WBG says UK Government lags behind OECD peers’ ambitions for early education and childcare

The Women’s Budget Group (WBG), the UK’s leading feminist economics think tank, has today published a new report highlighting OECD peers including Canada and Portugal that have introduced significant investment and reforms to early education and childcare (EEC), recognising its importance as vital social infrastructure needed to boost their economies and tackle inequalities.

• In July, the UK Government announced new funding rates for the ‘free’ (subsidised) hours it offers parents of eligible children, which early years settings will receive from September. These rates still fall short of the estimated cost of delivery for providers.

• WBG has previously calculated that for funding to cover the true cost of provision of all funded hours in the Government plans by 2025/26 an additional £5.2bn would need to be allocated (£9.4bn in total).

• Years of underfunding of the EEC sector have led to a sustainability crisis resulting in a shortage of available places, a recruitment and retention crisis, unaffordable provision for parents, and widening inequalities between children from different socioeconomic background – jeopardising the Government’s planned expansion of additional ‘free’ hours for parents.

Dr Sara Reis, Head of Policy and Research and Deputy Director at WBG said,

“Since the Chancellor’s welcome announcement in the Spring Budget that recognised the potential of the early education and childcare sector to boost our economy, we have been warning the Government that their inadequate funding rates, particularly for 3- and 4-year- olds, undermine their laudable ambitions.”

“The UK Government aren’t the only ones to see the challenges facing the sector resulting from global economic pressures as well as domestic ones, but they do risk lagging behind our global peers when it comes to seizing the opportunities at hand without the scale of funding and reforms needed and grasped by countries like Denmark, Canada and Portugal.”

“Scaling up provision however, takes work and close engagement with the sector. We have seen that ambitious targets without sufficient infrastructure and workforce planning can lead to slower progress than promised, such as in New Zealand where the pipeline of qualified teachers has slowed down their expansion plans, and Portugal with the potential for higher demand from parents than places available by 2024, when the Government plans to achieve full coverage.”

“We are calling for a rescue and reform plan for the UK early education and childcare sector. The Chancellor must look at the books again this autumn, take heed of Canada’s C$30 billion investment plan and increase funding for the planned expansion to at least £9.4bn by 2025/26.”

“International lessons also show that the Government must work closely with the early years sector and unions and urgently develop a workforce plan to recruit and retain the professionals needed to meet demand.”

“In the longer term, the Government should follow Denmark’s lead and move to a supply side model, in order to make good on their promises to support parents with the eye-watering costs of childcare in the UK, ensure access to quality provision at the vital stage of children’s lives, boost the economy and build a truly world-class early years system.”

Key international EEC features reviewed by the WBG include:

• Denmark: Supply side funding: The Danish government funds the actual costs of delivering EEC directly to providers, allowing them to set and enforce national standards and keeping costs down for parents, while preserving the financial sustainability of the sector.

• Canada: Significant increase in national government funding. Canada introduced a C$30 billion programme in 2021, resulting in a sevenfold increase in federal investment in EEC from C$1.3bn in 2020/21 to C$9.2bn in 2025/26. It has modelled its national model on Quebec’s, which has increased women’s labour market participation and reduced poverty among single mothers.

• France: Universal progressive subsidy. France provides a universal progressive EEC subsidy to all families with children under the age of three. This subsidy is income based and its amount varies depending on the family’s income level. This keeps the system affordable for all while targeting support to the most disadvantaged children. France invests 1.3% GDP in its EEC system, higher than the OECD average 0.8% and the UK’s 0.5%.

• New Zealand: Quality based conditional funding. New Zealand has prioritised driving quality up through conditional state funding. Its funding model is based on “quality funding bands” that reward providers with qualified teachers, encouraging better quality of care and education.

• Portugal: Universal free access rollout. Portugal is currently expanding free childcare to all children, prioritising low-income families. The government aims to achieve full coverage of free universal EEC by 2024.

For more information or further comment, contact

erin.mansell@wbg.org.uk / press@wbg.org.uk / 07799116631

Download the report here