Issue details

Proposed decision –

To approve, subject to a funding allocation being awarded by the Department for Education (DfE), the acceptance and deployment of capital grant funding for phase 3 of the School Based Nursery programme 2027 to 2030

Reason for the decision

The local authority may submit a bid to the Department for Education (DfE), by 30th September 2026, putting forward the projects it proposes to develop in Phase 3 of the national School Based Nursery Programme.  Should funding be allocated, the decision seeks the Cabinet Members approval to accept and deploy the grant funding to deliver the new school-based nurseries.

Background

The DfE has operated two phases of its school-based nursery programme (SBN).  Phase 1 was only available to schools with surplus accommodation that could be converted for less than £50k – five schools in Kent successfully applied.  Phase 2 widened to schools with more expensive proposals, but these needed to be well advanced, for example already having planning consent for a new building.  The schools made applications directly to the DfE, and the funding arrangements are between the schools and the DfE.  The DfE has already announced the successful phase 2 schools, with 9 of the 300 nationally being in Kent.

Phase 3 is a three-year programme.  It invites local authorities to develop multi-year funding proposals to deliver new and extended school-based nurseries between 2027 and 2030.  To be eligible for the grant, the SBN project must result in the creation of additional early education and childcare places.  These places should support the delivery of the government’s early education and childcare entitlements.

The government remains committed to expanding SBNs across England and has pledged almost £325 million of further funding between 2027 and 2030 to support future phases of the programme.   Local authorities can apply for as much capital funding as needed to create or repurpose spaces for nursery provision.  The use of surplus space is not a requirement for phase 3 of the programme. 

The local authority is currently working with approximately 30 schools county wide to develop each school’s costed proposals.  The local authority is then required to submit a bid to the DfE by 30th September putting forward the projects it deems are most likely to secure DfE funding.

Financial Implications

Phase 3 of the school based nursery programme is expected to be fully funded from the DfE through the School-Based Nursery (SBN) Capital Grant 2027-30. There is nearly £325 million of funding available with local authorities expected to bid for required funding for each individual project. There is no limit to the number of projects a local authority can bid for but each is assessed on its own merits and the DfE are not expecting individual projects to cost more than £1 million (or £0.5 million if repurposing existing spaces). Local Authorities will be required to justify costs for all projects with the DfE considering relative value for money when assessing the bids. This funding can also be used in conjunction with other funding sources (for example Trust reserves) where applicable.  

The grant cannot be used to reimburse costs already incurred before the grant is awarded, and unforeseen capital expenses will also not be covered by DfE. The DfE recommends that every

project bid includes a contingency in its cost planning to account for unforeseen expenses that is proportionate with the level of risk inherent in the project(s). Project level technical advisor fees can be funded from the capital grant up to 10% of the SBN project value. There is no KCC General Fund requirement expected for this decision, other revenue costs are expected to be met from existing resources.

The DfE also require the bids to span 3 financial years with the following funding distribution:

• 20% of total funding in Year 1 (April 2027 to March 2028) 

• 30% in Year 2 (April 2028 to March 2029) 

• 50% in Year 3 (April 2029 to March 2030) 

The DfE will inform the local authority of the totality of the grant in Spring 2027.

How the proposed decision supports the Council’s Strategic Statement

Aim 3: Supporting residents that need help.  Phase 3 of the School Based Nursery Capital Programme supports Aim 3 as it provides greater focus on prevention and early intervention and supports the ambition that every child has the chance to grow up safe and secure. 

Options

Option 1 – Accept and deploy any funding allocated by the Department for Education under Phase 3 of the School-Based Nursery Programme 2027–2030 (recommended proposal to be progressed). This would enable the Council to secure external capital funding to increase early years and childcare provision etc.

Option 2 – Decline funding allocation. This was rejected because this is an opportunity to receive capital funding from the DfE to further increase early years places across the county, especially in areas identified as being deprived and/or with lower, present capacity.