Early years funding will drop 8% in real terms, according to IFS research
By Rachel Lawler
has found that funding for the governments 15- and 30-hours childcare offers will be 8% lower in real terms by 2024-25.
The research finds that while funding for the offers has increased in the past 20 years, most of this was driven by new entitlements, rather than increases to the hourly rate.
11% increase in costs
The IFS estimates that costs for early years providers have increased by 11% in the past three years, driven by rises in the National Living Wage. This compares to a 7% increase in the cost of consumer goods in the same period.
The IFS estimates that by 2024-25, today鈥檚 funding rates will decrease by 10p an hour in real terms.
The IFS says: 鈥淕oing forward, high levels of inflation mean that even substantial cash-terms increases in the early years core funding rate will struggle to keep up with providers鈥 rising costs.鈥
"Little surprise to the sector"
Neil Leitch, CEO of the Alliance, commented: 鈥淲hile the news that early years funding is failing to keep up with inflation will come as little surprise to anyone in the sector, the news that real-terms funding for the so-called 鈥榝ree childcare鈥 offers is set to fall by 8% over the next two years is still deeply worrying.
鈥淵ears of inadequate investment from government has meant that many nurseries, pre-schools and childminders are already teetering on the edge of survival, with 4,000 settings permanently closing in the last year alone. As such, it is almost impossible to imagine how the sector will be able to survive with such a significant real-terms funding drop.
鈥淲e know that early years providers are deeply committed to providing high-quality education to our youngest children, as well as the childcare that many parents rely on 鈥 but this alone isn鈥檛 enough to pay the bills and keep the doors open. The fact is that the early years funding system in this country is broken and the way in which the government views and treats our vital sector needs an urgent rethink before it completely implodes.
鈥淩ather than continuing to push ahead with ill-thought-out deregulation plans, it is vital that ministers put forward a long-term plan for the sector that includes adequate, realistic funding. This is, quite simply, the only way to ensures that early years settings can remain viable not just now, but in the years to come.鈥
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