Increasing free childcare schemes will boost the economy

published on 1 Jun 2023

Schemes offering free childcare can boost the economy and bring more people into work, according to new research carried out by PwC and The Salvation Army.

The study focussed on a 2017 scheme, which extended state-funded childcare for three and four-year-olds in England from 15 to 30 hours. Researchers were able to calculate its effectiveness by drawing comparisons with Scotland, where similar provision was not available until 2021. The study found that the 2017 state funded childcare support added £22.3billion to output and brought 286,000 people into work.

In this year’s Budget, Chancellor Jeremy Hunt announced plans for a gradual expansion of 30 hours of free childcare for all working parents of children over the age of nine months.

Lieutenant Colonel Dean Pallant, Secretary for Communications at The Salvation Army, said: “Through The Salvation Army’s work as a provider of formal and informal childcare and Employment Plus services, we know that affordable and accessible childcare is economically and morally right, offering a route out of poverty for many families.

“The Government’s recent announcement to expand funded childcare was a move in the right direction, but more work needs to be done to make sure that parents on low incomes can get the same access to childcare as families who are better off. There needs to be:

  • adequate funding for providers,
  • more flexibility in the system to meet the needs of parents who have to work atypical hours,
  • and more help for families who need affordable childcare during the school holidays.

“PwC’s report provides clear evidence that improving access to childcare is essential for parents who want or need to work, and vital for the health of local and national economies.”

Siobhan Prendiville, an economist at PwC, said: “Given the current focus on economic inactivity in the UK domestic workforce, these findings highlight the potentially significant productivity and employment gains through extending childcare provision as well as improving equality of access to those on lower incomes.”

For more details, see the full report: The economic impact of childcare policy [PDF]

A young mum is sitting on a brown sofa with her little girl. They are talking to a female Salvatiton Army officer.

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