Nursery World - Education spending report warns the economic 'squeeze' for the childcare sector is yet to be felt

A new report on education spending warns that the early years sector is likely to be ‘increasingly squeezed’ as higher-than-expected inflation erodes the increase in free entitlement funding.

The IFS report estimates spending on the ‘free’ entitlement will ‘buy’ 9 per cent less in 2024-25 compared with 2021-22, PHOTO Adobe Stock

The IFS report, published today (12 December), estimates that total spending on the ‘free’ entitlement will ‘buy’ 9 per cent less in 2024-25 compared with 2021-22. This is despite a planned £170 million boost to funding by 2024.

The economic research institute warns that ‘virtually all of this squeeze is yet to be felt’.

Within its fifth annual report on education spending, funded by the Nuffield Foundation, the IFS states that ‘Childcare providers are currently experiencing faster rises in costs than overall levels of inflation’, and mentions recent rises in the national living wage pushing up costs.

It estimates that ‘prices facing’ childcare providers will have grown by 32 per cent between 2017/18 and 2024/25. It says this is above the 21 per cent growth in the GDP deflator – the standard measure of inflation for assessing real-terms changes in public spending.

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