Back to news listing

Next article

NEWS: IFS figures predict 8% fall in early years funding due to inflation and rising costs

A new report from the Institute for Fiscal Studies (IFS) outlines the changes in Government spending in the early years sector over time in England and forecast for the coming years. This work is funded by the Nuffield Foundation as part of its programme of work looking at education spending.

The reports main findings:

  • Government spending on early education and childcare has increased substantially over the past two decades due to the expansion of funded entitlements for 2, 3 and 4 year olds and subsidies for families through the benefits system.  
  • Despite this increase, rapidly rising costs for providers are outpacing economy-wide inflation and placing great pressure on providers’ budgets. Core funding rates which were set to rise over the Government’s Spending Review period are now predicted to fall in real terms.  
  • This gap is expected to widen further in the coming years, with an estimated real-terms funding cut of up to 8% by 2024 as a result of faster-than-expected cost rises.

Read the full report: Early years spending update: The impact of inflation

Liz Bayram, Chief Executive at PACEY comments:

“This report is a depressing read but just confirms what everyone working in childcare and early years already knows. Namely that year on year, they receive Government funding that fails to cover the full cost of delivering the early education places for all the 2, 3 and 4 year olds who are entitled to it.  

“We have no doubt that this substantial funding gap is a leading contributor to the precarious position we now see our sector in. Unless government is willing to invest, it is placing more providers at risk of having to either restrict their funded offers for eligible families or, in the worst case, close their vital services to families. Whilst providers could increase their prices for unfunded hours, they know the impact this will have on the families they are supporting. It also often leads to parents and carers choosing to reduce the number of childcare hours they use. Ultimately this underfunding leaves parents and providers struggling and does nothing to ensure that every child gets the very best start in life thanks to high quality early education and care.

“We need the government to stop tinkering with proposals for regulation change, including increasing the number of children any one nursery practitioner or childminder can provide for and instead address the years of underfunding that has left the sector in its current crisis. Every day PACEY is seeing overworked and undervalued early years professionals leaving the sector as they can earn more in retail.”