IFS unconvinced on impact of 30-hour free childcare

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The Government’s plans to extend the free childcare offer for all three- and four-year-olds in England from 15 to 30 hours a week for children in working families from September 2017 are ‘only likely to increase parental employment slightly’, according to the Institute of Fiscal Studies.


The IFS says the 30 hours may have a limited effect on mother's working hours

The researchers, who explored how the working patterns of mothers and fathers changed during the 2000s, found that only 12,000 more mothers were in work each year after their youngest children had moved from free part-time nursery into full-time primary school -  which effectively offers parents 30-35 hours of free childcare per week during term-time.

The research showed that mothers who had their youngest child in primary school for 30 - 35 hours a week were only 5.7 percentage points more likely to be looking for work and just 3.5 percentage points more likely to be in work than mothers who still had children in nursery part-time.

The research found no evidence that the work patterns of fathers and of mothers with younger children below the age of three were affected.

The report suggested that there were two primary reasons for these relatively small impacts for parents who had their youngest child in school for 30-35 hours a week.

Firstly, the research showed that, under current circumstances, childcare use changes little when parents can access free childcare, which makes it unlikely that that the planned additional 15 hours of free childcare will dramatically change parents’ working patterns.

Instead of using the additional free childcare during term-time to extend their working hours, or move into work, many parents replaced paid-for or informal childcare that they were already using with the free part-time nursery place or with their child’s place at primary school.

While one of the reasons the Government says it plans to increase free childcare in England is ‘to support working parents with the cost of childcare’, it is also the government’s intention to enable parents to work more.

The IFS report, however, found that parents who use free childcare to reduce their own childcare costs could, in principle, even be caused to work less, as their disposable income increases through saving money on childcare.

Secondly, the report stated, ‘The offer may not have been sufficiently generous or sufficiently flexible to enable many more parents to work’, as having the youngest child at primary school only provides parents with a window of six - six and-a half hours a day to work and commute - and only during term time.

The fact that free part-time childcare had more impact on mothers’ working patterns after 2010, when slightly more hours per week were offered that could be taken up more flexibly, suggests that the Government’s planned childcare extension could have a larger effect, the report further noted, as the Government has said that the forthcoming 30 hour entitlement can be taken more flexibly compared with the rigid hours of a school day, and possibly across the year and not just during term-time.

The fact that the 30 hours of free care will only be available to working families in which each parent earns £120 a week (or slightly lower if aged under 25) may also provide an additional crucial incentive for parents to move into work, the report observed.

But the researchers concluded that while the planned extension of the free entitlement could boost maternal labour supply slightly, the Government’s offer could just not be good enough to have a bigger impact on parents’ working patterns than the 30-35 hours of primary school parents benefitted from in the study.

If the Government wanted to improve parents’ labour market outcomes on a larger scale, the report suggested, it should ‘consider offering more (flexible) support in a targeted way to a smaller number of parents for whom free childcare is most likely to make the biggest difference’ - as opposed to the Government’s plan to entitle parents with an income of up to £100,000 each to the extra 15 hours of free childcare per week.

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