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Home Opinion Would more free childcare get more mothers into work?
Childcare • Economy • Equality

Would more free childcare get more mothers into work?

Mike Brewer - 27 November 2014

If considered purely as a pro-employment policy, free childcare places are expensive and ineffective

At a time when almost every area of government spending is being pared back, there is a remarkable consensus across the major political parties, policy thinkthanks, and even the Confederation of British Industry, that governments across the UK should spend more money subsidising parents’ use of childcare. Surprisingly, we have relatively little firm evidence about what would be achieved with any additional spending, and what little we do know suggests that more of the same will have only small effects on the number of mothers in work.

In England, three- and four-year-old children are entitled to free part-time early education, a policy announced in 1998 by the last Labour government. The policy is intended to capitalise on the large  private market for childcare and early education that has grown up over past decades, and so the free entitlement can be taken up at a local authority nursery school, a nursery class in a maintained school, or at a private, voluntary or independent setting. The policy became effectively universal across England for four-year-olds by 2000 (helped by a shift towards an earlier school starting age), but expanded more slowly for three-year-olds, becoming effectively universal across England by 2005.

Surprisingly, given the importance of this policy, it was only earlier in 2014 that we saw the first evidence on what the policy achieves, when I and six other researchers published an assessment of how the free entitlement for three- and four-year-old-children affects both the children (in the formal tests they undertake later, at infant and primary school) and their mothers. Our research took advantage of the fact that some local authorities in England were already offering some free early education to three-year-olds back in 1998, even though they were not funded to do so by central government. As a result, when the free entitlement was introduced in the early 2000s, some local authorities saw the availability of free places for three-year-olds increase considerably, but those already offering free early education in the 1990s saw the number of additional childcare places rise by much less. By comparing areas that saw a large increase in free places to those that did not, we could assess how the availability of free early education affects both the amount of paid work done by the mothers, and the performance of children in formal tests at school.

We found that this large expansion of free places for three year olds had only small impacts on the number of mothers in work. Specifically, we found that it led to an extra 12,000 mothers to be in paid work (equivalent to a rise in the employment rate of mothers whose youngest child is three years old from 53 to 56%), a pretty small number given the £0.7bn-a-year cost of these additional childcare places.  At a cost to the exchequer of £65,000 per extra job, these free childcare places are, then, an expensive pro-employment policy.

When we probed further, we found that the main reason that the policy had so little effect was that most of the children who became entitled to free childcare would have used paid-for childcare anyway. More precisely, for every six children receiving free early education in the 2000s, we think just one more child attended childcare as a result. For the other five, who would have been in some form of early education anyway, the free entitlement mostly acted just to cut their parents’
childcare bills. Of course, that does not mean the policy was a failure: the free entitlement can be viewed as a way of supporting all families with children, just as child benefit does, but directly supporting activities that should benefit children. But it does mean that one should be sceptical of any claims that more free childcare would make a huge difference to the ability of mothers to do paid work.

What would help, then? We cannot be sure of course, but if we look at other countries, and assess early education and childcare policy in England in the round, then we can make some informed suggestions. First, the UK spends money both providing free childcare to certain children, and subsidising parents’ spending on childcare (through tax credits, employer vouchers, and the new tax-free childcare scheme promised from late 2015). It may well be more efficient for government, and more transparent for parents, to see all these programmes brought together into one. Second, it may be that if we had more three- and four-year-olds in centres that were open 10 hours a day and all year round, then there might be more mothers working; as it is, a large fraction of the under-fives in England are in schools that are open only for traditional school hours. Third, we know that spending several years out of the labour market can make it very hard for women to go back to work, and so we could do more to ensure that childcare is available and affordable right from the end of maternity leave, rather than waiting until the children are aged three.

Mike Brewer is a professor of economics at the University of Essex, where he codirects the ESRC research centre on micro-social change. He is also a research fellow of the Institute for Fiscal Studies.

This article is based on recent research, funded by the Economic and Social Research Council, that evaluated the impact of free early education for three-year-olds in England. An expanded summary of its findings is available here

This is a contribution to Policy Network's work on Social Policy and Changing Welfare States.

Tags: equality , recession , labour market , pay gap , childcare , maternity pay

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