• New survey of women with children reveals an estimated 1.6 million desire to work more hours - and how a lack of childcare is holding them back
• Investing in affordable, flexible childcare would boost annual earnings of working mothers by up to £10.6 billion - generating up to £28.2billion in economic output per annum
• CPP research reveals that employment rates are 11 percentage points higher among women in areas with more locally available childcare opportunities

As the Chancellor looks for ways to boost the economy following the pandemic, the Centre for Progressive Policy (CPP) has today released new research identifying an underutilised workforce of 1.6 million mothers with young children who are currently being held back due to a lack of available childcare. The research reveals that more investment in childcare could boost the earnings of working mothers by up to £10.6 billion annually – generating up to £28.2bn in economic output per annum.

The thinktank urges the Chancellor to act quickly and make the necessary changes to unlock the economic potential of working mothers. CPP’s survey of women with young children proves that demand to work more hours is strong among this group, but adequate childcare is needed to make that a reality. 46% surveyed (equating to 3.8 million women) had “struggled to find suitable childcare” since becoming a parent. Using these results, CPP found an estimated:

1. 1.7 million were prevented from working more hours
2. 1.3 million were prevented from taking a job
3. 1.1 million had to reduce their hours
4. 560,000 had to quit their job

The survey found that a majority of mothers with young children would prioritise an extension of free childcare provision extended from 38 weeks to 52 weeks, covering the whole year including holidays, with 54% putting this in their top 3 choices of possible policy changes to support their working lives.

Drawing on this survey - and on the expertise of childcare providers to identify the structural weaknesses in the childcare sector - CPP urges the Government to take a number of steps, including:

• Increasing the amount of subsidised childcare for children aged 3 and 4 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 2 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

The paper also establishes a relationship between better locally available childcare and mothers being able to work - employment rates among women were found to be up to 11 percentage points higher in areas with more accessible childcare opportunities.

Dean Hochlaf, Research Analyst at CPP, said:

“Our research has shown that 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 have 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.”

Neil Leitch, CEO of the Early Years Alliance, said:

“We know that quality, affordable childcare plays a vital role in supporting parents - and primarily, mothers - to participate in the workforce. However, the harsh reality is that years of government underfunding have forced many early years providers to either restrict their hours or increase fees and charges to stay afloat, making it increasingly difficult for mothers with young children to return to and remain in work.

"As CPP's report points out, this not only results in lost earning potential for women, but also costs the economy billions in foregone tax revenue. It's time for the government to recognise that a strong and sustainable economy cannot be achieved without a strong and sustainable early year’s sector and commit to investing what is needed to fix our broken childcare system.

Rebecca Swindells, owner of The Blue Door Nursery, said:

“The chronic underfunding of the childcare sector means either an increase in cost for parents, or a loss of providers, each of which has a detrimental impact on the uptake of childcare by mothers with young children.

The lack of funding also produces poor working conditions and low pay, limiting the attractiveness to potential employees and undermining the sector yet further. We want to see the government act on CPP’s recommendations to improve services and employment opportunities, both of which would support the sector’s contribution to the wider economy.”

Felicia Willow, CEO of the Fawcett Society, said:

“We have long been calling for additional funding for the childcare sector to prevent a severe crisis. The pandemic has added extra urgency to our demands, as we cannot rebuild from the pandemic without a fully functional childcare sector.

CPP’s research has proved that if working mothers with young children are prevented from getting enough childcare to cover the hours they want to work, that hurts our economy. If the Chancellor is serious about Building Back Better following the pandemic, childcare is the place he must start.”

Notes to editor:

• Yonder surveyed a representative sample of 2,029 UK women with children under the age of 16. Quotas were placed on household income and employment status. The survey was conducted online between 23 and 28 August 2021. Full results can be found here.
• The research shows that an estimated 1.6 million women would work more hours with access to adequate childcare.
• Using data collected on the sectors that women work in and average wages, CPP estimates that a further 461 million to 659 million hours could be worked per year, increasing earnings by £7.6bn - £10.6bn. These values represent the upper and lower bound estimates should every woman who wants to work additional hours find suitable work within the range of hours their response fell under. We assumed 75.1% of total hours would be potentially filled, in line with current maternal employment rates These represent potential short-term gains, with improvement to lifetime earnings and productivity likely to far exceed those immediate benefits.
• The total economic value calculated using GVA could range between £19.7bn and £28.8bn per annum. This is based on ONS data on average GVA per hour worked per sector for those women who said they wanted to work more hours through the survey.
• CPP analysis found that employment rates in the ten areas with the highest ratio of early year’s childcare places to the population of children aged 0to 4, were on average 11 percentage point higher, than those with the lowest ratio.
• More information available on request.

CPP’s policy recommendations are as follows:

• Implement a new audit process to determine the cost of delivering subsidised care so that the government pays a fair price – Ensuring that providers receive a payment that fairly reflects the cost of care will help reduce financial pressures and improve the capacity and resources of providers at a cost of between £510m and £800m.
• Increase the amount of subsidised care for children aged 3 and 4 from 570 to 720 – An additional 150 hours of care would mean 15 hours extra for ten weeks which would help parents access childcare through the holidays at an estimated cost of £700m.
• Introduce a 720-hour subsidised care package for children during the first 2 years of their life – Children under 2 have no access to subsidised care which can make the transition back into work for mothers a challenge. A funding package of £1.8bn should be made available to provide 720 hours of free care during the first 2 years of a child’s life.
• Establish a central government fund to invest in after-school activities and holiday care – Building on previous CPP work, a £1.1bn fund should be used to invest the creation of a million after-school and holiday childcare places
• Create a new ‘What Works Centre’ for childcare - What Works Networks have a track record of investigating best practice across a wide range of policy areas, and one should be created with a specific focus on the childcare sector, evaluating evidence for how policy can improve outcomes for providers, parents, and children
• Establish a new ‘Skills for Childcare’ organisation - A dedicated, independent institution should be created to work in partnership with the Department for Education and childcare sector to collect information related to the quality and developmental needs of the childcare workforce.
• Introduce a right to a 20 day trial period for workers who have requested flexible working arrangements. While employees may have the right to request flexible working arrangements, this can become a right to reject among employers. We propose giving workers the right to trial their preferred arrangement, to provide clear evidence on whether flexible working requests are viable or not.

About CPP

The Centre for Progressive Policy is a think tank committed to making inclusive economic growth a reality. By working with national and local partners, our aim is to devise effective, pragmatic policy solutions to drive productivity and shared prosperity in the UK. Inclusive growth is one of the most urgent questions facing advanced economies where stagnant real wages are squeezing living standards and wealth is increasingly concentrated. CPP believes that a new approach to growth is needed, harnessing the best of central and local government to shape the national economic environment and build on the assets and opportunities of place. The Centre for Progressive Policy is funded by Lord Sainsbury and hosts the Inclusive Growth Network.