About the authors

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Nesta is a research and innovation foundation that designs, tests and scales solutions for the biggest challenges of our time. Driven by a vision to improve the lives of millions of people, our focus up to 2030 is on three missions: breaking the link between family background and life chances, halving obesity and cutting household carbon emissions.

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Executive Summary

This report provides a comprehensive analysis of public spending on early years support in Wales. We examine trends in the level and composition of spending in four areas: welfare, healthcare, children's services and social care, and funded childcare.

Early years spending in Wales spans both devolved and reserved policy, and hence comes from a combination of UK Government and Welsh Government or Welsh local authority budgets. Healthcare, funded childcare, and children's services and social care are devolved policy areas in Wales, while welfare remains almost entirely the responsibility of the UK Government.

Key findings

• Early years spending in Wales. We estimate that public spending on children aged 0-4 in Wales amounted to £6,200 per child on average, or £900m in total in 2022/23. The largest broad area of early years spending is welfare, at £3,400 per child (£500m per year) or 55% of the total.
• Changes in spending. The total level of early years spending per child in Wales changed little in real terms between 2014/15 (the earliest year for which we have robust data across all spending areas) and 2019/20, remaining at around £5,300 per child. It has since increased to £6,200 per child in 2022/23 (15% above its 2014/15 level).
  • Welfare spending per 0-4-year-old declined from over £4,120 per child in 2010/11 to £3,060 per child in 2019/20. It has since recovered slightly to £3,380 per child in 2022/23, but this remains 18% lower than its 2010-11 level.
  • Healthcare spending per 0-4-year-old increased from approximately £700 to £900 between 2014/15 and 2023/24 (a 25% increase).
  • Children's services and social care spending per 0-4-year-old increased from £820 in 2010/11 to £1,340 in 2023/24 (a 60% increase).
  • Spending on funded childcare per 0-4-year-old was first introduced in 2017-18, and by 2022-23 had reached approximately £560 per child.
• Shift in composition of spending. There have been considerable changes in the composition of early years spending in Wales.
  • Welfare spending has fallen from 69% of early years spending in Wales in 2014/15 to 55% in 2022/23.
  • Children's services and social care, as well as healthcare, have remained relatively stable as a share of total early years spending, at approximately 20% and 15%, respectively.
  • Funded childcare under the Childcare Offer for 3- and 4-year-olds, first introduced in 2017/18, has now increased to 9% of total early years spending.
• Clear links to policy choices.
  • Falls in welfare spending are the consequence of large UK-wide cuts to the generosity of many benefits and tax credits made by the UK Government during the austerity of the 2010s. These cuts have affected all working-age families in receipt of benefits and were not explicitly targeted at the early years, though a number of them were targeted specifically at families with children. Since 2019, welfare spending has stabilised, following the easing of austerity measures by the UK Government.
  • Spending on healthcare in Wales has experienced a small increase (6%) since 2014. However, because the early years population has decreased significantly in that period, this equates to a per-child increase of 25%. The per-child increase has almost entirely come since the pandemic and is driven primarily by A&E services, while per-child inpatient care, the largest component of early years health spending overall, has remained stable.
  • Spending on social care and children's services has grown steadily since 2014. This increase is partially driven by spending on children looked after, which is the main demand-led component of children's services and social care. Furthermore, there has been a considerable increase in Children's centres/Flying Start spending, reflecting the phased expansion of Flying Start that started in September 2022.
  • The increase in early years spending in recent years is also driven by the introduction and expansion of the Childcare Offer for Wales from 2017 onwards.
• Distributional implications. Due to data availability, it is not possible to present a fully consistent and unified analysis of spending trends by socio-economic status across each spending area. However, our analysis suggests that it is likely that early years support in Wales has shifted in composition away from lower-income households since 2010/11 overall. This is because the largest change in early years spending since 2010/11 is on welfare, which is tightly focused on the lowest-income households. It is the only spending area in which per-child spending has fallen since 2010-11 due to UK-wide cuts. However, a factor that is offsetting this to some degree is the Welsh Government's increased spending on children's services and social care, through the expansion of Flying Start. These spending increases are not as large in aggregate as the reductions in welfare spending, but we show that they are concentrated increases in areas with higher child poverty rates.

Limitations

Our analysis is subject to several limitations and data gaps. The main limitations are summarised below.

The main limitation of the healthcare analysis is that we are using delivery costs for healthcare services in hospitals and the community, many of which have been sourced from NHS England and adjusted for cost differences between England and Wales. As a result, our analysis does not capture additional funding to deliver government policies and programmes, such as the Healthy Child Wales and The First 1000 days programmes. This issue would be mitigated if there were robust unit cost data by type of healthcare provision (e.g., inpatient, outpatient, primary care).

Some elements of childcare provision or support within Wales cannot be robustly separated from other expenditure items, given the available data. For example, all of Flying Start's spending is included under "social care and children's services,” although Flying Start offers a diverse range of services, including healthcare and childcare components. Data that allowed us to separate Flying Start spending from other children's services and social care spending – and having estimates of how Flying Start spending breaks down across the services that it involves – would enable a more refined understanding of the composition of early years spending in Wales.

Introduction

Support and interventions targeted at the early years of life are major tools that governments have for addressing poverty and increasing life chances and social mobility. However, there is a gap in publicly available data on the distribution of this spending across spending areas, age groups, and other key breakdowns. In recent years, there have also been major policy changes that significantly affect children in the early years.

In this context, and in light of the upcoming parliamentary elections in Wales in 2026, Nesta has commissioned Alma Economics to address this evidence gap. In particular, this project aims to calculate the level of spending relating to children under 5 in Wales, disaggregating this according to the key types of spending, comparing spending across socio-economic groups and looking at changes over time.

This follows similar work undertaken previously for England and concurrently for Scotland (Alma Economics, 2025). That said, differences in data mean that strict comparability across nations cannot be guaranteed. The broad conclusions we reach can likely be compared and contrasted across nations, but precise numbers should not be assumed to be perfectly comparable.

We estimate the level of public spending on children in Wales aged under 5 (i.e., 0-4 inclusive), assembling and combining data (and, where necessary, transparent assumptions) on welfare, healthcare, children's services and social care, and early education and childcare. We track how this has changed since 2010, and we disaggregate results across children from richer and poorer backgrounds, and by whether the beneficiaries are aged 0-1 or 2-4.

It is important to note that early years funding for healthcare, children's services and social care, and funded childcare comes from the Welsh Government, while funding for welfare comes from the UK Government. However, our analysis treats both funding sources the same, so the "total spending" section does not distinguish between spending controlled by the Welsh Government and reserved spending controlled by the UK Government.

This report begins by summarising our methodology. We then present and discuss our results for each of the four broad areas of early years spending. A Technical Appendix is included at the end, setting out our approach, data sources, and assumptions in detail.

Methodology

In this chapter, we provide an overview of the methods used to estimate spending for each of the four early years spending areas in Wales. These include welfare, healthcare, children's services and social care, and funded childcare. Taking these areas in turn, we explain how we distinguish spending on the early years from spending on other age groups and how we analyse patterns of spending by sub-age-group (0-1 inclusive and 2-4 inclusive) and by socio-economic proxies.

For healthcare and children's services and social care, we used data on the share of children living in relative poverty as a proxy for the socio-economic status of children. This share shows the proportion of children living in low-income families by local area across the United Kingdom, using income before housing costs. However, the available spending data is not sufficiently disaggregated to allow for household-level mapping, so we mapped spending to local authorities. As a result, our analysis reflects how spending is distributed across areas by the share of low-income families in that area. It is not a reflection of how spending is distributed by family income, as spending may be distributed in a very high-income family within a local authority with a high incidence of children in relative poverty.

