Growing pains

The economic costs of a failing childcare system

6 March 2023

By Ben Franklin and Rosie Fogden

3 minute read

Download the report, Growing pains: the economic costs of a failing childcare system

The high cost of childcare is holding back our economy. Our new report lays bare the economic costs of the lack of accessible, affordable childcare in the UK and highlights the case for childcare to be classed as infrastructure in government spending frameworks.

Key findings:

A lack of affordable, accessible childcare is costing the economy billions in lost earnings and holding back much-needed labour supply

  • Over half of the mums surveyed (54%, equivalent to around three million mums) said they had struggled to find suitable childcare since becoming a parent.

  • 27% of those surveyed– equivalent to around 1.5 million mums – said they would like to work more hours if they had access to suitable childcare. If these desired hours were realised, it would result in at least £9.4bn in additional earnings per year, producing additional economic output of between £27bn and £38bn per year, or approximately 1% of UK GDP.

  • Based on survey results, CPP estimates that 540,000 mums have been prevented from entering paid work due to a lack of suitable childcare; 880,000 have reduced their hours at work, and 470,000 have quit their jobs.

A lack of suitable childcare is damaging women’s careers and curbing opportunities to earn during a cost-of-living crisis

  • Almost a million mothers (970,000) have been prevented from taking a job with a higher salary, with an average foregone annual salary increase of £12,000

  • Around one million mums have been prevented from applying for a different job

  • 910,000 said their opportunities for job progression and promotion were impacted

Mums want childcare reform, but not through abolishing staff-to-child ratios

  • 64% of the mums surveyed said a lower hourly cost would encourage them to use more childcare.

  • 69% want the government to support working parents by extending childcare into the school holidays

  • 82% think that either staff-to-child ratios should stay as they are or that there should be fewer children per childcare worker

Among reform options to support working parents, the three most prioritised options were more financial support for parents of children aged 0-2; an extension of childcare into the school holidays; and more before- and after-school clubs.

CPP is calling on the government to recognise childcare as infrastructure in national spending frameworks, so that governments can borrow to invest in it. Spending on childcare is akin to physical infrastructure like rail and roads, helping to drive output and productivity gains in the short, medium and long term.