A ‘universal childcare guarantee’ for children up to 11 would boost economy by extra £13 billion a year, a report out this morning finds
The report by the think tank IPPR and Save the Children found that Universally accessible and affordable childcare would create a ‘double dividend’ for the UK economy,
The change would increase parents’ earnings by £13 billion a year while generating £8 billion per year for the Treasury, close gender pay gap and help more women to progress at work
Families on the lowest incomes would gain most and 1.6 million children would benefit financially, according to the joint report
would mean some 700,000 households with 1.6 million children could see their incomes rise, with the largest gains flowing to households on the lowest incomes. At the same time families would save between £620 and £6,175 a year on the eye-watering current cost of childcare, depending on their circumstances (see Note 5).
With more women able to return to full-time work, they would progress further and faster in their roles and the gender pay gap would narrow as a result, with lone parents and the parents of younger children standing to gain the most. This would mean an overall boost to the productivity of the UK workforce, according to the researchers, at a time when there is a shortage of workers across the economy.
Investing in more childcare provision in England would also create an estimated 130,000 additional jobs in early years education and care.
Members of Save the Children’s Parent Campaigner Network described to researchers how the current system creates obstacles to their returning to work.
“If I can’t afford the childcare, I just can’t go to work – there’s no choice,” said one. “You kind of feel like you can’t reach your potential,” said another. A third parent said: “I’m always either earning a couple of pounds more than my childcare, or I’m losing out.”
Tasha, 39, from Wiltshire, said: “I used to work full time but after my fourth child, I was advised it was better financially not to be working because the cost of childcare meant there was more outgoing than coming in.
“And now I am stuck. The people at Universal Credit told me I have to go back to work, but how can I when that means I can’t afford childcare? What I would earn on minimum wage full time is what I would need to pay for childcare. All our money goes on childcare, what are we left with for bills?”
The report sets out detailed changes that would be needed to deliver the promise of universally affordable and accessible childcare that millions of parents badly want, spanning 10-plus years from the end of parental leave.
These would range from expanding free childcare hours for the under-twos to introducing wraparound care from 8am to 6pm for school age children, including outside term time (see details in note 4), and should be introduced in stages, the report says.
The total cost of this investment would eventually be £17.8 billion a year, partially offset by the £8 billion a year direct gain for the public purse from additional parental working, and a further £2.1 billion savings from closing existing schemes that would no longer be needed. IPPR suggests the difference could be funded through new tax measures (Note 6). Costs are likely to fall over the next decade as primary school pupil numbers are expected to decline.
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.
“The double dividend it would bring to the UK economy through higher wages, stronger tax revenues and greater productivity would itself be a significant return on the investment, and comes alongside the financial boost to young families from falling childcare costs, giving more parents the option to return to work sooner or increase their hours.
“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.”
Becca Lyon, head of child poverty at Save the Children, said:
“Parents we speak to, regardless of their income, are crying out for the childcare system to change. There is a real chance here to be bold and invest in children and future generations to come.
“If made a reality, a Universal Childcare Guarantee would be life-changing for families – creating an easy-to-use childcare payment system for all, dramatically cutting childcare costs, ensuring the nurseries their children love are properly funded, and providing free breakfast and after-school clubs when children are older. We owe it to children to give them the very best start in life and that begins by transforming our broken childcare system.”
