Ministers say the current system is flawed because it is out of date and full of anomalies, which make it unfair and overly complex.
The Government is proposing to introduce a new funding system for pupils aged three to 16.
The funding for all free early education - for private, voluntary and maintained settings, including nursery schools and nursery classes - is included within the overall school funding system, with local authorities responsible for funding providers.
Around half of the free entitlement provision for threeand four-year-olds is delivered in schools.
A further consultation taking into account responses is due in early summer.
Section eight of the consultation asks for opinions on how the Early Years Single Funding Formula has been implemented and how it might be improved. It says, 'If a fair funding formula is introduced for reception to Year 11 provision, there will obviously be implications for how free early education funding will operate.'
The consultation says that feedback on the EYSFF has been 'mixed' and that the system has been criticised for introducing formulae in the pathfinder local authorities that were more complex than necessary. It asks how much flexibility should be available to councils to set funding at local level.
It also asks how the total amount of funding for early years and the free entitlement for three-and four-year-olds not in school should be identified within the overall amount of 3-16 funding.
The DfE has set up the early education co-production group, chaired jointly by Pre-School Learning Alliance chief executive Neil Leitch and Eva Lloyd, reader in Early Childhood at the University of East London, to look at free education and its funding.
Further information
'A Consultation on School Funding Reform: Rationale and Principles' is at www.education.gov.uk/consultations until 25 May.
