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NEWS: Government set out the Treasury Spending Review

Yesterday the Chancellor, Rishi Sunak set out the government spending plans for the next 12 months in the 2020 Spending Review.

The Chancellor announced protecting jobs and livelihoods as ‘the number one priority’ with £3bn to help people back into work, a £4bn 'levelling up' fund for local projects and an increase to National Living Wage by 2.2% to £8.91 per hour. For the first time, this will be extended to 23 and 24 years olds. The National Minimum Wage rates will also increase.

Early Years

The Spending Review includes the allocation of £44m in Department for Education funding for early years education in 2021-22 to ‘increase the hourly rate paid to childcare providers for the government’s free hours offers.’ However, in real terms this settlement equates to an increase of just 1%, or £0.06 per hour. This fails to address the rising costs of delivery of early education, such as paying the increased National Living Wage and National Minimum Wage, let alone the operational costs of staying open during a pandemic and ensuring that settings are Covid-secure.

We know that effective investment in early years results in positive outcomes for children as well as long term economic savings[1]. The Early Intervention Foundation have estimated that the costs of late intervention for children and young people in England and Wales amounts to around £17 billion annually.

You can read the full Spending Review here.


The Chancellor announced £1.3 billion funding increase for the Welsh Government for 2021/22 through the Barnett formula. The Welsh Government Budget will be published on 21 December.

Liz Bayram, Chief Executive at PACEY comments:
“We share the Government’s ambition to help children catch-up after the pandemic but this cannot be achieved in their early years on such meagre funding levels. If children over 5 have been granted an additional £2.2 billion (a 2.2% increase in funding per child) why are children under five less deserving? All the evidence shows the key role early education plays in supporting children’s educational, social, emotional and physical development. This CSR could have harnessed the positive change that childminders, nurseries and pre-schools can deliver for children and families, including our most disadvantaged. It is yet another missed opportunity.”

[1] 2018. Realising The Potential Of Early Intervention. [online] Early Intervention Foundation. Available here [Accessed 26 November 2020].