Nursery Government funding of £325 Million for School-Based Nurseries: Phase 3

The government has announced up to £325 million in capital funding between 2027 and 2030 for the next phase of the School-Based Nursery (SBN) Capital Grant programme, and this time, the process of securing funding works differently.

The SBN programme is rooted in the government's Best Start in Life strategy, which recognises that children from disadvantaged backgrounds often have less access to high-quality early education, with lasting consequences for their development and school readiness. Phase 3 aims to expand nursery provision in areas of greatest need, particularly in deprived communities, while also improving how nursery settings connect with wider family services.

A key change: schools no longer apply directly for this phase of nursery funding

Unlike earlier phases, schools and providers cannot apply for this funding themselves. Phase 3 introduces a local authority-led model. Your local authority will develop and submit multi-year funding proposals on behalf of schools and other providers in the area.

In practice:

• Local authorities will consult with primary schools, maintained nursery schools (MNS), academy trusts, and other partners to identify local need
• They can submit multiple projects within a single proposal
• The DfE will allocate funding based on the strength and ranking of individual projects

Our advice: Make sure your local authority knows you're interested. Engage early, share your plans, and provide evidence of need or demand in your community.

What counts as a school-based nursery?

Phase 3 covers:

• Nursery classes embedded in a primary school
• Expansions to nursery classes at an existing maintained nursery school site
• Nursery units led by MNS governors or academy trusts
• Childminders or PVI (private, voluntary and independent) nurseries operating on a school site
• Nursery classes on a Best Start Family Hub (BSFH) site — whether co-located with a school or not.

This flexibility means schools that don't have traditional nursery provision may still be eligible, particularly if they can partner with a PVI provider or host a BSFH nursery.

What can the nursery funding be used for?

The grant covers capital expenditure e.g. building works, conversions, and creating or repurposing space for nursery use. There is no fixed cap per project, which is a significant change from earlier phases. Proposals simply need to demonstrate strong value for money.

A few important points:

• Using surplus space is encouraged but not required
• Combining this grant with other funding sources is welcomed and can strengthen bids
• Funding cannot reimburse costs incurred before an award is made.

Who isn't eligible?

Special schools, Alternative Provision settings, and Pupil Referral Units are not eligible for Phase 3. However, local authorities are encouraged to ensure funded nursery environments are as inclusive as possible, meeting the needs of children with SEND and their families.

What to do next:

• Contact your local authority: let them know your school is interested and find out how they're approaching Phase 3 planning
• Assess your space: even if you don't have obvious surplus space, consider what might be possible with a conversion or new build, for instance an outdoor classroom.
• Gather demand evidence: data on local childcare gaps, deprivation indicators, or unmet SEND needs will strengthen any proposal
• Explore partnerships: particularly with PVI providers, Best Start Family Hubs, or other community organisations

Phase 3 represents a real opportunity to expand early years provision, strengthen your school's community offer, and secure capital investment. Act now to influence your local authority's proposals.

Vertis Buildings works with schools across England on capital projects of all sizes. If you're thinking about what a new or expanded nursery space could look like, get in touch. We'd love to help you plan ahead and we can provide free preliminary building designs and a budget estimate.

Our school building design expertise means we can create school buildings that are sustainable and energy efficient such as this small nursery classroom, built for Offley Endowed Primary School to accommodate 15 pre-school children with a WC, within a budget of £150k. See also an example of a bespoke nursery building completed for Fawood Children’s Centre.

Get in touch with our experts and start the ball rolling today.