Universal free childcare could boost UK economy by £13bn per year, says report


Providing free childcare for all families until the end of primary school could boost the UK economy by £13bn per year, according to a new report.

Research by think-tank The Institute for Public Policy Research (IPPR) and Save the Children says that reforming childcare up to the age of 11 could also “raise educational attainment, narrow the gap for disadvantaged children and help achieve equal pay for women”.

Plans including increasing funded childcare hours for two-year-olds and providing free wraparound care from 8am to 6pm for all primary school children could benefit 1.6 million children with low-income families gaining the most, according to the report.

It adds that “increased parental working would enable the Treasury to recoup an extra £8 billion a year from increased tax and national insurance revenues and from lower social security payments.”

The report calls for a “universal childcare guarantee” which would include:

  • Extending 15 free hours to all two-year-olds, with eligibility beginning from the end of paid parental leave.

  • Increasing funded hours for two-year-olds and under two-year-olds.

  • Extending wraparound care from 8am to 6pm to more schools and offering a variety of after-school activities through term time.

Rachel Statham, IPPR associate director and lead author of the report, said: “A universal and affordable childcare guarantee from ages 0 to 11 would deliver a step change for millions of young children and their families, giving more children access to high quality early years education, while helping to grow the economy, and grow families’ incomes.  

“A universal childcare guarantee would begin to level the playing field for women at work and close the gender pay gap, while levelling up on critical early childhood development by offering every child access to more, high quality early education.”  

The Labour Party has backed the calls, with shadow education secretary Bridget Philipson describing the report as “detailed and thorough”.

She said: “The time has come for a new, modern childcare system – a better start for every child and better choices for every family.

“Childcare is broken and the case for change is clear.”

Early years leaders also welcomed the report’s calls for greater investment in the sector.

Neil Leitch, chief executive of the Early Years Alliance, said: “Save the Children and IPPR are absolutely right to argue for greater investment into the early years sector as a way of boosting economic growth.

“At a time when the government is focusing on encouraging ‘economically-inactive’ adults back into the workforce, it is truly bizarre that ministers continue to completely ignore the need for affordable, accessible early years provision to enable the parents of young children – and primarily, mothers – to do just that.

“What’s more, as the report rightly highlights, investing in the early years is about more than just providing childcare. It is investing in the kind of quality early education that will help shape children’s learning, development and life chances for years to come which itself has been shown to have huge wider economic benefits down the line.

“We believe that all children, without exception, should have access to affordable, high-quality childcare and early education, but the fact is that this is only possible with adequate funding. It’s clear that urgent action is needed to fix our broken early years system – the government has dragged its feet on this issue for long enough.”

Purnima Tanuku, chief executive of National Day Nurseries Association, added: “Giving all families fully-funded early education and care for their children is the right policy, both for the children’s life chances and to boost the economy.

“It’s widely acknowledged that our current system is broken. The government promises parents “free” childcare for eligible two-year-olds and all three and four-year-olds then does not pay providers enough to deliver this.

“Parents and childcare providers pick up the bill where the government fails. This is resulting in parents having to leave work because they can’t afford childcare, and nurseries having to close because the shortfall in funding leaves them unsustainable.

“Nurseries and other childcare providers offer high quality education and care to our youngest children, spot early signs of developmental delay and support families in crisis. They must not be allowed to reach financial ruin simply due to a government policy that is not fit for purpose.”

The report comes after providers warned that an increase in National Minimum Wage for all workers aged over 23 could leave settings forced to close if the government does not match investment in the early years with the increase.


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