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Chancellor promises extra funding for the early years at Spending Review

By Rachel Lawlerchildren early years learning Budget 2021

The Chancellor has pledged additional funding to "increase the hourly rate paid to early years providers to deliver the government's free hours offers" at this year's Spending Review.

Children and families minister Will Quince has confirmed that funding for the early entitlement schemes will increase by:

  • £160 million in 2022/23
  • £180 million in 2023/24
  • £170 million in 2024/25

The Chancellor originally only stated that the sector would receive "£170 million by 2024/25". It is not yet clear why the full funding amount was not originally announced in the Budget and accompanying briefing notes.

"A more positive picture"
Neil Leitch, chief executive of the Alliance, commented: "There is no doubt that the picture for the early years sector is more positive than was suggested by the Chancellor's announcement earlier today, and we welcome what appears to be a growing recognition within government of the value of the early years. 

"As always, however, the devil is in the detail and 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.

"What’s more, we know that for many nurseries, pre-schools and childminders, even remaining afloat until next April is set to be a real struggle. As such, we would urge the government to look at what short-term, emergency support can be given to those providers already on the brink of closure.  

"Early years providers are committed to delivering quality, affordable care and education to the families that need it – but that doesn’t come cheap. We hope that today is the first step towards a new approach to early years in this country, and the delivery of the significant investment that our sector needs and deserves."

Family hubs and early years training
The Chancellor also confirmed plans to spend a total of £80 million on a network of 75 'family hubs' over the next three years. He also made reference to the previously announced £150 million funding for early years training, which is part of the government's £1.4 billion education recovery fund and promised £20 million for parenting support.

Business rate relief
Elsewhere, the government announced a year-long offer of 50% business rates relief for retail, hospitality and leisure businesses – which will not be available to early years providers.

Neil Leitch added: “While we know that not all early years providers are subject to business rates, for those that are, inclusion in the business rates discount announced today would have been a huge financial help at an incredibly difficult time.

“Given that early years settings were  – belatedly – included in the rates relief offered during the pandemic, it makes no sense that our sector is now being excluded from this important support.

“We urge the Chancellor to review this decision and ensure that nurseries and other eligible providers are included in this policy without delay."