Funding for the entitlement for two-, three- and four-year-olds is likely to fall by 8 per cent in real-terms, according to research by the Institute for Fiscal Studies, which reveals the impact of rising inflation on the early years sector.
The IFS said that higher than expected inflation means that despite ‘a significant uplift to funding’ for the sector in the spending review, this increase will not compensate providers due to rising costs.
The IFS estimates that childcare providers’ costs are likely to rise by 9 per cent in total between the 2022–23 financial year and 2024–25.
Judged against these rising costs, total funding for the free entitlement for the 15 and 30 hours will be 8 per cent lower in real terms in 2024–25 than it is this year.
