Universal childcare up to 11 would save parents thousands and add billions to economy – report

Catherine Gaunt
Tuesday, December 6, 2022

A universal childcare guarantee for children up until the end of primary school, would create an extra £13 billion for the economy and boost parents’ wages, according to a new report by the IPPR and Save the Children.

The joint IPPR and Save the Children report makes a case for universal childcare, which it claims would save a family with young children between £620 and £6,175 a year in childcare costs PHOTO Adobe Stock
The joint IPPR and Save the Children report makes a case for universal childcare, which it claims would save a family with young children between £620 and £6,175 a year in childcare costs PHOTO Adobe Stock

Investing in more childcare provision in England would also create an estimated 130,000 extra jobs in the early years sector, according to the research.

Recommendations include:

  • making 30-hour childcare universal for three- and four-year-olds and on a higher hourly rate

  • universal two-year-old childcare for 15 hours on a higher hourly rate

  • extend a universal 15-hour offer for twos to 30 hours

  • expand three- and four-year-old offer from 38 weeks to 48 weeks a year

  • extend wraparound childcare provision in schools from 8am to 6pm

The report states that it would mean that 700,000 households with 1.6 million children could see their incomes rise, with the largest gains for the lowest income households.

At the same time, the report’s authors calculate that families would save between £620 and £6,175 a year on the current cost of childcare, depending on their circumstances.

With more women able to return to full-time work, they would progress further and faster in their roles, which would narrow the gender pay gap, with lone parents and the parents of younger children standing to gain the most, the researchers claim.

The report sets out detailed changes that would be needed to deliver universally affordable and accessible childcare, 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, and should be introduced in stages, the report says.

The IPPR puts the total cost of its proposals as eventually £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. It suggests the difference could be funded through new tax measures.  (See below for table of recommendations.)

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.’

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. Another parent said, ‘I’m always either earning a couple of pounds more than my childcare, or I’m losing out.’ Another said they felt they were unable to reach their full potential.

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?

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.’  

Sam Freedman, senior fellow at the Institute for Government and a senior adviser to Ark Schools, co-author of the report, said, 'The early years system is broken. It’s confusing, and extremely expensive, for parents. Most staff are paid at minimum wage levels. And the best provision is targeted at children from the wealthiest areas. Increasingly nurseries are run by private equity firms.

'A Universal Childcare Guarantee would be a huge help to families, but it would need to be accompanied by an overhaul of the market to ensure the funding went on better quality provision and higher wages rather than private equity profits.’

 

Source: Delivering a childcare guarantee

Sector organisations welcomed the call for greater investment.

Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA) said, ‘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.'

She added the  nurseries and childcare providers 'must not be allowed to reach financial ruin simply due to a government policy that is not fit for purpose.’

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.

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.

The report has received the backing of shadow education secretary Bridget Phillipson MP, who said, ‘This detailed and thorough report is further evidence that the time has come for a new, modern childcare system – which would improve lives for every family.

‘Labour will deliver a new system to give children the best start in life and parents choices, enabling them to get back into work or to increase their hours and give our economy the growth we need.'

A Government spokesperson said, ‘We know many households and childcare providers are facing pressures from recession and high inflation. Improving the cost, choice and availability of high-quality childcare for working parents is important for this Government.  

‘We have spent more than £20 billion over the past five years to support families with the cost of childcare and the number of places available in England has remained stable since 2015, with thousands of parents benefitting from this support. We’re investing millions in better training for staff working with pre-school children and have set out plans to help providers in England run their businesses more flexibly.’

  • The report, Delivering a childcare guarantee, is available to download here

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