30 Hours Funding: Making the Entitlements Work for Your Nursery
Funded hours can quietly run your setting at a loss. Here's how the entitlements work, where the money actually goes, and how to build a sustainable fee model.
The funded entitlements are the biggest single influence on your setting's finances, and the least well understood. Managers routinely deliver funded hours below cost and only discover it when the year-end accounts land.
The entitlements, plainly
- **Universal 15 hours** for all three- and four-year-olds, from the term after their third birthday
- **Extended 15 hours (the "30 hours")** for three- and four-year-olds of eligible working parents, requiring a valid eligibility code reconfirmed every three months
- **Two-year-old entitlements** for families meeting benefit or other criteria
- **Expanded entitlements for working parents of younger children**, phased in and materially changing the age profile of funded places
All are 570 or 1,140 hours per year, usually taken as 15 or 30 hours over 38 weeks — but you can offer them stretched across more weeks at fewer hours, which is often better for both cash flow and families.
The maths most settings never do
Work out your true hourly cost. Take your total annual costs — staffing including on-costs and cover, rent, utilities, insurance, food, resources, training, software, and a genuine allowance for management time — and divide by your total annual delivered child hours at realistic occupancy, not full capacity.
Compare that number with your local authority's funding rate. If your cost is above the rate, every funded hour you deliver loses money. That is not a failure; it is the sector's structural reality. The question is what you do about it.
Legitimate ways to close the gap
You cannot charge a top-up fee for the funded hours themselves. You can:
- **Charge for consumables and meals** — clearly itemised, genuinely optional in principle, and communicated up front
- **Charge for additional hours** at your standard rate
- **Offer optional extras** — forest school, music, French — properly optional and separately priced
- **Set session patterns** that suit your staffing, for example funded hours only in specific sessions
- **Stretch the offer** across more weeks so your income smooths and your rooms stay fuller in quieter terms
Be transparent about all of it. A clear one-page fee schedule prevents almost every parental complaint in this area.
Occupancy is the lever that beats fees
A five percentage point increase in occupancy usually outperforms any fee increase you would dare implement. Check:
- **Session shape.** Do your session times fit local working patterns, or your historic rota?
- **The two-day problem.** Fridays and Mondays run empty in most settings. Price or pattern them differently.
- **Room transitions.** Children held in a room past the point of need block places behind them.
- **Waiting list conversion.** How many enquiries turn into starts? If it is under half, the problem is your response time, not demand.
Cash flow through the funding cycle
Local authority payments arrive in a rhythm that rarely matches your payroll. Build a simple 13-week forward cash view showing headcount payment dates, payroll dates, and quarterly bills. Most settings that hit trouble were profitable on paper and simply ran out of cash in the week before a headcount payment.
What to review every term
- Actual delivered hours versus funded hours claimed
- Occupancy by room and by day of week
- Cost per hour recalculated with current staffing
- Parental debt over 30 days
- Eligibility code reconfirmations due
Half an hour a term on those five numbers tells you more about the health of your setting than any annual report.
Early Years Circle members get the funding calculator suite — 30 hours, EYPP, DAF and two-year-old entitlements — plus occupancy trackers, fee schedule templates and parent communication wording.
