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Childcare investment could increase mothers' income by £10bn, report claims

By Rachel Lawler

Increased investment in childcare could increase the total annual income of working mothers in the UK by up to £10 billion, according to a new report from the Centre for Progressive Policy (CPP).

The CPP says that 1.7 million mothers want to increase their working hours but are unable to do so due to a lack of affordable and flexible childcare and 1.3 million women have been prevented from taking on a potential job due to a lack of childcare.

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

Since the pandemic, this has increased with the report estimating that providers lost up to a total of £228 million in the lockdown period.

The childcare deficit
To help address what it called "the childcare deficit", the CPP has called for:

  • fairer funding for subsidised childcare places, with a new audit process to determine the cost of delivery
  • an increase in the number of funded hours for three- and four-year-olds from 30 weeks to 48 weeks
  • subsidised hours for children under two
  • funding for after-school and holiday care
  • the establishment of a 'What Works Centre' for childcare
  • a new 'Skills for Childcare' organisation
  • a right to a 20-day trial period for flexible working requests

Undermined sector
Dean Hochlaf, an analyst at CPP, commented: "The capacities and capabilties of the childcare sector have been severly 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."

Fix the system
Neil Leitch, chief executive of the 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 years sector, and commit to investing what is needed to fix our broken childcare system."

Find out more
Read the CPP's report in full here