Children’s minister confirms £340m funding boost for early years not announced in Spending Review

The Chancellor yesterday (27 October) announced that providers would receive “£170m by 2024/25 to increase the hourly rate to be paid to early years providers, to deliver the government’s free hours offers”.

Quince, who is MP for Colchester, held an “urgent meeting” with sector leaders including representatives of the Early Years Alliance, National Day Nurseries Association and Pacey.

The children and families minister confirmed additional funding for early years entitlements worth £160m in 2022/23, £180m in 2023/24 and £170m in 2024/25.

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“This is for local authorities to increase hourly rates paid to childcare providers for the government’s free childcare entitlement offers and reflects the costs of inflation and national living wage increases,” Quince said.

It is unclear why the additional funding was not originally confirmed and is not listed in the Treasury’s Spending Review document.

Early years leaders have “welcomed” the extra funding but said they are keen to hear more details about its allocation.

Purnima Tanuku, chief executive of National Day Nurseries Association, said: “The news that the government has listened to our calls for greater investment in children’s early education and care will be really welcomed by parents and childcare providers. Increasing the hourly rate for providers means more stability for our vital nursery sector and more resources to support children’s early learning and development.

“Childcare providers still face challenges ahead as they continue to operate under the pandemic, face rising costs and continue to offer the highest quality care and education. There is more work to be done to address the recruitment challenges the sector faces and addressing the unfair burden of business rates. However, this much-needed investment is a positive start.”

Neil Leitch, chief executive of the Early Years Alliance, added that “there is no doubt that the picture for the early years sector is more positive than was suggested by the Chancellor's announcement”.

However, he said many providers would struggle to stay afloat until April when the funding is due to be released. 

“We await further confirmation on how exactly this funding will translate into rate increases for the sector over the coming years. While the annual level of investment our sector is set to receive over the next three years will result in a higher increase in early entitlement funding rates than we have seen over recent years, there is still an incredibly long way to go to make up the £2.60 per hour funding shortfall that the government’s own cost calculations revealed,” Leitch said.

Liz Bayram, chief executive of Pacey described the increased funding as “most welcome” adding: “We now await the detail of this funding allocation from the Department for Education and hope this is the start of government’s efforts to address the sustainability concerns that registered childminders, pre-schools, and nurseries are battling right now. Pacey remains focused on persuading the government to undertake a thorough review of all early education and childcare funding before the next election, so we can ensure the system works better for families and providers.”