In some spending areas, we were also able to categorise spending as preventative or demand-led. With many spending areas, this requires judgement and/or there is spending that can be viewed through both lenses, and we generally took a conservative approach, not attempting to categorise spending as preventative or demand-led in these cases. For example, this applies to the whole of welfare spending. The vast majority of welfare spending is targeted based on measures of need (most typically low income), but it can also be viewed as preventative, in that the provision of income protection is a way that governments can try to ensure that families can provide adequately for their children, hence preventing other problems from arising. In cases where we did apply the distinction between preventative and demand-led spending, the overarching criterion used was the timing of the service or funding provision. In cases where action was taken before a need emerged (e.g., scheduled doctor check-ups), the spending associated with this action was classified as preventative as opposed to demand-led, which responds to emerging needs (e.g., A&E services). For example, we classify all spending on early education and childcare as preventative, as it is designed to give children the best possible start in life and support their early development, rather than being a response to needs or challenges that have already emerged.

All monetary amounts are adjusted for inflation and presented in 2025 prices. Many figures in this report are presented on a per-child basis. We use official mid-year population estimates by single year of age from the ONS in order to do this. We are therefore not expressing spending per child who benefits from or uses the relevant service, but spending per child across all children, whether they benefit or not. It is important to present numbers in both aggregate and per-child terms. Between 2014/15 and 2022/23, the number of 0-4 year-olds in Wales declined by about 14%, from 174,270 to 150,545. This means that constant early years spending in aggregate would imply a rise in spending per child.

We present a detailed analysis of expenditures within each of the spending areas outlined below, as well as an analysis of the total expenditure across all spending areas combined. We also compare this to the broader public expenditure on all government services.

The following sections give a high-level summary of the methodology used in each area of spending. A detailed description of the methodology used can be found in the Technical Appendix of this report.

Welfare

By "welfare” we mean cash transfers paid to households. As with our analysis of all spending areas, this measures what households in Wales receive, irrespective of whether the benefits are controlled by the UK Government. The vast majority of benefits received by households in Wales (e.g., Universal Credit, Child Benefit) are controlled by the UK Government, apart from a very small fraction (e.g., School Essential Grants and Discretionary Assistance Funds). Our estimates are based primarily on household-level data from the Households Below Average Income (HBAI) survey, whose primary purpose is to measure incomes (from all sources), which we adjust to align with national administrative totals (HMRC, DWP).

Summary of methodology

In summary, we estimate early years spending on welfare as follows (a more detailed summary of these calculations is presented in the Technical Appendix at the end of this report):

• Total and per child spending. We estimate early years welfare spending in Wales by calculating the total benefits received by households with children under 5 in Wales, according to the HBAI survey data, and then scaling this to account for the aggregate difference between welfare spending recorded in HBAI across the UK and total UK welfare spending according to administrative data (HMRC and DWP). We adjust for known underreporting and assume that income from benefits is shared equally across all members of a household. The HBAI survey is conducted annually, but we use pooled three-year moving averages of data to ensure robust sample sizes. For example, our "2022/23” data points draw on HBAI data from 2021/22, 2022/23, and 2023/24. Finally, spending was mapped into the following categories: preventive/demand-led, targeted/universal, and distribution channels.
• Spending over time. We produce estimates of total welfare spending, per-child welfare spending on early years, and the age breakdown from 2010/11 to 2022/23 using three-year pooled HBAI samples. We show how the share of early years spending within total child welfare spending evolves over time.
• By age group. The HBAI household survey also allows us to further break down early years spend on welfare by age groups, namely children aged 0-1 (inclusive) and 2-4 (inclusive), as well as all children.
• By income group. The HBAI survey allows us to examine how early years spending in Wales is distributed across children from households with different levels of household net income, adjusted (“equivalised") for differences in household size and composition and different income levels, by analysing data on early years spending going to each quintile of household income among households with children.

Healthcare

A more detailed summary of these calculations and limitations is presented in the Technical Appendix at the end of this report.

Included categories

Our analysis captures both primary and secondary care spending. Below, we present the included categories and offer brief definitions for each.

Primary care is defined as the first point of contact in the healthcare system and includes: (i) GPs; (ii) General Dental Services; (iii) ophthalmic services; and (iv) prescribing.

Secondary care includes:

• Inpatient care, defined as a patient admitted to a hospital and occupying a bed, usually requiring at least one overnight stay. An inpatient episode starts with admission and ends with discharge or transfer.
• Day cases are defined as patients who are admitted for care, occupy a bed, and receive planned treatment or surgery but are discharged on the same day (do not stay overnight). Day cases are formally recorded and distinguished from regular outpatients by the use of a hospital bed/allocated resources for a significant period.
• An outpatient is an individual who attends a hospital or clinic for diagnosis or treatment but does not stay overnight.
• Accidents and Emergencies (A&E) are defined as the immediate assessment and treatment of non-scheduled emergency cases. Attendances refer to each presentation at A&E, regardless of whether the patient is later admitted as an inpatient or is treated and discharged directly. These can include both new (e.g., first attendance for a complaint) and return attendances (e.g., a non-scheduled subsequent attendance for the complaint prior to discharge) (WG, 2020).
• Mental health services are dedicated to diagnosis, treatment, and support for people with mental health conditions. These services include community care, outpatient clinics, specialist inpatient wards, and day case services.
• Community care is defined as health and social care services provided outside of hospital settings, intended to help people live independently in their own homes or communities.

Summary of methodology

Our approach to estimating healthcare spending consists of multiplying the number of episodes and attendances for each type of care by the relevant unit costs from England, adapted to the Welsh context. Below, we present a short summary of our approach, while a more detailed presentation is included in the technical appendix.

• Total and per-child spending. Following discussions with experts, we have used unit costs from England, which were scaled to Wales using salaries for healthcare professionals from the Annual Survey of Hours and Earnings, carried out by the ONS in both nations. The unit costs were then applied to the number of episodes by service type. Per-child spending was estimated by dividing total spending by the ONS early years population figures in Wales. Finally, spending was mapped into the following categories: preventive/demand-led, targeted/universal, and distribution channels.
• Spending over time. Data on inpatient, outpatient, and day cases are not publicly available before 2014. As a result, we produced a series for 2014-2023.
• By subcategory. This included primary and secondary care, with the categories described in the previous subsection. The breakdown is enabled by the fact that both activity and unit cost data are reported separately for these categories.
• By age group. We estimated spending by single year of age within the early years and reported results on the following groups: (i) pregnancy; (ii) 0-1-year-olds (inclusive); and (iii) 2-4-year-olds (inclusive). This was achieved by using the existing age groups in hospital episode data and then assuming the distribution of spending within each age bracket is proportional to the total population in Wales for each single year of age. Similarly, we calculated spending for children above 5 and compared this against spending on early years.
  • Pregnancy and maternity: We calculated and reported spending on maternity and pregnancy services separately. While part of this spending could be included in the 0-1 category, the magnitude of spending was too small to affect our estimates. As a result, neither pregnancy nor maternity spending was included in per-child figures, in line with our analysis for England and Scotland.
• By share of children in relative poverty. We have used DWP data on the number of children in low-income families by Local Authority, which was then mapped to Health Boards, depending on the local authorities covered by each board. We then recalculated spending at a health board level, using local activity data, allowing us to create a distribution of spending by income per board.
• Preventative versus demand-led: We classify spending as either preventative or demand-led, depending on whether spending is used to respond to emerging needs or is proactive. In the context of healthcare, preventative spending includes all elective admissions (i.e., planned), while demand-led includes A&E and all other non-elective admissions (i.e., unplanned).

Our methodology (outlined in the next section) is based on unit costs (including some from England) and service utilisation data. As a result, the figures quoted in the “Findings” chapter do not reflect funding to deliver on policies and programmes, such as the Healthy Child Wales programme¹. This suggests that total government spending on early years healthcare is likely higher than our estimates, given the policy programmes targeting this age group.

Children's services and social care

We estimate early years spending on social care and children's and family services in Wales using official revenue outrun data from the WG (StatsWales, 2024e). The analysis covers total and per-child spending, disaggregation by age group and local authority income, subcategory-level detail, and trends over time.

