IFS report says funding increase “will not compensate for rising costs”
By Rachel Lawler
The Institute for Fiscal Studies (IFS) has said that the early years funding increase announced in the latest Spending Review will “not provide any substantial relief for providers” once rising costs have been taken into account.
The analysis came as part of the , which looks at spending across schools, further education and higher education as well as the early years.
Small increase
The report noted the additional £170 million announced in the Spending Review and the later announcement that this will amount to a 17p per hour increase to the rate paid to most local authorities.
The IFS said: “With a rising minimum wage and new taxes like the health and social care levy, this relatively small increase will almost certainly not be enough to compensate for rising costs.”
However, it also noted that the Early Years Pupil Premium would increase for the first since its introduction, rising from 53p per hour to 60p per hour in 2022/23 and the Disability Access Fund, which will rise from £615 per eligible child to £800 per eligible child.
Eroded by inflation
Neil Leitch, chief executive of the Alliance, commented: “This analysis from the IFS makes clear that while next year's increase in early years funding may be greater than previous increases, it is likely to be completely eroded by minimum wage rises, increases in national insurance contributions and general inflationary pressures.
"Add to this the fact that many nurseries, pre-schools and childminding settings are still battling with the impact of being grossly underfunded for several years and the ongoing effect of the Covid-19 pandemic, and it's clear why so many early years providers remain incredibly concerned about their ability to remain sustainable.
"We know that the early years are absolutely pivotal to children's long-term learning and development and yet, as this report reveals, government spending per child in the early years remains by far the lowest of any part of the education sector.
"Instead of giving the sector just enough to survive and expecting us to be grateful for it, the government should rethink its entire approach to the early years, and invest what is needed to ensure the delivery of affordable, quality and, crucially, sustainable care and education, both now and in the long term."
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