Policy Brief – Does a universal childcare guarantee for children provide clear benefits for economies?

A recent report from two UK-based organisations, Save the Children and the Institute for Public Policy Research (IPPR), weighed up the potential societal benefits of investing in a universal guarantee of affordable childcare for children and their families. Although largely focussed on the economic benefits of this initiative rather than benefits for children and their development, it is still important to review this at a time when Early Years and School Age Care (EYSAC) provision is changing profoundly in Ireland.

The report calls for a ‘Universal Childcare Guarantee’ – a comprehensive offer of affordable and accessible Early Years and School Age Care for all children from the end of parental leave until they leave primary school. This would replace the current incomplete patchwork of childcare entitlements, benefits, and allowances for working parents.

Boosting family incomes

The report states that the guarantee would boost family incomes. It 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 per year, depending on their circumstances. Increased parental working would enable the UK Treasury to recoup an extra £8 billion per year from increased tax and National Insurance revenues and from lower social security payments.

Reducing the gender pay gap

Moreover, the report notes that more women would be able to return to full-time work. This would allow them to progress further and faster in their careers and the gender pay gap would narrow as a result. Ultimately the report asserts that lone parents and the parents of younger children would stand 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. Furthermore, investing in more EYSAC provision in England would also create an estimated 130,000 additional jobs in the sector. Interestingly, the gender equality and job creation aspect of an expansion of EYSAC was also mentioned in a previous policy brief, albeit in an Irish context, which you can read on the Early Childhood Ireland website.

Investment now yields future gains

The IPPR reports that the total cost of this investment would eventually rise to some £17.8 billion per year. This would be partially offset annually by the £8 billion direct gain to the public Exchequer from additional working parents and their income tax contributions. Plus, a further £2.1 billion savings would come from closing existing childcare schemes that would no longer be needed. IPPR suggests the difference could be funded through new tax measures. Costs are likely to fall over the next decade as primary school pupil numbers are expected to decline.

Keeping the quality high

Although this report is very much couched in terms relating to benefits of the economy, there are important steps that must accompany any Universal Guarantee to ensure that provision is of a high quality and meets the needs of children. The IPPR believe that such a Guarantee would offer children with time in settings. Sam Freedman, author of the report, believes decoupling the EYSAC system from providing profits for “private equity firms” would allow development of higher quality provision. In the view of Save the Children’s Head of Child Poverty, a Universal Guarantee would ensure that settings in the UK would be properly funded and would provide children with hot meals and a functioning system.

In the end, the report argues that a functioning, well-funded and high quality EYSAC system benefits all of society . You can read this report from IPPR and Save The Children at the IPPR Press Release. If you would like to know more about this report and how it relates to Ireland, or speak to us about Early Childhood Ireland’s policy work, please get in touch with our Policy, Advocacy and Campaigning team at policy@earlychildhoodireland.ie.