Summary of methodology

• Total and per-child spending: We use StatsWales expenditure data on children's and families' services to estimate total local authority spending. As this spending covers various population groups (e.g., 0-18, depending on the type of service provision), we apportion costs to children aged 0–1 (inclusive) and 2-4 (inclusive) using age distributions from Children Looked After (CLA) and Children in Need (CIN) datasets (StatsWales, 2024a). We then assume spending is proportional to the number of children in each age group within these populations (as explained in the spending over time point below). Per-child spending is calculated by dividing early years expenditure by ONS mid-year population estimates for under-5s (ONS, 2025).
• Spending by subcategories: We report spending on Children's Centres/Flying Start and Early Years, children looked after services, family support, asylum seekers' children's services, other children's and families' services, and safeguarding. Subcategory data are consistent from 2013/14, so we present 2013/14, 2016/17, and 2023/24. Finally, spending was mapped into the following categories: preventive/demand-led, targeted/universal, and distribution channels (i.e., funding originating directly from the Welsh Government or local authorities).
• Spending over time: We present total and per-child spending, as well as age group breakdowns, for each year from 2010/11 to 2023/24. By age group: Because expenditure data lack direct age breakdowns, we use CLA data to apportion spending for "Total children looked after services" and CIN data for all other subcategories. Both data sources report the number of children for age groups <1 and 1-4. To report consistently across spending areas, we assume that 1/4 of spending on children aged 1-4 relates to age 1 and report spending for age groups 0-1 and 2-4. No identifiable pregnancy-specific items were found in the data.
• By share of children in relative poverty: To assess variation by degree of child poverty, we link StatsWales expenditure data with the proportion of 0-4 children living in relative low-income households by local authority (ONS, 2024e; DWP, 2025b). Spending comparisons are presented for 2016/17 and 2023/24.
• Preventative versus demand-led spending: We classify spending subcategories as preventative (Children's Centres/Flying Start and Early Years, family support, asylum seekers' children's services), demand-led (children looked after services), or mixed (other children's and families' services, safeguarding) and present them for 2013/14, 2016/17, and 2023/24.

Childcare Offer

We estimate funded childcare spending for the early years using the Welsh Government's "Local government revenue and capital settlement datasets,” hereafter referred to as "settlement data” (WG, no date b). Spending within this area is estimated by focusing on the Childcare Offer for Wales, which was introduced in 2017/18. The childcare element of this offer provides up to 30 hours of funded childcare per week for children aged 3 and 4 years old (WG, no date c). Although early education entitlements were previously available through Foundation Phase Nursery (which also included funded childcare), they were funded via unhypothecated sources, meaning that it is not possible to isolate the associated expenditure (WG, 2019)². By contrast, the childcare element of the Childcare Offer was funded through hypothecated grants provided to local authorities and is therefore recorded separately within the settlement data, enabling us to apportion spending for funded childcare specifically. A more detailed explanation of this limitation is provided within the technical appendix.

Furthermore, funded childcare is also provided via Flying Start for 2- to 3-year-olds, alongside a range of wider children's services. However, due to the lack of granular data, it is not possible to isolate the childcare component of Flying Start from its other elements. Expenditure on this programme is instead captured within the “Social care and children's services" chapter of this report.

Smaller-scale childcare provisions existed prior to 2017, funded at the discretion of local authorities from unhypothecated sources; while some of this spending may be captured within wider children's services, the childcare series presented here should be interpreted strictly as relating to the Childcare Offer introduced in 2017.

For this spending area, we define universal spending as funding that is available to all children of a certain age, and targeted spending as funding directed only to specific groups of children within a certain age. As such, all spending on the Childcare Offer is classified as targeted, as it is not available to families in which one or more parents work less than 16 hours per week (or are not in paid work at all) and are not in education, nor to families in which a parent earns £100,000 or more (WG, no date c). Based on our aforementioned definition, we classify all spending on early education and childcare as preventative, as it is designed to give children the best possible start in life and support their early development, rather than being a response to needs or challenges that have already emerged.

Summary of methodology

We estimate the following spending on early years:

• Total and per-child spending. Total spending is estimated by summing all grants associated with the Childcare Offer, including: the “Childcare Offer for Wales," the "Childcare Offer - Childcare Costs," the “Childcare Offer - Administration Grant," and the "Childcare Offer - Additional Support Grant." Per-child spending is estimated by dividing the total expenditure by the total number of children aged 0-4 in Wales, using ONS population statistics. Finally, spending was mapped into the following categories: preventive/demand-led, targeted/universal, and distribution channels.
• Spending over time. We produce an estimate of the total spend on early years from 2017/18 (when the Childcare Offer began) to 2022/23, the most recent year for which reliable data on local authority settlement is available.
• By age group. The age groups that we consider are deliberately consistent throughout the report: (i) 0-1-year-olds (inclusive) and (ii) 2-4-year-olds (inclusive). No additional steps are required to disaggregate spending through the Childcare Offer to these groups, since all eligibility for the Offer is within the latter group, and specifically for 3- and 4-year-olds. Note that, when we measure per-child spending, the concept we are trying to measure across the report is spending per child across all children in the group of interest, not just those who are eligible or using the service. Hence, we still look at the whole 2-4-year-old group here, not just the 3- and 4-year-olds who are eligible for the Childcare Offer. This is important to enable meaningful comparison and aggregation across spending areas.
• By income group. We estimate spending by income using data on the "proportion of participating parents by gross salary bands at the time of applying for the Offer,” available within the evaluations of the Childcare Offer (Harries et al., 2023). Given that the latest available data extend only to 2021/22, this share is used as a proxy to estimate the income breakdown for 2022/23. This enables us to map the Childcare Offer expenditure to various income levels, as proxied by parental salary. We also use data from the Annual Survey of Hours and Earnings to arrange income groups into quartiles of the salary distribution (ONS, 2022).

Findings

This chapter begins by setting out total early years spending in Wales and how it has evolved over time, along with a breakdown of this spending by high-level spending area. We then step through each spending area in turn – namely, welfare, healthcare, children's services and social care, and funded childcare - and examine it in more detail.

We aim to cover the period from 2010/11 up to the most recent data available, although the precise coverage varies across spending areas due to data availability. All results are adjusted for CPI inflation and reported in 2024 constant prices.

Finally, all findings below should be interpreted within the context of a declining early years population. In particular, the population of 0-4-year-olds in Wales was 176,337 in mid-2014 and 150,545 in mid-2023 (a decrease of almost 17%)³. As a result, even if spending per child remained constant, total spending would appear lower due to the decline in the 0-4 population.

Early years spending across all spending areas

Total and per child spending

We are able to estimate spending on children aged 0-4 across every broad spending area from 2014/15 to 2022/23. Due to data limitations, it is not possible to construct a complete time series for the full period 2010/11 to 2023/24. In particular, healthcare spending data is only available from 2014/15 onwards. We pool welfare data using three-year moving averages to ensure robust sample sizes, meaning that our last data point is for 2021/22-2023/24 (which we describe as the midpoint, 2022/23). These limitations are discussed in more detail within the relevant chapters of this report.

Figure 1 presents total early years spending between 2014/15 and 2022/23. It shows that:

• Total early years spending in Wales stood at about £930 million in 2022/23, a level similar to that recorded in 2014/15. Spending declined slightly between 2014/15 and 2019/20 and then rebounded to approximately its previous level. This mostly reflects the stabilisation of welfare spending after the UK-wide austerity measures of the 2010s, as well as the introduction and expansion of the Childcare Offer for Wales from 2017 onwards. Spending on Healthcare and Social Care and Children's Services has changed little over time.
• Although expenditure on welfare has fallen as a share of total early years spending, it continues to represent the most significant form of support for 0-4-year-olds in Wales. It accounted for 69% of total early years spending in 2014/15 and 55% in 2022/23.

