Autumn Budget 2021: Early years sector gives cautious welcome to funding increase


While Chancellor Rishi Sunak announced £170m for early years funding by 2024-25 in his Budget speech today, Nursery World now understands that there will be additional funding in 2022-23 and 2023-24 that was not initially set out.

While the news of wider funding of £500m for children and families had been trailed over the weekend, the £170m in early years funding  – to increase the hourly rate for the Government’s free entitlements for childcare providers by 2024-25 – was an unexpected announcement.

Nursery World understands that sector organisations have received clarification from ministers that the £170 million early years investment announced by the Chancellor in Parliament today will be allocated to the sector in 2024-25 in addition to annual investments of a similar level in 2022-23 and 2023-24.

It is unclear why the full sector funding allocation was not announced at the Spending Review today, or in any of the subsequent Treasury documents. Nursery World has contacted the Treasury for a response.

Commenting, Neil Leitch, chief executive of the Early Years Alliance, said,’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.’

Liz Bayram, chief executive, the Professional Association for Childcare and Early Years, said, ‘The Chancellor has acknowledged the importance of a child’s earliest years in his Budget Statement today as well as the importance of support from children and family services, including childcare and early years.

‘The commitment of an increase in funding over the next three years, for providers delivering early education entitlements, is most welcome. PACEY understands that annually the increase will be significant, rising to £170m by 2024/25. Given the funding challenges that so many providers are facing, this is both good news and a relief as it will help to offset rising costs including increases to the Living Wage.

‘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.’

Speaking following the speech and initial announcement, Purnima Tanuku, chief executive of the National Day Nurseries Association, said, ‘The funding for childcare places must cover the higher costs providers are facing now and next year. The childcare sector went above and beyond, supporting families and children through the pandemic. These childcare providers face a 6.6 per cent increase in the Living Wage and inflation of 4 per cent driven by energy costs. Failing to meet these costs increases through the early years funding package will have disastrous consequences for childcare providers.’

Family Hubs

Of the £500 million announced at the weekend for children and families £82 million will be given to 75 local authorities to set up new Family Hubs.

Many commentators have pointed out that this money does not make up for the closure of hundreds of children’s centres since 2010.

Responding for the opposition, following the Chancellor’s speech, shadow chancellor Rachel Reeves commenting on Family Hubs, said, ‘Has he ever heard of the Sure Start programme that this Government has cut?’

Meanwhile, Tulip Siddiq, shadow children and early years minister, tweeted, ‘A handful of Family Hubs will not make up for the loss of over 1,000 children’s centres under the Conservatives. Pretending this is in some way new is an insult to the families who have suffered from Sure Start closures.’

Margaret Longstaffe @mjlongstaffe said,I’m pretty sure I’ve heard about these #earlyyears developments before, I think it was called #surestart oh and @RishiSunak it worked, shame you had to cut it before you announced you were allegedly going to build it again! #Budget2021′

Director of policy and campaigns at Action for Children, Imran Hussain, said, ‘You cannot level up without investing in the future, and you cannot invest in the future without investing in children. We welcome the Government’s focus on Family Hubs, but we hope this will mark just the start of a programme of investment to ensure all children can have the best start in life.’ 


During his speech, the Chancellor announced that the taper for Universal Credit would be reduced from 63p to 55p in the £1, giving a tax cut to families on the lowest incomes. 

But Mr Hussain, added, ‘Despite the Chancellor’s measures today on Universal Credit, we’re heading for a new age of pessimism on poverty. The £2bn rescue package for Universal Credit is a fraction of the £6bn that’s being taken from families across the country this month. ‘ 

Sara Ogilvie, policy director at Child Poverty Action Group said the lower universal credit taper rate was ‘good news’ but added, ‘The long-overdue decision to lower the UC taper rate will help lots of low earners.  But there was nothing for those who cannot work – carers, those with young children and people who are sick or disabled  – who face the same cost pressures as other households and will still have a black hole in their finances after the universal credit cut.  

‘The money for early years and family support hubs is welcome but we hope the Government will build on today’s announcements with further support for the sector until every family that needs it has high quality childcare. 

‘The Chancellor acknowledged every child’s right to succeed – but we have record child poverty levels in the UK and this budget left too much still to do.   Enabling every child to thrive will require restoring the value of children’s benefits, expanding eligibility for free school meals and removing the punitive two-child limit.’ 

Anna Feuchtwang, chief executive of the National Children’s Bureau, said,’Today’s Budget and Spending Review could be a turning point for children and families. The prominence given to the needs of babies, children and young people in the Chancellor’s speech, when they’ve been all too often ignored in previous budget announcements, provides a glimmer of hope that we are embarking on a new direction.

‘But creating lasting change must mean sustained improvement in local authority budgets for children and families too. Investment is still urgently needed in health visiting, childcare and early education, children’s social care, and support for disabled children.

‘And while money for public services is vital, high rates of child poverty remain an insurmountable barrier to levelling up opportunities for children. Rises to the national living wage and the taper rate for Universal Credit are positive moves but more is needed for children growing up in households with nobody working. Rising insecurity, debt, homelessness and hunger is not the context in which plans to build back childhood can succeed.’

Business rates

While the Chancellor said that retail, hospitality and leisure would continue to be exempt from business rates, nurseries were excluded from this relief.

Ms Tanuku said, ‘We have called for nurseries, who are still being badly affected by the pandemic, to be exempted from paying business rates. Childcare business must be part of the relief given to the retail, hospitality and leisure sector that has been announced. Nurseries should not be penalised for the space they provide children to learn, play and develop.’

David Eaves, director, childcare and education at Christie & Co, said, ‘The impact of increasing staffing costs will only be compounded by the return of business rates to pre-pandemic levels. While the retail, hospitality and leisure sectors are set to benefit from continued business rate relief through 2022-23, this will disappointingly not be extended to the childcare sector’. 

Referring to the Chancellor’s freeze in the business rates multiplier and and the news that business owners making improvements to their properties would not need to pay any extra rates for 12 months, he added, ‘While this benefit is unlikely to be sizeable, it should be noted for providers that may be evaluating whether to add additional capacity to their premises in the near term.

‘From a property perspective, the announcement of an additional £1.8bn for housing supply may create new opportunities both for early years providers seeking to expand their portfolios in new community hubs, and developers/investors seeking secure childcare assets. Additionally, the £2.6bn earmarked for creating 30,000 new specialist school places will provide new opportunities in this historically undervalued and important sector.’

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