Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential impact of good quality childcare on levels of economic productivity.

Investing in high quality childcare can support economic growth and productivity, through its impact on parental participation in the labour market and children’s future success in education and in the labour market.

At Spring Budget 2023, the government announced that it will expand the free childcare hours offer so that eligible working parents in England will be able to access 30 hours of free childcare per week for 38 weeks of the year. HM Treasury does not prepare formal forecasts for the UK economy, including assessments of the impact of the Budget, which are the responsibility of the independent Office for Budget Responsibility (OBR). As a result of this policy, the OBR estimated around 60,000 to enter employment by 2027-28, as well as increase the hours worked by mothers already in work. The OBR judged this policy to have the largest impact on potential output in this Budget. Further details can be found in the OBR’s latest Economic and Fiscal Outlook published in March 2023: https://obr.uk/efo/economic-and-fiscal-outlook-march-2023/

The government also announced a substantial uplift to the hourly rate paid to providers to deliver the existing free hours offers, providing £204 million in 2023-24, paid from September 2023, and £288 million in 2024-25. This will help providers manage cost pressures, develop the necessary capacity to deliver the new free hours offers, and raise the quality of provision. According to the IFS, attending high quality early years settings has a positive impact on children’s future success in education and in the labour market, with higher lifetime earnings.