How early years spending in England has shifted over time

Project context and background

Public spending on early years support is a major tool for addressing poverty and increasing life chances and social mobility. However, policy decisions are typically made in the absence of a comprehensive and integrated assessment of how much we spend in this area, and how different forms of support combine to form the total. This project, commissioned by Nesta and conducted by Alma Economics, provides a data-driven assessment of early years public spending in England since 2010.

Methodology

Our methodology involved:

Spending categorisation: Early years spending was grouped into four broad areas—welfare, healthcare, children’s services and social care, and free childcare—each of which plays a distinct role in early years support.

Data collation: We gathered spending data from each spending area from official government sources, including HM Treasury, NHS England, the Department for Education, and the Department for Work and Pensions. Data from multiple agencies were cross-referenced to ensure accuracy and consistency.

Data analysis and modelling: Combining data sources and using transparent assumptions where necessary, we estimated the portion of spending in each area that goes on the early years (i.e. to children aged 0-4), as well as to those aged 0-1 and 2-4 specifically.

Trend analysis: We examined the historical trends in early years spending back to 2010, and contextualised them within key policy decisions that have affected these trends.

Distributional assessment: We gathered data on where in the income distribution the beneficiaries of different forms of spending area are found, and used this to evaluate whether early years spending has become more or less progressive over time.

Our results suggest that, in 2022/23, early years spending in England totalled £21 billion, or £6,400 per child. While overall spending has remained stable in real terms since 2010/11, its composition has shifted significantly:

Welfare remains the largest component but has declined. Welfare accounts for £9 billion per year (£3,000 per child), but this is £1,000 lower per child than in 2010. It is the most progressive form of early years spending, with the poorest families receiving many times as much as the richest families.
Children’s services and social care has also fallen, mainly due to the 75% reduction in Sure Start funding, which fell largely in low-income neighbourhoods. This has also led spending in this area to be less focused on preventative early intervention, and more focused on reactive services that respond to high need when it materialises.
Healthcare spending has grown steadily. Healthcare spending has grown in real terms, from £800 per child in 2010 to £1,300 in 2023. This does not appear to reflect an explicit policy decision. The spending growth is driven by spending on children from lower-income families, and may reflect an increase in healthcare need.
Free childcare entitlements have expanded substantially, nearly tripling since 2010 to reaching £2,000 per child aged 0-4. Over half of free childcare spending goes to families in the top half of the income distribution.
The combined effect has been to make early years spending less targeted to lower incomes. Despite stable total early years spending, the large shifts in its composition have very likely made it considerably less progressive since 2010. Welfare and Sure Start cuts disproportionately impact lower-income families, while much of the benefit of expanded free childcare entitlements goes to higher-income families.