When interpreting spending across different areas, it is important to note a few key points:

• The childcare series specifically focuses on the Childcare Offer for Wales, which provides up to 30 hours of childcare and early education per week, for up to 48 weeks in a year to children aged 3 and 4 years old in Wales (WG, no date c). It was introduced in 2017/18, so spending here was zero before that.
• Some elements of childcare provision or support within Wales cannot be robustly separated from other expenditure items, given the available data:
  • First, Flying Start is a key Welsh programme that integrates childcare, healthcare, and wider children's services (WG, 2024b). Data limitations prevent disentangling its elements, so all of Flying Start's spending is included under "social care and children's services.” Launched in 2007 as a targeted early years programme for disadvantaged communities, Flying Start provides up to 12.5 hours of funded childcare per week for 2- to 3-year-olds, alongside health visiting, parenting support, and language development support (National Assembly for Wales, 2018).
  • Second, relatively small and discretionary childcare provisions existed prior to 2017, such as REACT. These earlier provisions are unlikely to be fully captured in our data. This data limitation is explained in both the methodology section and the technical appendix.

Figure 2 shows early years spending as a share of total public sector expenditure in Wales over time. As with all figures in this report, all spending in Wales is within scope here, regardless of whether it is a spending source controlled by the UK Government or the Welsh Government (HM Treasury, 2024; ONS, 2024a). The share has declined quite steadily, from 2.3% in 2014/15 to 1.6% in 2022/23. This is broadly in line with population trends, however. As previously mentioned, the early years population in Wales declined by 17% since 2014, while the overall population increased by 3%.

Figure 3 displays the spend on early years in Wales in per-child terms. Between 2014/15 and 2022/23, the 0-4 population in Wales declined by 14%. Therefore, on a per-child basis, early years spending trends look more positive than they do in aggregate. Specifically, Figure 3 shows that early years spending was £5,380 per child in 2014/15, changed little over the five years to 2019/20 (even though total spending was falling), and has risen since to reach £6,200 in 2022/23 an increase of 15% over its 2014/15 level⁴. In fact, in per-child terms, welfare is the only early years spending area that has fallen since 2014/15.

Figure 4 shows how early years spending per child differs between 0-1-year-olds and 2-4-year-olds. Between 2014/15 and 2019/20, spending per child was similar across the two age groups. Since then, however, the expansion of the Childcare Offer, which does not affect the 0-1-year-old age group (or 2-year-olds), has created a divergence between the two age groups. Comparing 2014/15 with 2022/23, per-child spending on 2-4-year-olds has increased from approximately £5,280 to £6,850, while spending for 0-1-year-olds has declined, from approximately £5,550 in 2014/15 to £5,170 in 2022/23⁵.

It is not possible to present a unified analysis of how total early years spending in Wales differs by socio-economic status. This is because, due to data availability, we must measure socio-economic status in different ways for different spending areas. We describe this analysis by spending area later in this chapter. However, as we have concluded in similar reports on both England and Scotland, it is likely that overall early years support in Wales has shifted in composition away from lower-income households since 2010/11. This is because, of all spending areas, welfare is by far the most strongly targeted towards low-income households, and it is the only spending area in which per-child spending has fallen since 2010-11. Our analysis in the next section, focused on welfare, shows that low-income households with young children in Wales have lost far more from welfare reductions than higher-income households.

Welfare

This section examines welfare spending on children aged 0-4 in Wales. Overall, early years welfare expenditure has declined substantially since 2010/11. This does not reflect decisions made by the Welsh Government (which controls only a very small fraction of benefits spending going to households in Wales), but the large cuts to social security for working-age households that were a part of UK-wide austerity concentrated in the 2010s, implemented by the UK Government. As has been examined extensively and in detail in its own right (Chaudhuri, Waters and Wernham, 2024), the period since 2010/11 has seen a large number of cuts to the generosity of working-age welfare. For example, most benefit and tax credit rates were uprated by less than inflation in each year between 2013/14 and 2019/20; housing benefit limits for private sector tenants were subject to a series of cuts; and within the means-tested benefits system, per-child support has been limited to the first two children in the family for children born since April 2017 (DWP and HM Revenue & Customs, 2021). The latter policy is a leading example of one that affects families with children specifically. However, families with children receive more benefits on average than other working-age families, and thus, they tend to have more to lose even from broad-based cuts to support not specifically targeted at them.

Comparing age groups, welfare expenditure per child has generally been similar for 0-1-year-olds and 2-4-year-olds, which is not surprising given that eligibility rules generally do not differ between these age groups, although in the latest data, it is slightly higher for 2-4-year-olds. Per-child welfare spending is higher for 0-4 year-olds than for children as a whole (aged 0-18). However, the gap has narrowed over time. This is likely because families with young children tended to lose more from austerity-induced cuts to welfare.

When broken down by income, lower-income households receive much greater welfare support than higher-income households, reflecting the progressive design of the system and the fact that much of it is means-tested. As a result, cuts to welfare spending since 2010/11 have had a particularly significant impact on those with low household incomes.

Total and per-child spending

Figure 5 describes the annual time series of early years welfare spending in Wales from 2010/11 to 2022/23.

Overall, early years welfare spending in Wales has decreased by approximately 31%, from £740 million in 2010/11 to £510 million in 2022/23. All of this reduction occurred during the UK-wide austerity of the 2010s, as described above.

Since 2019/20, early years welfare spending in Wales has stabilised. This is to be expected because UK-wide welfare cuts were largely concentrated in the 2010s (HM Treasury and Javid, 2019). The economic disruptions caused by the COVID-19 pandemic also led to increases in welfare spending, including through increased housing benefit rates for private sector tenants, a temporary increase in Universal Credit (during 2020/21 and 2021/22) and Cost of Living Payments within Wales.

Figure 6 describes the time series on a per-child basis. Overall, early years welfare spending in Wales declined from over £4,120 per child in 2010/11 to £3,060 per child in 2019/20, before bouncing back slightly to £3,380 per child in 2022/23. This remains approximately 18% below its 2010/11 level in real terms.

Welfare spending is essentially all targeted to some degree and distributed directly to households. We do not attempt to distinguish between preventative and needs-based welfare spending, as it is a subjective combination of the two.

Spending by age group

Figure 7 displays welfare spending per child for children aged 0-1 and 2-4 over time. Spending has been broadly similar across the two age groups, which is unsurprising given that the eligibility rules are generally the same for both age groups. That said, since 2020-21 spending on 2-4-year-olds has increased while spending on 0-1-year-olds declined. To our knowledge there is not a policy-related reason for this divergence in trends (and we do not see the same divergence in Scotland).

Table 1 compares welfare spending per child in the early years with spending per child for all children in 2010/11, 2016/17, and 2022/23. Although per-child spending for 0-4-year-olds has consistently been higher than spending for all children, the gap has decreased significantly over time, decreasing from £450 in 2010/11 to £60 in 2022/23. While the major welfare cuts of the austerity period did not explicitly distinguish between households with children above and below the age of 5, the two-child limit was applied to new births from April 2017. This means that the introduction of the limit still disproportionately affects early years children, as indicated in the latest available data. The convergence of early years spending and spending on all children is likely to partly reflect the fact that, since households with children tend to receive more welfare in the first place, they have more to lose when it is cut back.

Spending by income group

Table 2 presents the distribution of spending on welfare across income quintiles in Wales for 2010/11, 2016/17, and 2022/23. The table shows that welfare has strongly targeted low-income individuals over time. In 2022/23, spending for the first quintile (lowest earners) was over eight times the spending recorded for the fifth quintile. Per-child spending has declined across all income quintiles except the highest-income fifth, between 2010/11 and 2022/23. The lowest two income quintiles have seen far greater losses from reductions in welfare in absolute terms since 2010/11 than other groups, on average. This is not surprising, because low-income households receive more benefits, so they tend to have more to lose when it is cut back.

Healthcare

This section presents our estimates for healthcare spending in the early years in Wales. We first present total spending on children aged 0-4 from 2014/15 to 2023/24, and then per-child spending by service type, age subgroup, and quartile of child relative poverty rates based on family income. Our results suggest that total early years healthcare spending has changed little in Wales since 2014, while increasing in per-child terms by 25%⁷. That increase has almost entirely come since the pandemic. It is driven primarily by A&E services, while inpatient care, the largest component of the total early years cost, has remained stable. Per-child spending on both 0-1- and 2-4-year-olds has been increasing, and is almost identical between the two age groups. Finally, per-child spending has been higher in areas with higher child poverty rates throughout the examined period.

