“A journey of a thousand miles begins with a single step” - so the saying goes.

And the path to recovery is certainly long for the early years sector, even with the various announcements made this week in the Budget.

After all, there was some (much-needed) good news for the early years sector, with a promise of £18 million to develop family hubs, £20 million on parenting support, £170 million by 2024-25 for early years providers and the confirmation of £150 million funding for early years training - part of the government’s £1.4 billion education recovery fund.

The children and families minister also later clarified that the additional funding for providers will be worth £160 million in 2022-23, £180 million in 2023-24 and £170 million in 2024-25.

This extra money is for local authorities to increase the hourly rates paid to providers for the government’s entitlement offers.

This additional funding is a step in the right direction but is it enough?

Early years funding: How much is enough?

Right after the announcement, we started pulling things together to make sense of how much this extra funding is worth.

An extra 20p per hour? 50p? Whatever the correct figure might be - we’re still awaiting confirmation from the government - the bottom line is it will fall short of the ongoing funding gap.

Documents obtained by the Early Years Alliance through a Freedom of Information request to the Department for Education show that for the 30-hour entitlement the funding gap is around £2.60 per hour.

In the Education and Policy Institute’s first recovery and resilience report, we presented our own costing model for a pilot of high-quality early years provision, which estimated a similar gap.

In other words, this new investment is a welcome first step, but it needs to be followed but many others.

In more immediate terms, the increase is still likely to be insufficient for providers to cover even the cost of inflation and national living wage increases.

The sector has been severely underfunded for too long and was hit very hard by the pandemic - yet government spending for early years remains much lower than spending for primary and secondary schools.

In addition, some crucial elements for “bouncing back better” were clearly missing.

Early years pupil premium

For example, the early years pupil premium is much lower than the school pupil premium: £302 per child per year in pre-Reception, compared with £1,345 in primary school.

This difference is not associated with any clear change in the costs of supporting disadvantaged pupils when children are aged 5 versus aged 4.

If anything, the government’s acknowledgment that around 40 per cent of the disadvantage gap is already evidenced by age 5 should make raising the EYPP level even more of a priority - or, at the very least, part of the recovery package.

In our first recovery report, we estimated that this would cost £400 million over three years.

Business rates relief - a missed opportunity

During the pandemic business rates relief was (belatedly) extended to early years providers and, indeed, provided much-needed relief at a time of increased operational costs and reduced income.

As such, it is not clear why the business rates relief will continue at 50 per cent for the next year for the retail, hospitality and leisure businesses but not for early years providers.

Early years leaders are already urging the chancellor to review this decision.

A roadmap

Every long journey needs a good map or else the risk of going off course is high. Yet this is exactly what has happened to the early years sector in the past decade.

Quality isn’t cheap and cannot arise from a patchwork approach, yet the government has dropped the commitments taken with the Early Years Workforce Strategy in 2017 and replaced them with a series of policies and funding streams that are at best disjointed and at their worst in conflict.

It’s well established that investing in the early years brings significant returns. With children born during the pandemic now starting nursery, it’s essential that we see this education phase prioritised.

The Budget 2021 has taken a first baby step in the right direction. Let’s hope that many more are coming, or we won’t go very far.

Sara Bonetti is director of early years at the Education Policy Institute think tank