Inflation will erode funding for early childhood care, says IFS | early childhood education

The rapid pace of inflation will significantly erode funding for early childhood care in nurseries and daycare centers over the next three years, according to a report by the Institute for Fiscal Studies.

The IFS said funding for childcare places in England will actually fall by 8% by 2024-25 due to inflation, with providers facing a 16% cost increase over this period , mainly due to the increase in the wage bill.

Elaine Drayton, one of the authors of the IFS report, said governments had prioritized early childhood spending over the past decade, with new childcare rights for disadvantaged children from two-year-olds and for three- and four-year-olds in working families. , and the expansion of supply at a time when other public services were being cut.

“But early childhood providers are facing rapidly rising costs that are eroding the value of their budgets. Costs for child care providers had already risen faster than economy-wide inflation in recent years, but they face an even greater increase in the years to come” , Drayton said.

“This will leave government funding for the free childcare scheme well below what was projected when the budget was last set in 2021.”

The result is that the significant increase in the 2021 spending review – up to £3.75billion a year through 2024-25, covering the universal right to 15 hours of childcare per week , rising to 30 hours for many working parents – will be negated by higher than expected inflation.

Neil Leitch, Chief Executive of the Early Years Alliance, said: “We know that early years providers are deeply committed to providing high quality education for our youngest children, as well as the childcare on which many many parents matter – but that alone isn’t enough to pay the bills and keep the doors open.

“The fact is, the early childhood funding system in this country is broken and the way the government views and treats our vital sector needs an urgent rethink before it completely implodes.”

Kevin Courtney, co-general secretary of the National Education Union, said its members were warning nursery closures were inevitable ‘unless the government intervenes’ and announced additional financial support for the sector in the budget of the next week.

Bridget Phillipson, the shadow education secretary, said the IFS analysis highlighted the need to build a “new modern childcare system”.

‘The fall in the value of childcare aid means parents will face even higher bills or more child care closures, all because the Tories have taken the economy down’ , Phillipson said.

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