Total and per-child spending

In total, healthcare spending in Wales in the early years was approximately £140m in 2023/24, an increase of almost 6% from £130m in 2014, as shown in Figure 8.

Figure 9 presents a time series of healthcare spending per child aged 0-4. Per-child spending has increased by 25% from approximately £700 in 2014/15 to £900 in 2023/24.

Spending by subcategory

This subsection breaks down spending by broad categories of healthcare services, each including several items. Table 3 shows that most spending is concentrated in inpatient services (£40m), outpatient care (£40m), and primary care (£30m). The relative shares of spending in these categories have remained relatively stable since 2014/15. Table 4 presents the same breakdowns of spending on a per-child basis. As with total spending, per-child early years healthcare spending has increased across all categories, apart from community dental services.

In addition to children's healthcare services, we also calculated separately spending on pregnancy and maternity items. In particular, spending on pregnancy increased from approximately £7m in 2014 to £17m in 2023/24. We do not include spending directly related to births/maternity, although this comes to only £1m in the recorded data.

Finally, our analysis suggests that early years healthcare spending is predominantly demand-led (including A&E, as well as non-elective admissions⁹) at almost 70% in 2023/24, with a peak in demand-led spending of 77% during the pandemic years. Almost 98% of all spending on children is distributed through the seven regional Welsh Health Boards and Velindre University NHS Trust, as opposed to Public Health Wales-commissioned services¹⁰.

Table 3. Total early years healthcare spending by subcategory, 2014/15, 2016/17, and 2023/24

Table 4. Early years healthcare spending per child by subcategory, 2014/15, 2016/17, and 2023/24¹¹

Spending by age group

Figure 10 presents the time series of healthcare spending per child per year for 0-1-year-olds and 2-4-year-olds. Spending per child is almost the same across the two age groups and has remained as such since 2014/15. Spending per child aged 0-1 was £720 in 2014/15 and increased to £910 in 2023/24. Similarly, spending per child aged 2-4 was almost £750 in 2014/15, increasing to £920 in 2023/24.

Finally, spending on early years healthcare has remained stable relative to healthcare spending on all children, at around 24% of all healthcare spending on children throughout the examined period (approximately £135m out of £570m in 2023 compared to £130m out of £550m in 2014). In per-child terms, early years healthcare spending has increased more quickly than for other children, due to the significant decline in the early years population in Wales. As shown in Table 5, spending per child aged 0-4 years old was almost £90 lower in 2014/15 but was £60 higher in 2023/24.

Table 5. Spending on healthcare per child aged 0-4 compared to all children

Spending by share of children in relative poverty

Table 6. Average spending on healthcare per child, by quartile of the share of children in relative poverty, 2016/17 and 2023/24

The results show that early years healthcare spending in Wales has consistently been highest in the poorest areas (as proxied by child poverty rates). There have not been large differences in the rate of growth of spending across these areas.

Children's services and social care

This section explores changes in spending on children's services and social care in Wales from 2010/11 to 2023/24. Over this period, both total and per-child spending have steadily increased. The analysis examines how these resources have been allocated across different service categories, age groups, and the proportion of children living in relative poverty in the local authority. We have found a shift in focus from preventative to demand-led spending within this area due to the growing share of spending on children looked after (CLA). Other notable trends include the widening gap between early years and older age groups, and the reduction in the progressivity of spending over time.

Total and per-child spending

Figure 11 presents the full time series of total spending on children's services and social care from 2010/11 to 2023/24. The total spending followed an upward trend over this period, increasing from £150m in 2010/11 to £200m in 2023/24.

Figure 12 presents the same series in per-child terms. Spending per-child has increased by 60%, from £820 in 2010/11 to £1,340 in 2023/24.

Spending by subcategory

Table 7 shows per-child spending broken down by six subcategories for 2013/14, 2016/17, and 2023/24. The single biggest change in absolute spending, and one that accounts for most of the overall increase in per-child spending, is on CLA, which is also the largest spending subcategory in each year. In 2023/24, over half of spending went towards CLA services. Wales has both higher overall rates of CLA and a steeper recent increase than any English region (Hodges and Scourfield, 2023).

Two other subcategories that have shown a steady increase in per-child spend are Children's centres/Flying Start and Early Years (increasing from £150 in 2013/14 to £210 in 2023/24), as well as Total Family Support Services (increasing from £110 in 2013/14 to £150 in 2023/24). Flying Start supports families with children under 4 in disadvantaged areas in Wales. This support includes part-time childcare for 2-3-year-olds and an enhanced Health Visiting service. The increase in Children's centres/Flying Start and Early Years reflect WG's commitment to the expansion of early years childcare, and the Flying Start programme is currently undergoing a phased expansion that started in September 2022 (WG, 2024d).

Table 8 breaks down spending according to whether it is “preventative”, “demand-led”, or a combination of the two (“mixed"), for 2013/14, 2016/17, and 2023/24. As set out in the "Methodology” section, preventative spending aims to address issues before they arise. This includes spending covering Children's Centres/Flying Start and Early Years, family support services, and asylum seekers' children's services. Demand-led spending, responding to needs that have already emerged, consists of CLA services. We categorise children's and families' services and safeguarding children and young people's services as a mix of preventative and demand-led. Table 8 confirms that there has been a shift towards exclusively demand-led forms of spending, driven by the rise in CLA.

Table 8. Percentage of total early years spending on preventative, demand-led, and mixed items

These services are all needs-based and accessed through eligibility assessments, so are targeted rather than universal; in addition, all of the spending captured here is distributed via local authorities.

Spending by age group

Figure 13 presents the full time series of the per-child spending on children's services and social care from 2010/11 to 2023/24 for age groups 0-1 and 2-4. Spending per child is similar for both age groups and has trended in the same way over time.

Table 9 shows per-child spending for the 0-4 and 0-18 age groups for 2013/14, 2016/17, and 2023/24. For all three years, spending per child for the early years is lower than the spending per child for the whole 0-18 group. While the per-child spend has significantly increased for both age groups, the difference between them has increased markedly from £60 in 2010/11 to £260 in 2023/24. Most of this divergence has occurred since 2016/17.

Table 9. Spending on children's services and social care per child aged 0-4 compared to 0-18

Spending by share of children in relative poverty

Table 10. Average spending on children's services and social care per child, across quartiles of local authorities classified by the share of children in relative poverty, in 2016/17 and 2023/24

Table 10 presents per-child spending on children's services and social care for quartiles of local authorities, grouped based on the number of children living in relative poverty for both 2016/17 and 2023/24. Spending per child has converged across areas since 2016-17. It was almost 20% higher in the lowest two quartiles than in the upper two quartiles in 2016-17, but is now essentially the same for the poorest and richest half of local authorities, as proxied by child poverty rates¹³.

Childcare Offer

This chapter focuses on the Childcare Offer for Wales, which was introduced in 2017/18 (WG, no date c)¹⁴. This offer provides up to 30 hours of childcare and early education per week, for children aged 3 and 4, starting from the term after the child turns 3. As such, this provision is not available to younger age groups. Aside from the main Childcare Offer and its associated administrative grant, this analysis also includes the Childcare Offer Additional Support Grant. The latter makes funding available to eligible children with specific additional support needs.

Total and per-child spending

(WG, 2024a). The main Childcare Offer provides eligible parents of 3- and 4-year-olds with 30 hours of funded early education and childcare per week, for 48 weeks a year (WG, no date a).

As mentioned in the methodology section, two caveats apply. Flying Start also includes childcare, but this cannot be separately identified and is reported under “Social care and children's services.” In addition, while the Childcare Offer has been in place only since 2017/18, earlier entitlements through Foundation Phase Nursery and changes in reporting after 2022/23 prevent us from isolating associated spending.

Spending on the Childcare Offer, in total and per child, has increased since its introduction in 2017/18, with a notable spike in 2020/21, likely reflecting additional expenditure related to the Coronavirus Childcare Assistance Scheme (C-CAS).

When broken down by income group, the majority of funded hours are accessed by parents from the poorest households. Parents in the bottom two income quartiles account for more than 50% of all spending, compared with parents in the top two quartiles. By age group, the Childcare Offer is specifically targeted at 3- and 4-year-olds, with no funding available for children aged 2 and under. As a result, recorded expenditure for 0-1-year-olds within this scheme is zero.

