Who benefits from universal free childcare?

3 June 2015

The Prime Minister’s recent announcement that the Government will bring forward the extension of free childcare for three and four year olds has sparked concerns about adequate public funding. Research commissioned by the Pre-school Learning Alliance last year found that there was an 18 per cent shortfall in public funding for free childcare in 2013/14, compared to the average cost – a shortfall that is passed on to parents, some of whom pay for additional hours at a higher rate. Despite these concerns, the UK has jumped from being among the lowest public spenders on childcare and early years twenty years ago to one of the highest among European countries (OECD, 2014). With the expansion of free entitlement costing an estimated £350 million a year, it is crucial that this investment is targeted at those least able to afford childcare.

There are two motivations for public expenditure on childcare and early years. The first is to narrow the attainment gap between rich and poor children; the second is to improve employment opportunities for women. While these arguments are rarely questioned, the evidence in support of them is far from clear cut. One study has shown that, while the introduction of free entitlement for three year olds in 2005 marginally increased participation, it had a small impact on a child’s attainment at age five which, by the age of 11, had completely disappeared. Earlier research on the other hand suggests there is a positive impact on a child’s attainment at age 11, but the difference in impact is contingent on the quality of pre-school provision. Those attending poor quality pre-schools received no significant benefit over those who did not attend any pre-school.

Given that the impact on children’s outcomes is dubitable, will the expansion of free childcare help mothers to move into or stay in employment? While the evidence for increasing maternal employment is more positive, one concern is that the emphasis on ‘formal childcare’ is skewing the market and missing what many parents on low incomes really want: informal, flexible childcare. As Alison Wolf has argued, growing parts of the labour market require flexible working hours at changing locations, which is unsuited to the organised childcare provided at nurseries and day care centres.

At a time when the Government is trying to cut £12 billion from the welfare budget, it must consider how to improve its offer for the most disadvantaged in society. There are likely to be better ways to make childcare affordable for parents on low incomes than extending a non-means tested offer. One option is to increase childcare tax credit or the childcare cost element of Universal Credit. Currently, only 70 per cent of childcare costs are publicly funded through Universal Credit – although this will rise to 85 per cent from 2016. Investment could be better spent supporting these parents, rather than subsidising those who are already able and willing to pay for childcare.

Amy Finch, Researcher, Reform




05 June, 2015

This is absolutely right:- ‘formal childcare’ is skewing the market and missing what many parents on low incomes really want: informal, flexible childcare. I supplement paid childcare by swapping childcare responsibilities with other mums in the area which sites like https://littlesits.com/ can help coordinate. Helps with costs, availability AND flexibility.