Understanding how early years investment pays off

The announcement that Kelly Tolhurst has been named as the new Minister of State for Schools and Childhood, responsibilities that were previously split between two ministers, has done little to reassure me that the current government appreciates the huge social and economic importance of the early years (see online 27.09)

There is currently a major crisis of both funding and provision, with providers and practitioners feeling neglected and undervalued, settings closing at an unprecedented rate, and families in the UK either not having access to provision or facing prohibitive childcare costs.

According to the OECD, families in the UK already have the highest costs of childcare for any country apart from Switzerland – 26.6 per cent of average family incomes, compared to an OECD average of 11.8 per cent.

And UK parents therefore have an increasingly high reliance on 'informal' childcare, or in other words the support of relatives or friends. The situation is now a deteriorating one. As Neil Leitch, from the Early Years Alliance recently said:

‘Research conducted by the Alliance earlier this year found that an overwhelming majority of providers said the funding they receive for so-called “free childcare” places is less than the cost of delivery and that even those settings that received funding increases this year said that it wasn’t enough to cover delivery costs.’   

‘Time and time again, the sector has urged the Government to come up with a long-term plan that includes realistic funding, but these calls continue to fall on deaf ears. Now, as the situation is fast approaching a catastrophe, the Government needs to stop sticking its head in the sand and start investing in our vital sector, before the damage becomes irreversible.’

As the article correctly states, in the last ten years we have seen no less than ten ministers who have been given responsibility for the early years, almost all of whom have come from entirely unrelated areas, and yet this is the sector that has by far the largest societal return on investment.

Across Europe and North America the long-term impact of poor early childhood experiences on health and productivity is the equivalent to 1.3 trillion dollars a year, according to a 2019 World Health Organization (WHO) co-authored paper, published in the Lancet Public Health. The cost is equivalent to a massive three per cent of the two regions combined Gross Domestic Product – or 1,000 dollars a year for every person in North America and Europe.

'Time and again the sector has called on the Government to provide realistic funding for a sustainable early education and childcare market.'

Long term damage
Adverse Childhood Experiences (ACEs) include being a victim of child maltreatment and being exposed to domestic violence, parental alcoholism and other severe forms of stress while growing up. The paper estimated that as many as 319 million people aged 15 or above in Europe and 172 million in North America are currently living with a potentially health-corroding legacy of ACEs.

And that was before Covid, which in itself has been a profound adverse experience for young children and their families.

Early investment reduces pressure on health services from conditions including heart disease and cancer, as well as reducing the wider societal harms that arise from poor early childhood experiences. The paper found that ACEs are attributed to:

18.2 per cent of individuals smoking in Europe, and 23.7 per cent in North America – at an estimated cost of $165 billion in Europe and $160 billion in North America

About 30 per cent of anxiety cases and 40 per cent of depression cases in North America, and more than a quarter of both conditions in Europe – at a combined annual cost of around $51 billion in Europe and $82 billion in North America

More than a quarter of cases of respiratory disease in North America and about one-fifth of cases in Europe – at an estimated cost of $99 billion in North America and $47 billion in Europe

Around one in ten cancers in North America and Europe – at an estimated cost of $95 billion in North America and $117 in Europe

Lead author of the paper, Professor Mark Bellis, said: ‘Individuals who suffer ACEs such as child maltreatment or domestic violence can pay a high price through lifelong impacts on their health and economic prospects. As a society, though, we all pay for failing to tackle childhood adversity through its impacts on our health services, social systems and workforce. All children deserve a safe and nurturing childhood, and our findings provide economic support for this, indicating that even a moderate 10 per cent reduction in the numbers suffering ACEs could equate to annual savings of $105 billion per year.’

In 2013 the UK government posed the question ‘How advisable is it for national or local policymaking bodies in the UK, with responsibility for child health or welfare, and control over spending, to switch investment more heavily to the early years?’ It concluded:

‘The short answer is there is general expert consensus that it is somewhere between economically worthwhile and imperative to invest more heavily, as a proportion of both local and national spend, in the very earliest months and years of life.’

Nine approaches to evaluating the outcomes of early years’ investment were reviewed in the associated report, with the following findings:

High returns
Every approach – even the most cautious and circumspect in its recommendations – found that returns on investment on well-designed early years’ interventions significantly exceeded their costs.

The benefits ranged from 75 per cent to more than 1,000 per cent higher than costs, with rates of return on investment significantly and repeatedly shown to be higher than those obtained from most public and private investments. Where a whole country has adopted a policy of investment in early years’ prevention, the returns are not merely financial but in strikingly better health for the whole population. The benefits span lower infant mortality at birth through to reduced heart, liver and lung disease in middle-age.

None of these estimates, however, fully took account of the additional economic value of the knock-on effect that child abuse averted in one generation will itself result in a cumulative reduction in this dysfunction during future generations.

In 2017 the NSPCC calculated that the estimated average lifetime cost of non-fatal child maltreatment by a primary caregiver was £89,390 (with a 95 per cent certainty that the costs fall between £44,896 and £145, 508). And in the USA two influential reports concluded that:

‘The estimated average lifetime cost per victim of nonfatal child maltreatment is $210,012 in 2010 dollars, including $32,648 in childhood health care costs; $10,530 in adult medical costs; $144,360 in productivity losses; $7,728 in child welfare costs; $6,747 in criminal justice costs; and $7,999 in special education costs. The estimated average lifetime cost per death is $1,272,900, including $14,100 in medical costs and $1,258,800 in productivity losses.

The total lifetime economic burden resulting from new cases of fatal and nonfatal child maltreatment in the United States in 2008 is approximately $124 billion. In sensitivity analysis, the total burden is estimated to be as large as $585 billion.`

Surely, therefore, the real question is not whether we can afford to invest in early childhood health and wellbeing, but whether we can afford not to.

About Wendy Ellyatt
Wendy is the founder of the Save Childhood Movement, National Children’s Day UK (NCDUK), the Flourish Project and Futuregens.net. She currently leads the UK Spirituality in Education Alliance (SIEUK), is a Global Council Member of the Wellbeing Economy Alliance (WEAll) and is the G100 UK Country Lead on Collective Stewardship.

References
Bellis M, Hughes K, Ford K, Ramos Rodriguez G, Sethi D, Passmore J, Life course health consequences and associated annual costs of adverse childhood experiences across Europe and North America: a systematic review and meta-analysis, www.thelancet.com/public-health Published online September 3, 2019 

Conti G, Morris S, Melnychuk M, Pizzo E (2017) The economic cost of child maltreatment in the UK, NSPCC
Haggerty RJ. Child health 2000: new pediatrics in the changing environment of children’s needs in the 21st century. Pediatrics. 1995;96:804–812.

Heckman, James 

OECD Net Childcare Costs (2021)

UNICEF (2017) State of the World’s Children Report Stiglitz, J.E. (2012) The Price of Inequality: How Today’s Divided Society Endangers our Future. W. W. Norton: London.

Wave Trust (2013) Conception to age 2 – the age of opportunity, Appendix 4

Xiangming Fang, Derek S. Brown Curtis Florence and James A. Mercy - The Economic Burden of Child Maltreatment in the United States And Implications for Prevention, published in Child Abuse and Neglect 2012 Feb; 36(2): 156–165.