Figure 14 describes the time series of total spending on the Childcare Offer. Overall, the Childcare Offer remains a small fraction of overall early years support in Wales (see Figure 1), but it has increased significantly over time. Expenditure spiked in 2020/21, reaching approximately £90 million. This rise is likely linked to C-CAS, which provided funded childcare to children of critical workers and vulnerable families at the height of the COVID-19 pandemic between April and August 2020 (WG, 2021). It was funded through a temporary repurposing of spending for the Childcare Offer and, unlike the standard Childcare Offer, C-CAS provided funded childcare to all children under the age of 4 (ibid.). While the Childcare Offer spending lines do not explicitly identify C-CAS, the suspension of the standard Childcare Offer to new entrants and the simultaneous increase in recorded spending suggest that C-CAS provision is likely included in the figures. After 2020/21, spending returned to levels broadly similar to those in 2019/20.

The same pattern of spending can be seen in Figure 15, which describes the time series of per-child expenditure on the Childcare Offer for Wales. As previously mentioned, and in line with the rest of the analysis, the per-child figures are estimated with reference to the entire Welsh population of early years children (i.e., children aged 0-1 and 2-4), and not just children potentially eligible for the Childcare Offer (e.g., not only 3- and 4-year-olds). For context, were we to examine per-child spending on the Childcare Offer only among 3-4-year-olds, it would be about 50% higher than it is for 2-4-year-olds.

Overall, expenditure per child across all children aged 0-4 in Wales has reached approximately £560 per child in 2022/23. This figure is lower than in England, where spending was approximately £1,250 per child in 2022/23. This, in part, reflects the fact that England's offer included provision for some 2-year-olds (since extended further down to the age of 9 months). Again, it is worth remembering, however, that Flying Start also provides childcare services, and these are captured elsewhere in this report.

All spending within this area is targeted to at least some degree. Families in which at least one parent works less than 16 hours per week and is not in education, or in which a parent earns at least £100,000, are not eligible for any part of the Childcare Offer )(WG, no date c). It is better conceived of as preventative or pre-emptive in nature, rather than as a reaction to need. In terms of distribution channels, the Childcare Offer was funded via a hypothecated grant and delivered through local authorities for the period of our analysis.

Spending by age group

We provide age breakdowns using the same age groups as those examined in the other spending areas in this report (i.e., 0-1-year-olds and 2-4-year-olds). As mentioned, spending is estimated per child and not just among those eligible or in receipt. As such, although the Childcare Offer in Wales is available only to 3-4-year-olds, we group 2, 3, and 4-year-olds together just as in other spending areas. The fact that the 2-year-olds within this group are not eligible therefore reduces per-child spending within the group – reflecting the real fact that this eligibility restriction does indeed reduce spending. Figure 16 shows that funding via the Childcare Offer reached £910 per child by 2022/23 for the 2-4 age group (a figure that is approximately 50% higher per child within the 3-4-year-old subset of this group who are potentially eligible).

Per-child spending is calculated by dividing total spending by the corresponding population for each age group. Unlike Figure 7, where total spending is divided by the 0-4 population, here all spending is attributed to the 2-4 age group and is therefore divided by the population of 2-4-year-olds to generate per-child figures.

Spending by income group (parental salary)

Table 11 describes the distribution of spending on the Childcare Offer by the annual gross salary bands of parents accessing the offer, arranged into quartiles for 2022/23¹⁵. Taken together, the bottom two quartiles of parents receive more than 50% of all funding compared to parents from the top two income quartiles. More specifically, this is driven by parents belonging to the lowest income quartile, who account for nearly 40% of total spending, compared with 23% among those in the highest quartile. This indicates that lower-earning parents utilise the Childcare Offer more than their higher-earning counterparts.

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Technical Appendix

Welfare method and sources

Total and per-child spending

Our approach to estimating welfare spending involves two steps. First, we compute total UK welfare spending. This is the sum of welfare spending reported by HMRC and DWP (DWP, 2025a; HM Revenue & Customs, 2025).

Second, we use broadly representative household-level survey data from the Households Below Average Income (HBAI) series to apportion how much of total UK welfare spending (calculated above) goes to different groups within Wales (DWP, 2025c). Most fundamentally, for our purposes, this includes the proportion of UK welfare spending that goes to children in Wales under 5.

The reason why we do not use the HBAI data to simply measure early years welfare spending in Wales directly is that survey data is known to under-record total welfare spending when compared to administrative totals. Hence, we use the administrative totals and the information in the survey to apportion that total between groups. The implicit assumption is that the extent of under-recording/under-reporting of welfare is the same across all groups.

We have to make an assumption about the degree to which children benefit from welfare payments received by their household. We make the simple and transparent assumption that the benefit is shared equally among all individuals within a household. For example, if a household contains two parents, a 3-year-old, and a 10-year-old, and it receives £100 in welfare, we effectively assume that £25 (1/4 of the total payment) of this is early years spending. This assumption was preferred over alternative options, such as assuming that some people in the household do not benefit at all, as it is a more realistic representation of the benefits' impact.

The sample size of the HBAI data each year has fluctuated over time, but has typically been between 19,000 and 25,000 households per year across the UK. During the coronavirus (COVID-19) pandemic, achieved sample sizes were smaller than usual – for example, around 16,000 households in FYE 2022 – and interviews were conducted by telephone rather than face to face, which may have affected response rates. We take a somewhat conservative approach by pooling three years of HBAI data together for all of our calculations – so, for example, calculations for 2010/11 are actually based on data pooled across 2009/10, 2010/11, and 2011/12. This ensures that sample sizes always remain robust for our purposes.

Hence, this approach allows us to produce total and per-child spend on early years in the welfare spending area for 2010/11 (which pools 2009/10-2011/12) to 2022/23 (which pools 2021/22-2023/24).

Spending by subcategories

We do not undertake an analysis of spending by relevant subcategories for Welfare spending in Wales. One of the key conceptual reasons why it is of limited use is because of the large change to the structure of the benefits system in recent years, with Universal Credit gradually replacing and combining several legacy benefits.

Spending by age group

We use the same approach as above to produce estimates on how early years spending on welfare is distributed between the age groups 0-1 and 2-4, consisting of using the HBAI data on the number of children in each family by age. In addition, it allows us to present the proportion of spending on early years compared to spending on all children (0-18)¹⁶.

Spending by income group

Using the detailed household-level data provided by the HBAI dataset, we examine the distribution of early years spending in Wales across households with children by income quintile.

Mapping of spending

We have mapped welfare spending to these categories:

• Targeted versus universal: Virtually all welfare spending is targeted at certain eligible individuals and families using eligibility rules, rather than being universal, and is distributed directly to households.
• Preventative versus demand-led: Welfare can also generally be considered as being a combination of both preventative and demand-led, depending on the nature of the benefit.
• Distribution channels: Welfare spending is distributed directly to households.

Healthcare method and sources

Total and per-child spending

As mentioned in the methodology section, we employed a bottom-up approach, where activity data were multiplied by the relevant unit costs. We then used official mid-year population estimates by single year of age from ONS to calculate spending per child in Wales (ONS, 2024d). In particular, we calculated the total number of children aged 0-5 for each year and then divided the total expenditure in this area by that population.

Spending by subcategories

The subsections below offer additional details and sources for our calculations in primary and secondary care, respectively.

Primary care

To estimate the total spending on each included service, we used cost data from NHS Wales expenditure per head by budget category multiplied by the respective number of patients (StatsWales, 2024b). In particular:

• GPs: Unit costs for general medical practices were multiplied by the number of early years children attending GP appointments. To estimate the share of all GP appointments for children in early years, we used the share of all GP-registered patients who are children aged 0-4 as a proxy (NHS Wales, 2025a).
• General Dental Services: Unit costs for dental problems were multiplied by the number of people treated in general dental services (StatsWales, 2025a).
• Ophthalmic services: Unit costs for eye/vision problems were multiplied by the number of patients examined through the WGOS 2 scheme and those undergoing sight tests (StatsWales, 2024c, 2024d).
• Prescribing: The median cost per prescribed item was multiplied by the number of prescribing patients and the number of items per patient (NHS Wales, 2025a).

