Extending the early years entitlement: Costings, concerns and alternatives

The government has committed to increasing free childcare hours for 3- and 4-year-olds in working families from 15 hours per week to 30 hours per week, for 38 weeks of the year. Increased investment in childcare is clearly to be welcomed. High quality, affordable childcare and early years education achieves three key outcomes: better child development, higher maternal employment, and greater gender equality.

However, there are concerns that the government will significantly underfund the planned extension, and that this will result in a poorly-delivered policy with negative outcomes for families and for the sustainability of the sector.

This briefing explores two key concerns.

• Underfunding: The government’s policy costing, at £365 million in its first year, is inexplicably low in comparison to other estimates, as well as to current funding. IPPR puts the cost of this extension at £1.6 billion annually. If the rates the government pays to providers to deliver care (which are already under review) are consequently set too low, it will result in falling quality, poorer outcomes for children, and less choice for parents as the market shrinks.
• Loosening regulations: We are concerned that the low costing for this policy will lead the government to change the nature of provision to fit the price tag, including by loosening child-to-adult ratios in care settings.

There is also a broader question about whether the government's proposed reform is the best and most strategic way to invest in childcare. We propose the following alternatives, which would better achieve the outcomes of increasing maternal employment and equalising school-readiness across socio-economic groups.

• Targeting the free hours at 2-year-olds – for whom childcare support is lowest, despite childcare costs for this age group being highest – by universalising the current 15-hour offer (for the most disadvantaged 2-year-olds) to cover all 2-year-olds. This would have a greater impact on child development, maternal employment and gender equity.
• Extending the free offer from 38 to 48 weeks of the year in order to cover holiday care, which is currently both expensive and hard to find, and so pushes parents out of work or onto reduced hours. As a step towards full holiday coverage, the government could provide an additional 10 weeks for the 40 per cent most disadvantaged 2–4-year-olds.

The lack of strategy for the 3- and 4-year-olds offer reflects a broader short-termism in childcare policy. In this briefing we argue that the government should develop a long-term strategy for childcare that corrects historic imbalances, and utilises the extensive evidence base to design a system that delivers better outcomes for families.