Last reviewed 21 October 2021

Investing in affordable childcare would boost annual earnings of working mothers in the UK by up to £10.6 billion, according to a new report from the Centre for Progressive Policy (CPP).

The research reveals that there is a workforce of 1.6 million mothers with young children who are currently being held back due to a lack of available childcare.  Increasing investment in childcare would boost the earnings of working mothers as well as generating up to £28.2bn in economic output per annum. The research also shows that employment rates are 11 percentage points higher among women in areas with more locally available childcare opportunities.

The report, Women in the labour market: boosting mothers' employment and earnings through accessible childcare, also highlighted the negative impact of low funding rates on early years providers, estimating that for each 15-hour place providers lose £335 a year due to the gap between funding rates and the cost of delivery.

The thinktank is now urging the Government to take a number of steps, including:

  • increasing the amount of subsidised childcare for children aged three and four from 570 to 720 hours a year, at a cost of £700m per annum

  • introducing a 720-hour subsidised childcare package for children during the first two years of their life, costing £1.8bn per annum

  • establishing a central government fund to invest in after-school activities and holiday care for children, at a cost of £1.1bn.

Dean Hochlaf, an analyst at CPP, said:

"The capacities and capabilities of the childcare sector have been severely undermined by consecutive governments' lack of attention and investment. Childcare providers have told of an industry buckling under pressure and on the brink of collapse, whilst our survey with mothers has revealed desire to use the service far outstrips current capacity."

“It is essential that the Chancellor uses the upcoming Spending Review to fix childcare for good, which we’ve shown would boost the earnings of mothers with young children by up to £10.6bn. This would both contribute to the post-pandemic economic recovery and enhance the overall strength of the UK economy.”

The full report is available here.