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The Alliance has expressed alarm and concern after the Department for Education confirmed further details on the increase in early years funding over the next three years announced at last year's Spending Review.

Back in October, following a meeting with the Alliance and other early years organisations, the newly-appointed children and families Minister Will Quince  that, as stated verbally at the meeting, the government would be “investing additional funding for the early years entitlements worth £160m in 2022-23, £180m in 2023-24 and £170m in 2024-25”.  

However, the Department for Education has now advised that: “The investments in 2022-23, 2023-24 and 2024-25 are all individually in comparison to the baseline for the current year 2021-22.” 

The Alliance understands that this means that the yearly funding increases will not be cumulative funding increases (i.e. with each increase funding being added to the previous year’s funding levels), as the original announcement suggested but that instead, the yearly funding amounts represent how funding levels each year will compare to 2021-22 funding levels. This would mean that in 2023-24, the sector would only see a £20m increase in funding compared to 2022-23, while in 2024-25, funding would actually decrease by £10m compared to 2023-24. 

The DfE has stated to the Alliance: "This investment reflects cost pressures as well as anticipated changes in the number of eligible children. On the latter, the number of children is forecast to decrease across this period. This is driven by ONS data, which projects a decrease in the 0 – 4 year old population of around 5% from mid 2022 to mid 2025."

Commenting, Neil Leitch, CEO of the Early Years Alliance, said:

“We are incredibly concerned about the implications of this new information from the Department for Education.

"If what seems to be being suggested is accurate, the funding outlook for the sector over the next three years is not only a lot worse than many in the sector understood it to be at the time of the announcement, but potentially worse than the dire situation providers have faced over recent years.

"Early years providers are facing huge increases in wages, national insurance contributions, business rates and countless other costs, alongside the ongoing financial impact of the pandemic. It beggars belief therefore that the government could possibly think that an at-best 17p increase in funding this year, following by a marginal increase the following year and a decrease the year after that, would be anywhere near sufficient to keep the sector sustainable - or that providers would have welcomed this announcement if they had understood this to be the case.

“For far too long, early years setting have faced a constant struggle to remain in business in the face of stagnant funding and rising costs. Failure to deliver adequate investment into our sector over coming years will almost certainly mean the preventable closure of hundreds, if not thousands, of nurseries, pre-schools and childminders across the country."