Report charts falling spending on three and four year olds

A new report from the Institute for Fiscal Studies highlights falling overall spending on early years as a result of rising costs.

Child playing with blocks at nursery


Spending on three and four year olds is likely to be 12% below 2012-13 levels by next year once providers’ rising costs are taken into account, according to a report from the Institute for Fiscal Studies.

The report states that total spending on early years has fallen since 2018–19 to £5.6 billion, partly as a result of the pandemic and high inflation. However, it says this still represents “a major increase in resources at a time when other stages of education have been squeezed”.

The report says that the government seems to be prioritising children under three, with funding for two year olds likely to be more than £1 an hour higher in real terms in 2024-25 than in 2017–18.

Despite higher hourly resources for the most deprived fifth of local authorities, the report says core funding for disadvantaged children generally has fallen. In 2017-18 it represented an additional 60% of the core funding rate in 2017–18. In 2023-24 it is worth just 38%. The report says: “This fall reflects the fact that funding for additional needs is constrained to be 10.5% of total funding, whilst the number of children classified as deprived has increased.”

Neil Leitch, CEO of the Early Years Alliance, says underfunding on early years education means it is “near impossible” for many settings to stay open, let alone deal with a projected increase in demand due to the Government’s childcare expansion plans.

He stated: “If the government had properly engaged with the sector and addressed existing funding gaps before it announced the expansion, this could have not only stemmed the number of setting closures but also enabled settings to increase their provision to meet the upcoming increase in demand. Instead, the sector is preparing for the start of the rollout while in the worst possible position.

“As such, we urge the government to finally listen to early years providers and commit to the investment needed to address the sector’s long-standing underfunding challenges and safeguard its future. Given that the expansion is fast approaching, time for meaningful action is running out.”

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