This includes the regulations that;
· enable (but do not require) local authorities to refuse or withdraw early education and childcare entitlements funding from providers who receive specified Ofsted grades, and,
· require local authorities to secure the provision of information, advice and training to early years providers registered with Ofsted that have been judged less than ‘Good’.
On 3rd December 2025, the Department for Education laid a statutory instrument in Parliament updating these regulations and this is due to come into effect from 1st January 2026.
Subject to Parliament approving the changes, we can confirm the new specified grades will be as follows for inspections taking place on or after 10th November 2025.
The updated specified grades at which local authorities are able to refuse or withdraw entitlements funding will be where one or more of the following apply:
· All entitlements – where the ‘Safeguarding’ standards are ‘Not met’
· 30 hours childcare for eligible working families and the universal 3- and 4-year-old entitlement – where ‘Leadership and governance’ has been graded as ‘Urgent improvement’
· The entitlement for 2-year-olds for families receiving additional support – where ‘Leadership and Governance’ has been graded as ‘Needs attention’ or ‘Urgent improvement’
The specified grades for entitlements funding apply to all types of early years providers inspected by Ofsted, including some independent schools. Where an independent school is inspected by an independent inspectorate, the specified grade is where either ‘Safeguarding’ or ‘Leadership and governance’ are ‘Not met’.
Childminder agencies and providers registered with childminder agencies are not affected by these changes. Local authorities retain the ability to terminate funding for these providers where the agency is awarded a grade of “ineffective” in its most recent inspection report, or the agency notifies the local authority that, in its reasonable opinion, the childminder has ceased to provide childcare of satisfactory quality.
The updated specified grades requiring local authorities to secure the provision of information, advice and training to early years providers registered with Ofsted will be when ‘Safeguarding’ standards are ‘Not met’ or ‘Leadership and governance’ is graded as ‘Needs attention’ or ‘Urgent improvement’.
An updated version of the Early Education and Childcare statutory guidance will be published in early 2026, ensuring these updates are accurately reflected in guidance for local authorities. However, local authorities can take action in reliance on the new specified grades from 1st January 2026 when the updated regulations take effect. Where providers were last inspected before 10th November 2025 under the previous inspection framework, the previous specified grades continue to apply. Should Ofsted publish a report before 1st January 2026 and the inspection took place on or after 10th November, local authorities may be able to rely on the terms of their provider agreements if they wish to take action before the updated regulations take effect.
Providers should be aware local authorities may need to review and update their provider agreements in light of these changes.
These changes are to ensure local authorities can continue to take action where quality concerns have been identified following an inspection and do not represent a change in policy.
With regard to entitlements funding local authorities have power to refuse or withdraw funding if they consider it appropriate, but they are not required to do so. Local authorities should work with providers to ensure children receive high-quality early education and childcare, giving the best possible start in life.
There were also updates made to the Experience-Based Route eligibility criteria to come into effect from 1 January 2026. This is to set out the requirements for early years providers with the new Ofsted inspection framework and for independent schools inspected by an independent inspectorate. Please see the Early years qualification requirements and standards for more information.
