Expand early-years childcare: note

Central fiscal result

+£3.0bn - Net fiscal impact in 2028-29

Low case: +£2.0bn. High case: +£6.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Models expand early-years childcare by 2028-29.
• Baseline is current policy or published departmental plans.
• Central case uses published party or official anchors where available.
• Wider manifesto interactions are excluded unless stated.

Affected population

• Affected units are people, firms, households or providers depending on policy.
• Direct exposure follows the manifesto or government target group.
• Indirect exposure includes suppliers, workers, consumers and taxpayers.
• Weakest counts are widened in the low and high cases.

Gross impact

• Published anchor or scenario central is +£3.0bn in 2028-29.
• Gross costs or receipts are adjusted for behaviour and delivery risk.
• Tax, benefit or procurement offsets are separated in the fiscal build-up.
• The range is deliberately wider where implementation detail is thin.

Fiscal build-up, central case

• Gross programme or delivery cost: +£3.4bn
• Tax and receipt offsets: -£0.2bn
• Administration and evaluation: +£0.1bn
• Behavioural and pass-through effects: -£0.3bn

Central net impact: +£3.0bn in 2028-29.

Behaviour and pass-through

• Low case assumes stronger delivery or receipts than central.
• Central case applies moderate behavioural leakage and pass-through.
• High case allows weaker delivery, larger take-up or higher costs.
• Output effects follow incidence, capacity and investment channels.
• Distributional gains do not automatically imply GDP gains.

Phasing

• 2026-27: +£0.3bn. Phased implementation and take-up.
• 2027-28: +£1.7bn. Phased implementation and take-up.
• 2028-29: +£3.0bn. Phased implementation and take-up.
• 2029-30: +£3.0bn. Phased implementation and take-up.

Main source groups

• Heckman, "Skill Formation and the Economics of Investing in Children" (Science, 2006): Early childhood investments can have high returns when targeted well and delivered effectively; relevant to nurseries and early years.
• Liberal Democrats, "Funding a Fair Deal: Liberal Democrat Manifesto Costings" (2024): Party costings give 2028-29 spending, revenue and investment figures; used as starting anchors, not official costings.
• Psacharopoulos and Patrinos, "Returns to Investment in Education" (Education Economics, 2018): Education has positive private and social returns, though quality and targeting matter; supports education spending with delivery caveats.
• Liberal Democrats, "For a Fair Deal: Liberal Democrat Manifesto 2024" (2024): The manifesto gives announced policy detail across health, care, housing, taxes and climate; used to define the policy scenarios.