Secondary care

Our scoping, confirmed by sector experts, suggested that there are no publicly available data on unit costs for inpatient, outpatient, and A&E in Wales. To address this issue, we used unit costs from England, after adjusting for the Welsh context. The adjustment was based on the ratio of wages between England and Wales for healthcare professionals, as captured in the Annual Survey of Hours and Earnings (ASHE) (ONS, 2024b). Below, we present the sources for unit costs and activity data for each type of secondary care.

Inpatient & Day cases

Hospital episode data for inpatient and day cases were taken from Annual PEDW Data Tables, available from 2014 to 2023 (NHS Wales, 2024). In particular, we carried out a mapping of each individual Health Resource Group (HRG) item to our categories of interest, consisting of:

• Paediatric items: This category included all items explicitly labelled as "paediatric.”
• Other items involving children: Following discussions with experts, we concluded that the paediatric items above do not capture the entirety of spending related to children. As a result, we also included other spending items that cover all ages, including children.
• Maternity and pregnancy items: We captured all items related to abortion, miscarriage, post-natal, ante-natal, and neo-natal activities.

Unit cost data for each of the aforementioned services were sourced from England's National Cost Collection and were then adjusted based on the AHSE, as described above (NHS, 2025).

Outpatient

Data on outpatient attendances were sourced from StatsWales (StatsWales, 2019a). This included both paediatric items and the share of other items concerning children (see the "Age breakdown" section for additional details). The paediatric items included were: (i) dentistry; (ii) neurology; (iii) surgery; and (iv) general paediatrics.

Unit costs were sourced from the National Cost Collection and adjusted to Wales, as for inpatient and day cases.

A&E

Spending on A&E was calculated using the number of attendances in emergency departments by age, multiplied by the weighted average cost of A&E attendances (StatsWales, 2025b). The cost of A&E attendances was sourced from the Personal Social Services Research Unit (PSSRU), adjusted to Wales (Jones et al., 2024).

Mental health services

Mental health services include community care, outpatient clinics, specialist inpatient wards, and day case services. As a result, they are not reported separately but are rather included in a wide range of different sources. To address this issue, we manually identified the relevant items from these services and aggregated them to create the “mental health” category. This included:

• Child and adolescent psychiatry (outpatient) (StatsWales, 2019a).
• Paediatric congenital mental health conditions (inpatient) (NHS Wales, 2024).
• Paediatric congenital mental health conditions (day cases) (NHS Wales, 2024).

The number of episodes in the aforementioned categories was then multiplied by NHS expenditure per head for child and adolescent mental health services (StatsWales, 2024b).

Community care

We have explored different options for items to be included in community care. In particular, we reviewed community child health, community contraception, community pharmacies, community mental health teams, community health visiting, and more. However, the scope of these services and the lack of data prohibited their inclusion in our analysis, as confirmed by policy experts. As a result, we included only community dental care in this category (StatsWales, 2019b).

Spending by age group

The available age breakdowns differed for each type of care, as detailed below.

• Inpatient and day care hospital episodes include specific categories on paediatric care, peri-natal, ante-natal, neo-natal, and other pregnancy items, as detailed earlier. Pregnancy and birth items were included in their entirety, while paediatric items were apportioned to the share concerning children in early years. In addition, the dataset offers varied age breakdowns in some currencies (e.g., 18 and under, 3 and under, 4 and under, 1 year and under, and more), which were also included where early years were concerned.
• Outpatient data is also separately reported for paediatric items. However, following discussion with policy experts, we concluded that not all spending on children is captured in the paediatric items. To that end, the share of the spending on all other outpatient attendances that relates to children was separately identified and included in addition to paediatric attendances.
• The number of attendances in A&E departments is reported on the following in-scope age groups: 0-4, 5-17, all ages (StatsWales, 2025b).
• General Dental Services offer data on 0-5, 6-11, 12-17, and other groups for adults (StatsWales, 2025a).
• GP and prescribing data include 0-4, all children 0-18, and all ages (NHS Wales, 2025a).
• Ophthalmic services reports only the number of patients aged under 19 in terms of age breakdown for children (StatsWales, 2024c).

To address these inconsistencies, we used official mid-year population estimates by single year of age from ONS (ONS, 2024d). In particular, we calculated the share of the general population of each single year of age within the age groups in each type of care. For example, we calculated the share of 1-year-olds with respect to the total number of children aged 0-2 in the general population and applied this percentage to the total 0-2 population in dental care services to estimate how many 1-year-olds use dental services. This approach assumes that service utilisation within the same age bracket is distributed proportionately to the national population share of the ages in that bracket.

This approach also allowed us to calculate spending on 0-4 and 0-18, enabling us to compare spending on early years with that of all children.

Spending by share of children in relative poverty

We were not able to identify any data that would allow us to directly estimate how spending on healthcare is distributed to income groups based on a household-level measure of income. As a result, we developed an approach based on area-level income. First, we calculated the total early years spending by the Health Board. To that end, we used activity data by Health Board from Annual PEDW Data Tables, GP practice statistics, and secondary care activity extracts (NHS Wales, 2024, 2025a, 2025b). The activity data per board were then multiplied by the aforementioned unit costs.

Finally, we used DWP data showing the number of children in low-income families by local authority (DWP, 2025b). In particular, we focused on early years children in families in relative poverty, which is based on income Before Housing Costs. Income in this context is defined as Gross Personal Income from benefits or tax credits, from employment and self-employment, and from occupational pensions. We then summed the number of early years children in relative poverty across local authorities served by the same Health Board. This figure per board was then divided by the total number of early years children in each Health Board, resulting in a share of early years children in relative poverty by board. Finally, we mapped these shares to the spending on early years per board, calculated as described above.

Mapping of spending

• Targeted versus universal spend: All healthcare spending is universally available to everyone who may need it, regardless of age, income, and type of care. As a result, we considered all healthcare spending as universal.
• Primary prevention versus demand-led spend: We classified all A&E and non-elective attendances costs as demand-led spend, while all remaining items were classified as preventative.

Social care and children's services method and sources

Total spend and per-child spending

We estimated total spend by utilising Social services revenue and outturn expenditure by client group data (StatsWales, 2024e). We included all spend relevant to early years under the Total children's and families' services category for each year.

The challenge of presenting the total early year spend for social care and children and family services is that the categories presented in the expenditure data also contain spend on other age categories. There is no specific breakdown on spending by age available for this data. To address this limitation, we used both children receiving care and support (formerly children in need, hence abbreviated to CIN) and its subset of children looked after at 31st March (CLA) data to approximate the share of spend for children aged 0-4 (StatsWales, 2021, 2024a). Specifically, we assume that costs are distributed in proportion to the relative number of looked-after children and children receiving care and support in each age group. Which dataset is used for which subcategory is discussed in more detail in the Age breakdown section.

To estimate spending per child, we used official mid-year population estimates for Wales by single year of age from the ONS (ONS, 2024d). Using these figures, we estimated the total number of children aged below 5 for each year and then calculated spending per child by dividing the total expenditure in this area by that population. This approach reflects spending per child across the entire population in this age group, rather than per child who directly benefits from or uses the service.

We have produced an estimate of total expenditure and spending per child for the social care and children and family services spending area from 2010/11 to 2023/24, the most recent year for which expenditure data is available.

Spending by subcategories

For Wales, we reported the spending on the following subcategories:

• Children's Centres/Flying Start and Early Years
• Total children looked after services
• Total family support services
• Total asylum seekers' children's services
• Total other children's and families' services
• Safeguarding children and young people's services

Spending at subcategory levels is only consistent and comparable from 2013/14 onwards, and extending the breakdown to earlier years would be purely assumption-based. Hence, this breakdown is presented for three years, 2013/14, 2016/17, and 2023/24.

