Guidance

Early years budget grant (EYBG): conditions of grant for the 2024 to 2025 financial year

Updated 9 October 2024

Applies to England

1. Introduction

1.1 Legislation

The early years budget grant (EYBG) will be paid by the Secretary of State for Education as a grant under section 14 of the Education Act 2002. In accordance with section 16 of that Act, the Secretary of State attaches the following terms to the grant payable.

1.2 Purpose

The EYBG is for the purpose of supporting early years providers delivering the government’s early years entitlements from September 2024.

The methodology and operational guidance, with step-by-step tables, should be read in conjunction with the terms along with the overarching policy pages for early years funding..

1.3 Period 

These conditions of grant cover September 2024 to March 2025 in the financial year 2024 to 2025.

2. Eligibility

2.1 Types of settings

The following settings are eligible to receive funding provided they meet the criteria as set out at 2.2:

• Local authorities

2.2 Criteria

All local authorities that fund the government’s free early years entitlements for 3-and-4-year-olds are eligible to receive the EYBG.

One local authority, South Gloucestershire, has not received an EYBG allocation, because they did not receive a large enough portion of pay grant funding to deliver a pence uplift through ‘core’ EYBG rates.

The Isles of Scilly and City of London are excluded from these allocations.

3. Payments

3.1 Calculation

We have calculated an allocation for this grant using a standardised methodology for EYBG.. We have also published step-by-step tables and have published the breakdown at local authority level.

3.2 Payment timetable

The Education and Skills Funding Agency (ESFA) will pay the EYBG to local authorities in a single payment on 29 November 2024, to cover the period 1 September 2024 to 31 March 2025 within the financial year 2024 to 2025.

3.3 Additional local authority duty

Local authorities will be required to certify that they have passed on the correct amount of funding to providers. The Department for Education (DfE) will issue a certification form in spring 2025.

4. Assurance

4.1 Eligible spend

Local authorities must ensure that all of the EYBG funding they receive is distributed to their early years providers. EYBG must not be used for contingency funding or local authority central or administration costs.

It is for local authorities to determine the most appropriate way of allocating EYBG funding locally. As with the roll-in of historic teacher pay and pensions funding in 2023 to 2024, we encourage local authorities to consider the purpose for which this additional funding has been provided (to address increases in pay) and consider how they could target this funding to take account of the additional workforce pressures that some providers will face.

We are aware that to date different local authorities have taken a range of approaches to managing funding for pay and pensions in their local areas. Previously, for example, some local authorities have distributed additional funding universally, to all providers locally, in recognition of the workforce cost pressures that providers are facing.

Other authorities have targeted additional funding to providers who have a greater proportion of qualified teaching staff, and who will directly experience pressures as a result of increasing teacher pay and pension contributions. Local authorities are best placed to determine the needs amongst providers in their local areas and are encouraged to distribute this funding in a way that reflects their local circumstances.

Local authorities must pass on the funding in a clear and transparent way, so that providers can understand how allocations have been determined locally.

Given the importance of providers receiving notification of their allocations promptly, local authorities do not need to consult with their schools forum on passing on the EYBG funding to early years providers. Nonetheless, we encourage local authorities to consult with providers, where this is possible and does not create excessive delays in finalising allocations and making payments to providers.

4.2 Carry forward

Funds must not be carried forward past 31 March 2025.

4.3 Records required

Local authorities are required to maintain and keep clear records of income and expenditure in relation to this grant including evidence of the use of funds.

5. Further information

Books, other documents and records relating to the recipient’s accounts shall be open to inspection by the Secretary of State and by the Comptroller and Auditor General.

The Comptroller and Auditor General may, under section 6 of the National Audit Act 1983, carry out examinations into the economy, efficiency and effectiveness with which the recipient has used its resources.

Local authorities shall provide information as may be required by the Secretary of State to determine whether they have complied with these conditions.

6. Variation

The basis for allocation of grant may be varied by the Secretary of State from that set out above, if so requested by the local authority.

7. Recovery of funding

If a local authority fails to comply with the terms and conditions set out in this document, the Secretary of State may recover some or all of the EYBG that has been allocated. This will be notified in writing to the local authority.

Recoveries will be made by invoice or by offsetting the amount against subsequent payments due from the department.

The recipient must notify ESFA immediately through our Customer Help Portal  if it becomes aware of any instance of error, suspected fraud or financial irregularity in the use of the funds.

8. Overpayments

If a local authority identifies that it has been overpaid, it must contact ESFA to arrange repayment of the excess. Where ESFA identifies an overpayment, it may seek to recover the excess. The local authority will be notified of this in writing.

9. Enquiries

For queries relating to these terms and conditions please use the Customer Help Portal.