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State support for early childhood education and care in England

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Presentation on theme: "State support for early childhood education and care in England"— Presentation transcript:

1 State support for early childhood education and care in England
Sarah Cattan © Institute for Fiscal Studies

2 Background Large increase in state support for education and care for the under fives in England over the past 20 years Current government spending between 0.5 and 0.9% of GDP © Institute for Fiscal Studies

3 Background Large increase in state support for education and care for the under fives in England over the past 20 years Current government spending between 0.5 and 0.9% of GDP Cross-party support for further spending Reforms announced at Budget 2013 Proposals from Labour and the SNP © Institute for Fiscal Studies

4 Background Large increase in state support for education and care for the under fives in England over the past 20 years Current government spending between 0.5 and 0.9% of GDP Cross-party support for further spending Reforms announced at Budget 2013 Proposals from Labour and the SNP Will describe the policy environment due to be in place in Autumn 2015 before looking at key concerns in the childcare debate © Institute for Fiscal Studies

5 ECEC support from Autumn 2015
Entitlement to a free, part-time nursery place Open to all 3- and 4-year olds and 40% most deprived 2 year-olds Expected to benefit 1.2m children © Institute for Fiscal Studies

6 ECEC support from Autumn 2015
Entitlement to a free, part-time nursery place Open to all 3- and 4-year olds and 40% most deprived 2 year-olds Expected to benefit 1.2m children Tax-free childcare system “Top up” payments of 20p for every 80p, up to £1,200/child/year Open to all working families except those on additional tax rate Expected to benefit 2.5m working families © Institute for Fiscal Studies

7 ECEC support from Autumn 2015
Entitlement to a free, part-time nursery place Open to all 3- and 4-year olds and 40% most deprived 2 year-olds Expected to benefit 1.2m children Tax-free childcare system “Top up” payments of 20p for every 80p, up to £1,200/child/year Open to all working families except those on additional tax rate Expected to benefit 2.5m working families Subsidies to low- and middle-income families through UC 70% subsidy (85% for families where both parents pay income tax) Up to a maximum of £175/wk (for one child), £300/wk (for 2 or more children) © Institute for Fiscal Studies

8 Key concerns The new system will create three regimes of subsidy, which is hard to justify and could be confusing © Institute for Fiscal Studies

9 The new system will create 3 regimes of subsidy
The new system will create 3 regimes of subsidy... Government contribution to childcare costs in a couple family with two pre-school children Note: Authors’ calculations using TAXBEN. The figure shows the situation facing the second earner in a couple family with two pre-school children that spends £115/wk on ECEC in April 2016. The first earner is assumed to earn £15,600 a year. © Institute for Fiscal Studies

10 The new system will create 3 regimes of subsidy
The new system will create 3 regimes of subsidy... Government contribution to childcare costs in a couple family with two pre-school children UC 70% Note: Authors’ calculations using TAXBEN. The figure shows the situation facing the second earner in a couple family with two pre-school children that spends £115/wk on ECEC in April 2016. The first earner is assumed to earn £15,600 a year. © Institute for Fiscal Studies

11 The new system will create 3 regimes of subsidy
The new system will create 3 regimes of subsidy... Government contribution to childcare costs in a couple family with two pre-school children UC 70% Note: Authors’ calculations using TAXBEN. The figure shows the situation facing the second earner in a couple family with two pre-school children that spends £115/wk on ECEC in April 2016. The first earner is assumed to earn £15,600 a year. © Institute for Fiscal Studies

12 The new system will create 3 regimes of subsidy
The new system will create 3 regimes of subsidy... Government contribution to childcare costs in a couple family with two pre-school children UC 70% Note: Authors’ calculations using TAXBEN. The figure shows the situation facing the second earner in a couple family with two pre-school children that spends £115/wk on ECEC in April 2016. The first earner is assumed to earn £15,600 a year. © Institute for Fiscal Studies

13 The new system will create 3 regimes of subsidy
The new system will create 3 regimes of subsidy... Government contribution to childcare costs in a couple family with two pre-school children UC 70% Note: Authors’ calculations using TAXBEN. The figure shows the situation facing the second earner in a couple family with two pre-school children that spends £115/wk on ECEC in April 2016. The first earner is assumed to earn £15,600 a year. © Institute for Fiscal Studies

14 …which is far from ideal
Size of the subsidy rises and then falls as family income rises Each regime is aimed at different sorts of families, but family circumstances change frequently System could be simplified with a single scheme open to all parents with top-up payments varying with family circumstances © Institute for Fiscal Studies

15 Key concerns The new system will create 3 levels of subsidy, which is not obvious to justify and risks to be confusing Lack of clarity over the policy objectives © Institute for Fiscal Studies

16 What is the government trying to achieve?
Recent announcements indicate the government hopes to: Improve long-term outcomes of children Decrease socio-economic inequalities Increase labour supply of parents of young children But unclear what specific policies are trying to achieve What is the case for government intervention? Help credit constrained parents or promote social equality (could justify targeted interventions) Promote gender equality (could justify universal interventions) © Institute for Fiscal Studies

17 Key concerns The new system will create 3 levels of subsidy, which is not obvious to justify and risks to be confusing Lack of clarity over what the government aims to achieve Lack of clarity about the evidence base for intervention © Institute for Fiscal Studies

18 Evidence on ECEC and children’s outcomes
Evidence that intensive, high-quality ECEC interventions targeted at disadvantaged children are highly effective Not necessarily a good guide for UK policies No direct evidence on the impact of current policies on child development Ongoing work at ISER and University of Surrey International evidence that large-scale interventions have fairly small benefits, concentrated among disadvantaged children © Institute for Fiscal Studies

19 Maternal employment and age of youngest child
© Institute for Fiscal Studies

20 Evidence on ECEC and parental labour supply
No consistent evidence that childcare has large effects on mothers’ labour supply There are reasons why we might not detect an effect Subsidies usually only apply to formal childcare Policies might be inflexible Out-of-work women might be those further away from labour market We know little about the impact of UK policies Ongoing work in this area at IFS and ISER IFS study shows very small impact on out-of-work lone-mothers © Institute for Fiscal Studies

21 Conclusions State support for ECEC in England has grown over past 20 years Likely to continue, given strong cross-party support © Institute for Fiscal Studies

22 Conclusions State support for ECEC in England has grown over past 20 years Likely to continue, given strong cross-party support Planned reforms create a complex and confusing system of subsidy Could be simplified © Institute for Fiscal Studies

23 Conclusions State support for ECEC in England has grown over past 20 years Likely to continue, given strong cross-party support Planned reforms create a complex and confusing system of subsidy Could be simplified There seems to be a mismatch between what the government hopes to achieve and the evidence base for intervention © Institute for Fiscal Studies

24 Conclusions State support for ECEC in England has grown over past 20 years Likely to continue, given strong cross-party support Planned reforms create a complex and confusing system of subsidy Could be simplified There seems to be a mismatch between what the government hopes to achieve and the evidence base for intervention The case for targeted interventions is easier to make than the one for extending universal provision of nursery education © Institute for Fiscal Studies

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