New Government Funding Guidance – What It Means for Nurseries
On 21 February 2025, the government announced new measures to make high-quality early education more accessible and affordable for parents. While this may sound like good news for families—who see it as ‘cheaper childcare’—what does this mean for nursery providers?
Transparency on additional charges
The new guidance requires nurseries to clearly outline any additional charges for items such as nappies, wipes, and meals. These charges must be optional, ensuring parents understand exactly what they are paying for.
Read the full guidance here.
Challenges for nursery providers
The early years sector has raised concerns about this update. Many nurseries wouldn’t need to charge extra fees if government funding covered the true cost of delivering early education. While wages continue to rise (which is necessary and fair), funding rates have not kept up, making it harder for nurseries to provide quality care and remain financially sustainable.
What you need to do
By January 2026, nurseries must ensure that invoices and receipts are itemised, showing a clear breakdown of:
- Free entitlement hours
- Additional paid hours
- Food charges
- Non-food consumables (e.g., nappies, wipes)
- Activity charges
These invoices must include the nursery’s full details to ensure clarity and compliance.
How Connect Childcare can help
The Connect management system is designed to simplify this process. Our comprehensive funding tool helps nurseries efficiently allocate funds and customise invoicing to meet individual needs.
With over 20 years of experience supporting nurseries, we offer pre-built LEA Compliant invoice templates that clearly break down all the extra consumables and outline funded and non-funded hours. These templates also include explanatory text to help parents understand their bills.
Open communication and transparency with families are crucial for tackling funding challenges. Being able to clearly explain fees and educate parents on funding will help you to build trust while maintaining your financial stability.
Need help setting up?
If you’re an existing customer, here’s what to do next:
- Contact support: Our support team is ready to assist you in setting up your new invoice templates.
- Self-help options: Check out our Helpdesk article for step-by-step guidance on invoice templates.
- Free Training: Book yourself on to the next Connect Academy online training session on Grants, Billing & Payments here.
If you’re new and want to learn more, you can book a 10-minute chat with a team member here.
Stay informed and join the discussion
- Read more about the changes: Link to Government Updates
- Join the debate on Facebook: Facebook Discussion Link
Understanding the Department for Education’s new rules on charging and extended entitlement hours can feel overwhelming. But remember, your Local Authority Early Years support team is also there to help you. Reach out to them for guidance as you adjust your model.
Further reading
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About the Author
Marketing Lead at Connect Childcare