January 2017

The cost and funding of early education

Report summary

Aims and Methods

A sample of 166 settings for cost visits was selected from a pool of settings that had taken part in the SEED quality assessments, which itself had been drawn from settings used by parents in the SEED longitudinal study of families and children. The sample was selected to broadly match the quality visit sample on a number of characteristics, and weighted throughout the report to match the distribution of places in the most recent Childcare and Early Years Providers Survey. Cost visits took place from April to December 2015.

Cost and revenue data was collected using semi-structured face-to-face interviews, usually with setting managers. Information was collected on a range of detailed setting characteristics, staff and non-staff costs as well as revenue sources. This information was used to derive an estimate of the hourly cost of delivery per child, as well as a measure of the additional costs and revenue for children with special educational needs and disabilities (SEND) in mainstream settings as well as SEND-specialist settings.

Key findings

  • The mean hourly delivery cost per child is £4.58 for children under the age of two; £4.30 for two year olds; £3.72 for three/four year olds; and £3.91 for school children (when cared for in settings with preschool children). 


  • Costs are highest for maintained nursery schools and lowest for private settings.


  • Costs are highest in London, followed by the Midlands, South West and East of England.


  • There is no statistically significant difference in cost between higher and lower quality settings, or between graduate-led settings and non-graduate-led settings.


  • Additional costs for children with SEND are higher for autism, combined other needs or physical needs than for children with a speech/language need, with a very wide range of additional cost within the three higher cost categories.