Compare the funding you receive for each age group against an honest allocation of the cost of delivering those hours, including the next pay rise.
Use your actual local authority ratesEvery rate and cost shown initially is an illustrative example, not a national or local authority tariff. Annual funded hours should be hours actually delivered, not children on roll. Only include costs allocated to these hours. Do not include costs already accounted for elsewhere.
| Age group | Annual funded hours | LA funding £/hr | Annual allocated staffing £ | Annual other delivery costs £ | Cost £/hr | Annual surplus/(shortfall) |
|---|
Income excludes separately paid private hours and optional extras. Overheads require a sensible allocation between funded and private provision; the output is not a judgement that an LA rate alone must cover every nursery expense.
Bring the annual employment-cost uplift calculated in the Minimum Wage tool, or enter a figure manually. Only the proportion you attribute to funded delivery is added below.
Wage increase allocated between age groups in proportion to each group's existing staffing costs. If staffing costs are zero, delivery hours are used instead. Make sure your annual staffing figure is before the planned wage increase to avoid double counting.
| Age group | Funding income | Allocated delivery cost | Before wage rise £/hr | After wage rise £/hr |
|---|
The useful question is how much of your actual delivery cost is recovered by funding, what private hours contribute and which costs would change if occupancy moves. Confirm rates with your local authority and test the result against your full business model.
Discuss your nursery's figuresUsing the numbers
Use the figures as a starting point for a real business decision, with your own assumptions and evidence.
01 / How to use the calculator
02 / Worked example
Illustration: At a hypothetical provider rate of £6.25 per hour, 1,000 funded hours produce £6,250 income. If the allocated cost is £7.10 per hour, delivery costs £7,100. That leaves an £850 shortfall on those hours.
The example rates are not a statement of your council’s actual funding. Use your provider statement and an honest cost allocation.
03 / Interpreting the result
A shortfall on funded hours is not automatically the same as a nursery-wide loss. Private-hour income, permitted charges, age mix and fixed costs all affect the setting’s overall position. The useful question is which provision is covering its costs and where you may be cross-subsidising.
Do not treat the result as permission to charge separately for anything included within a funded entitlement. Check current local authority agreements and applicable funding guidance.
Official reference: DfE: early years funding guidance
Content reviewed 29 October 2026. Recheck rates, funding rules and your assumptions before making a decision.
Questions owners ask
Provider rates differ by local authority, age group and, in some cases, supplements. Using someone else’s rate could produce a misleading result.
Yes, if those resources support funded delivery. Choose and document a reasonable allocation, rather than counting all overheads against one age group.
Yes. The linked Minimum Wage Calculator can pass the estimated annual increase into this model so you can test the funding position after higher payroll costs.