On rare occasions the council could put funding restrictions in place on early years providers who do not meet the quality standards for early education funded places as outlined in the Department for Education's Statutory Guidance.
This is normally applicable to providers who receive the following inspection ratings:
- Requires Improvement - funding restrictions could be implemented on Think2 places for disadvantaged 2-year-olds.
- Inadequate - funding restrictions could be imposed on all funded entitlements.
In most cases, for both the above ratings, providers can normally continue claiming for children they claimed for before the Ofsted inspection report is published meaning restrictions would be applicable to any new children a provider had not previously claimed for and who starts or become eligible for funded hours after the publication of the report. Restrictions normally remain in place until the rating improves - subject to any appeal outcomes.
All funding could be removed for the applicable age groups as stated above for consecutive 'Requires Improvement' or 'Inadequate' ratings. This would also be applicable if a provider was suspended by Ofsted.
Providers can review full details in relation to Quality as outlined in the Staffordshire provider agreement, section 14 from page 25.
Providers are notified in writing by the council regarding any funding restrictions, support and next steps.
From November 2025 Ofsted rolled out the new inspection framework for early years settings with a new 5 point grading scale.
The Department for Education has advised that from January 2026 the updated specified grades at which local authorities are able to refuse or withdraw early education funding will be where one or more of the following apply:
- All funded entitlements removed from an early years setting– where the ‘Safeguarding’ standards are ‘Not met’
- 30 hours childcare for eligible working families and the universal 3- and 4-year-old entitlement removed from an early years setting– where ‘Leadership and governance’ has been graded as ‘Urgent improvement’
- The removal of the entitlement for 2-year-olds for families receiving additional support (Think2 in Staffordshire) – where ‘Leadership and Governance’ has been graded as ‘Needs attention’ or ‘Urgent improvement’
Support
Our Early Years Team will make contact with settings who receive a rating that means funding restrictions are put in place. This will be to support settings to work on actions set by Ofsted or agency.