On Wednesday, the spending review allocated an extra £1.6 billion for funded entitlements for working parents between 2025-26 and 2028-29.
The IFS said that the extra funding has been prompted by ‘big over-spends’, as the new entitlements have proven much more popular than anticipated.
Spending on the new entitlements has already been much higher than the Department for Education expected 18 months ago.
If take-up stays at current levels, the IFS said that extra spending needed could end up £1bn higher from next year than originally planned when it was announced by the then-Chancellor Jeremy Hunt in the March 2023 Budget.
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