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Phase 2 of the DfE’s School-Based Nursery Capital Grant

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Robert Gould FRICS

Partner at Barker Associates | Award-Winning Integrated Property Consultants

The Department for Education (DfE) has announced the second phase of its School-Based Nursery (SBN) Capital Grant programme, with £45 million set aside to create or expand a further 300 nurseries opening from September 2026. 

Phase 1 of the programme, launched last year, funded 300 new or expanded nurseries. With Phase 2 announced on the 4th of September 2025, schools have a new opportunity to access funding, but the rules have shifted, with a much sharper focus on supporting disadvantaged families and targeting areas of greatest need. 

At Barker, we supported our clients with their applications in Phase 1 and achieved an incredible success rate. 

Below we summarise the fund and outline the application process. See also our frequently asked questions guide.

What Funding Is Available?

Who Is Eligible For The Nursery Capital Grant?

Schools can bid for up to £150,000 in capital funding to create or expand a school-based nursery. Eligible applicants include: 

State-funded primary schools with a reception class

Maintained nursery schools for expansions only

Who Is Not Eligible For The Funding?

  • Schools that were funded in Phase 1
  • Special Schools and Pupil Referral Units

Voluntary Aided Schools remain eligible for up to 100% of costs. 

A key change from Phase 1 is that schools are no longer required to use surplus space. While Phase 1 focused on re-purposing empty classrooms, Phase 2 allows for new builds, extensions, or remodelling – provided schools can demonstrate strong value for money. 

School-Based Nursery Capital Grant Key Dates 

  • Applications open: 22nd September 2025 
  • Deadline: 11 December 2025 (5 pm) 
  • Decisions announced: April 2026 
  • Funding released: June 2026 
  • Projects operational: September 2026 
  • Final spend deadline: September 2027 

Applications must be submitted online with full supporting documentation. Late or incomplete applications will not be considered. 

Meeting the Eligibility Gateway Test

The DfE has tightened the process. The new template application form makes eligibility an explicit gateway test. Schools must confirm that: 

  • They did not receive Phase 1 funding.
  • Their project will deliver a net increase in childcare places.
  • The project can be delivered with ≤£150,000 of DfE capital funding.
  • The nursery will be operational before September 2027.
  • The project is on a primary school site with a reception or a maintained nursery school site.
  • Written landowner consent (local authority, trust, diocese) is secured.
  • Local Authority approval has been formally obtained, with a signed approval form uploaded.

Failure on any of these criteria will result in automatic disqualification. 

Nursery school teacher surrounded by young children at a table

How SBN Grant Applications Will Be Assessed

Phase 2 introduces a new scoring framework, with a much stronger emphasis on deprivation: 

  • Disadvantage – 50% (based on FSM and IDACI data). 
  • Local need – 20% (eligibility code data, Ofsted accessibility). 
  • Value for money – 20% (cost per place, space standards, extended hours). 
  • Ofsted judgements – 10% (Leadership, Early Years, or Quality of Education). 

Educational approach and management are now pass/fail questions. Schools must demonstrate a credible plan for delivering high-quality EYFS provision and long-term sustainability, but these will not contribute to scoring unless they fail. 

This marks a shift away from Phase 1, where the educational approach and governance contributed directly to scoring. The message is clear: projects in deprived areas will be prioritised. 

 Key Changes from Phase 1 

  1. Surplus space requirement removed – schools can now propose new builds or extensions. 
  1. Assessment weighted to deprivation – disadvantage is now 50% of the total score. 
  1. Mandatory Local Authority approval form – without this, bids cannot be submitted. 
  1. Academies – must address “significant change” within the application, including evidence of a minimum three-week consultation. 
  1. Maintained schools – no longer required to follow the statutory “prescribed alteration” process to change age range. 
  1. A minimum of five new childcare places are required, except in rural areas. 

 

What Schools Should Do Now

With applications opening in September but requiring extensive preparation, schools and trusts should act urgently. Key steps include: 

  • Confirm eligibility – check your project meets all DfE criteria. 
  • Engage your Local Authority – secure the required approval form early. 
  • Plan consultations – academies must allow at least three weeks. 
  • Scope your project – prepare floor/site plans, cost breakdowns, and risk registers. 
  • Evidence demand – use parental surveys, waiting lists, and local authority sufficiency analysis. 
  • Demonstrate financial sustainability – governing bodies and trust boards should test affordability and long-term viability. 
  • Register interest – if not ready to apply, complete the registration form to remain in scope for Phase 3. 

 Barker’s View On SBN Phase 2

Phase 2 of the SBN programme is more flexible in delivery but tougher on evidence. The removal of the surplus space requirement opens up new opportunities, but the heavy weighting towards disadvantage means schools must make a strong case rooted in data and community need. 

At Barker, we supported schools through successful Phase 1 applications and are already working with trusts and governing bodies to prepare for Phase 2. From strategic estate planning to technical cost assurance, stakeholder engagement, and bid writing, our integrated consultancy approach helps schools to maximise their chances of success. 

Final Thoughts and Next Steps

With £45 million available but demand expected to be high, schools cannot afford to delay. The strongest applications will be those that combine robust evidence of need, clear alignment with disadvantaged priorities, and well-prepared technical and financial documentation.

Our team had an incredible success rate for bids in Phase 1. Contact us today to maximise your school’s chances in Phase 2.

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