The government has allocated £500m to local authorities to fund nursery places for two year olds from September next year.
The funding should provide 16 hours of early education a week to 130,000 young children and is being offered to authorities on a “use it or lose it” basis, the Department for Education says.
“In future, funding to councils will be based on the number of participating children,” the DfE said in a statement.
“Less money will go to local authorities that have not ensured parents are taking up these places…they will be funded on a ‘use is or lose it’ basis.”
Deputy prime minister Nick Clegg said good quality childcare gave two-year olds a headstart in life. “No child should miss out on this just because of the circumstance of their birth.”
Councils’ budgets for the scheme have been worked out according to a flat-rate payment schedule which assumes that each nursery place costs £5.09 an hour and that all of the money is passed directly on to the provider.
David Simmonds (Con), chair of the LGA’s children and young people’s board, welcomed the funding but criticised Whitehall restrictions on how it should be spent.
“It should not be down to Whitehall to stipulate the criteria for identifying which children are eligible for free education.
“Councils know the needs of local children best and it should be down to their discretion to decide which children benefit from the increase in provision.”