GOVERNMENT funding to help families with the cost of childcare for two and three-year-olds is set to increase by 2.8% from September in line with inflation.
The increase will raise the maximum amount that can be claimed each academic year from £6,270 to £6,445 for the 2026-27 academic year.
The decision follows a recommendation that the funding should be uprated in line with the approach already used for the Nursery Education Fund, which applies the previous year’s fourth-quarter retail price index figure.
The ministerial report says the increase is based on the 2.8% RPI recorded in the fourth quarter of 2025.
Just over 400 families have benefitted from the funded childcare scheme so far, with £1.4 million paid out through the reimbursement model.
The government has allocated £3.74 million to the scheme this year, rising to £4.78m in 2027, £4.76m in 2028 and £4.86m in both 2029 and 2030.
Funding for the scheme was approved last year to provide childcare support for children in the year before they become eligible for the Nursery Education Fund.
At the time, ministers indicated that the value of the support could be increased to reflect inflation.
The report says the latest increase is intended to ensure the funding “keeps pace with inflation”, helping parents facing cost-of-living pressures.
The higher funding rate is expected to increase spending by the Children, Young People, Education and Skills department by around £9,000 in 2026, £28,000 in 2027 and £27,500 in 2028.
According to the report, those additional costs will be met from existing departmental resources.
