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.
The report comes after the Chancellor announced no further support for the early years and childcare sector within his Autumn Statement last month, but revealed an increase to the national living wage of 9 per cent next April, which many providers have warned will be unaffordable without a rise in childcare funding and amid a cost-of-living crisis.
The Early Years Alliance said it was ‘difficult to see how the Government could possibly justify its complete lack of action over the vital early years sector’, arguing that by ignoring the problem it would not make it go away.
The research also looks at spending on primary and secondary schools, colleges and universities.
School spending
On schools, it reveals:
- There has been no growth in school spending per pupil over 14 years.
- Spending per pupil in England fell by 9 per cent in real terms between 2009 and 2019 – the largest cut in over 40 years. However spending was increased by over 60 per cent per pupil during the 200s.
- School spending per pupil is set to return to 2010 levels by 2024.
- The pupil population is expected to decline by 700,000 or 9 per cent between 2024 and 2030, creating less demand for places.
Education spending
On education spending overall, the IFS finds:
- Spending represented about 4.6 per cent of national income in 2021.This is about the same share of national income as in the early 2000s, mid 1980s and late 1960s, but lower than the mid 1970s and late 2000s, when it was well over 5 per cent of national income.
- Total spending on education was about 2 per cent lower in 2021 than in 2010.
- The share of total Government spending on education has fallen from 12 per cent in the early 1970s to 10 per cent today.
'Higher than expected inflation has eroded the value of spending on the early years.'
Luke Sibieta, IFS research fellow and author, said, ‘Following a period of cuts to most areas of education spending, since 2019 the government has provided a boost to education funding. In the case of schools, this will take spending in 2024 back to its high point in 2010, though no growth in spending per pupil over a 14-year period is still a significant squeeze in historical terms. Higher-than-expected inflation has also seriously eroded the value of spending on the early years and higher education.’
Josh Hillman, director of education at the Nuffield Foundation, added, ‘This report provides an authoritative account of the significant financial strains impacting all sectors of our education system. While these are not being felt equally, we can see that early years, primary and secondary schools, post-16 provision and higher education are all facing challenges that can only compromise the standard of teaching, care and support being delivered to our children and young people. They are ultimately the ones who will lose the most from an education system which is receiving historically low levels of funding as a proportion of Government spending.’
Neil Leitch, chief executive of the Early Years Alliance, commented, ‘The Government has argued that without a plan for education, there is no plan for economic growth – but unless ministers finally wake up to the fact that education starts well before, and goes on long after, the school gates, any future policy is doomed to fail.
‘As the IFS rightly highlights, sky-high inflation rates and huge increases in the national living and minimum wages are putting unsustainable pressure on an already-fragile early years sector. Add to this the impact of rising energy costs and the ongoing severe staffing crisis, and it's difficult to see how the government can possibly justify its complete lack of action over our vital sector.
‘Unless the Government starts investing what's needed, we will continue to see prices rise and places lost.
‘The government simply must commit to adequate long-term early years investment, and it must do so now. Simply ignoring this problem is not going to make it go away.’
- The report is available here