We are aware that Children's Centres, Flying Start, and Early Years services span multiple spending areas, including both early education, childcare, and children and family services. However, due to the integration of these services, we treated them as a subcategory of social care and children's services rather than attempting to split them. This approach avoids methodological challenges and ensures a more accurate and consistent analysis of overall spending in this area. This is also in line with the guidance provided to local authorities for reporting expenditure (WG, 2024c).

Spending by age group

As mentioned in the Total early year spend section, the data does not provide information on breakdowns of spending by age group. The CLA and CIN data mentioned above provide further breakdowns of the number of children who are aged 0 and 1-4. Hence, we used that data to estimate the proportion of early years spend going to the different age groups by assuming that costs are distributed in proportion to the relative number of children in each age group for CIN and CLA. We use the CLA data for the Total children looked after services subcategory and CIN data for all other subcategories. This is not exactly the population of interest, but it provides an empirical measure of the age distribution of support for a population that likely shares some relevant characteristics. For the first three years (2010/11-2012/13) where the subcategories are not consistently available, we use CIN to estimate the share of total spend on early years¹⁷. We further assume that 1-year-olds receive 1/4 of the spending on 1-4 year-olds. This is to convert figures on 0-year-olds and 1-4-year-olds into figures on 0-1 and 2-4-year-olds for comparability with the other spending areas that we consider in this report.

To calculate early years spending as a proportion of total spending for children in this spending area, we again utilised the expenditure data from StatsWales for spend data and the age breakdowns of CLA and CIN data for Wales.

Due to the age group definitions in CIN/CLA data, we used the definition of 0-18 as the age band for the total spend on all children. This total will include subcategories that are not relevant for early years, such as Total youth justice services and Total services for young people.

Spending by share of children in relative poverty

We are unaware of data that would allow us to directly estimate how spending on children and family services and social care goes to different income groups based on a household-level measure of income or child poverty level. Hence, we employed an approach based on a local area-level measurement. We presented these figures for 2016/17 and 2023/24. We combined the StatsWales data on early year spending on social care and children and family services by local authority with the proportion of early age children living in relative low-income households calculated from the DWP data on the number of children aged 0-4 living in households with relative low-income by local authority (DWP, 2025b). This allowed us to show how children's social care and children and family spending vary with the child poverty level of the local authority.

Mapping of spending

It is difficult to neatly separate all spending on children's services and social care into that which is responding to need and that which is attempting to prevent need or proactively support families (and some spending will be doing a combination of the two). We made the following split:

• Preventative:
  • Children's Centres/Flying Start and Early Years
  • Total family support services
  • Total asylum seekers' children's services (note that there is a specific category under children looked after for asylum seekers' children in care)
• Demand-led:
  • Total children looked after services
• Mixed:
  • Total other children's and families' services
  • Safeguarding children and young people's services

As subcategories are only reported on consistently from 2013/14 onwards, we present this breakdown for the years 2013/14, 2016/17, and 2023/24. Regarding other mapping categories:

• Universal versus targeted: Many social care and children and family services are needs-based and accessed through eligibility assessments, which would most naturally be described as "targeted.” Hence, we are not convinced that a useful distinction between targeted and universal spending can be made for this spending area.
• Distribution channels: Because of data constraints, this analysis uses expenditure data, which only captures spending delivered by local authorities. By definition, therefore, that is the distribution channel.

Childcare offer method and sources

Total and per-child spending

We estimate total spend by utilising the Welsh Government's revenue and capital settlement datasets (WG, no date b). Our analysis includes grants associated with the Childcare Offer for Wales, including its costs, the Administration Grant, and the Additional Support Grant. This information shows details of the total amount of each grant provided to local authorities. We provide a consistent time series of Childcare Offer spending for the period 2017/18 (when the Childcare Offer began) and 2022/23.

Rationale for focus on the Childcare Offer and implications for the time series: Funding for early education and childcare is delivered to local authorities by the Welsh Government through two main streams: hypothecated and un-hypothecated funding. Hypothecated funding refers to resources earmarked for a specific purpose, most notably through grants, which are fixed in value and cannot be redirected to other services. These funding lines can therefore be categorised and tracked consistently in the settlement data. By contrast, un-hypothecated funding is not tied to a particular use. Instead, it is presented in the settlement data as a set of notional categories, which indicate the amount a local authority would be expected to require to deliver a standard level of services. These figures do not represent actual expenditure, and local authorities are free to allocate the funding according to local priorities. As a result, while hypothecated funding provides a clear and consistent measure of resources allocated to early education and childcare, the proportion of un-hypothecated funding devoted to these services cannot be identified with precision. Furthermore, while local authorities publish expenditure figures related to education more broadly, this data does not include any breakdown of educational spending with regard to early learning more specifically. For this reason, the analysis presented here focuses on hypothecated funding.

It should be noted that funded childcare provisions were available in Wales prior to 2017/18, primarily through Foundation Phase Nursery (WG, 2019). However, funding for this was distributed via un-hypothecated grants. As such, the exact proportion of this un-hypothecated funding that went towards Foundation Phase Nursery was decided at the local authority level¹⁸, and no reliable data exists to estimate this expenditure across local authorities. For this reason, we focus on the Childcare Offer, which is funded through hypothecated grants, and exclude earlier years of funded childcare from this analysis¹⁹.

Post 2022/23, the core funding for the Childcare Offer was no longer recorded²⁰ within the spending lines of the settlement dataset. While the Welsh Government budgets report certain associated figures, this data is published at a broader category titled "supporting children” (WG, 2025). However, the scope of this line remains unclear, with the possibility that it may include spending on children aged 5 and above. Further, this data may not be directly comparable to the settlement data used to estimate the broader time series. Therefore, we exclude the most recent years from the analysis.

As mentioned within the section on "Social care and children & family services," programmes such as Children's Centres, Flying Start, and Early Years services span multiple spending areas, including early education, childcare, and children and family services. Flying Start, in particular, includes spending on Childcare for eligible 2-year-olds in Wales. However, due to the integration of multiple services, we have proposed treating them as a subcategory of social care and children's services.

Spending by age group

The Childcare Offer is available only to children aged under 5, making it straightforward to attribute this spending as early years spending. To maintain consistency in our analysis across other spending areas, we provide an estimate of the spending, broken down into spending for 0-1-year-olds and 2-4-year-olds. As the Childcare Offer for Wales is available only for children aged 3-4 years old, all recorded expenditure is attributed to the 2-4-year-old age group, with no spending recorded for children aged 0-1.

We also provide an estimate of spending per child by dividing the total expenditure associated with the Childcare Offer by the total early years population in Wales (i.e., aged 0-4). To do so, we utilise Welsh population estimates provided by the ONS (ONS, 2024c).

Spending by income group

To document how spending on the Childcare Offer is distributed across income groups, we utilise data from evaluations on the policy, which report the "Proportion of participating parents by gross salary bands at the time of applying for the Offer” (Harries et al., 2023). As the most recently available figures are available for 2021/22, we use these values to proxy the breakdown for 2022/23. These evaluations provide information on the share of parents accessing the Childcare Offer by gross salary band, which is used as a proxy for the income breakdown of spending. We apply these proportions to the total Childcare Offer expenditure to apportion spending across salary bands.

To enable comparison across spending areas, we map salary bands and their associated expenditure into income quartiles using ranges from the UK Annual Survey of Hours and Earnings (ONS, 2022). It is important to note that this approach differs from the methods used in other spending areas, which are based on total household income and encompass not only salaries, but also other forms of income and benefits. In this case, the use of salary bands was necessary due to the limited availability of data on household income related to those who access the Childcare Offer.

Mapping of spending

• Targeted versus universal spending. For this spending area, universal spending is defined as funding that is available to all children of a certain age, and targeted spending is defined as funding directed only to specific groups of children within a certain age. We classify all spending for Childcare as targeted because the offer is not available to families with a parent earning £100,000 or more (WG, no date c).
• Preventative versus Demand-led. All expenditure is classified as preventative within this spending area due to the nature and purpose of childcare, which supports the development of children and their longer-term outcomes.
• Distribution channels: All spending is distributed via Local Authorities.

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