each of the other relevant groups, the hourly unit funding rate in relation to that group as notified to the local authority in the early years block.

(3)

A local authority may alter the operation of this regulation if authorised to do so by the Secretary of State under regulation 43(1)(q).

Annotations

Commencement

I1

Reg. 38 in force at 11.2.2026, see reg. 1(2)

Footnotes

f1

The table can be found in the spreadsheet entitled “Local authority funding rates under the 3 and 4-year-old funding formula, 2-year-old and under 2s funding formula and maintained nursery school (MNS) funding formula” published by the Secretary of State on 15th December 2025 at https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fassets.publishing.service.gov.uk%2Fmedia%2F693ffb70adb5707d9f33d776%2F2026-27_Early_Years_Funding_Rates_and_Step_by_Step_calculations.xlsx&wdOrigin=BROWSELINK. A printed copy may also be inspected at the Department for Education, Sanctuary Buildings, Great Smith Street, London SW1P 3BT, on request.