Headlines: October 13th, 2004

Better provision of early education and childcare and an improved system of parental leave could have significant economic and social benefits for Britain, according to a report today. It has been produced by PricewaterhouseCoopers and evaluates a long-term vision developed jointly by Daycare Trust and the Social Market Foundation. The report puts the long-term benefit to the economy of such a package of measures at between 12 and 24 billion pounds a year.These estimated economic benefits are the equivalent of one to two per cent of Gross Domestic Product, based on 2004-5 values, and would broadly match the total costs of the package to government and parents. The economic benefits would come from increasing parental employment and by boosting the future productivity of children who benefit from high quality early education and care. The report predicts that such education and care would also have significant social benefits in reduced child poverty and improved life chances for children from disadvantaged backgrounds.

The report – “Universal early education and care in 2020: costs, benefits and funding options” puts the net cost to tax payers at around 8 to 15 billion pounds a year by 2020, again at current values, but it says these costs would build up gradually over time. The estimates assume that to make universal childcare affordable, parents would pay an average 30 per cent of total costs, compared with the 75 per cent they currently contribute and the report recommends the focus of government funding should be on grants to early years providers, rather than through the childcare tax credit.

The report outlines a vision of services for children and families developed jointly by Daycare Trust and the Social Market Foundation and evaluated by economists at PWC. The package of policies includes extending paid parental leave to 12 months, introducing home care allowances for parents of children aged between one and two and extending free early years education to all 2 year-olds. The vision also calls for a childcare entitlement to cover the whole working day for parents who want it and 8am to 6pm care provision for 5-14 year-olds in line with the Government’s proposals for extended school hours. Finally it recommends significant improvements in the skills and qualifications of people working in early years education and care.

The report is the second in Daycare Trust’s “Leading the Vision” series of policy papers.