Spending on early childhood services - Is England really near the top of the league?

The Coalition Government's recent policy statement, 'More Great Childcare', sets out what the Government spends each year on a range of early childhood services. It then goes on to claim a leading place in the international early childhood spending league: 'As a share of GDP, the Government spends around 40 per cent more than the OECD average on childcare ... lower than the Nordic nations, comparable with France and higher than Germany' (page 16).

Now there can be no doubt that government investment in early childhood education and care has increased substantially since 1997. Nursery education entitlements, subsidies to parents for childcare use, children's centres - all have boosted public spending on the early years. But starting from so far back, have we now become a front runner when it comes to expenditure on early childhood services? If not, where are we now in comparison to other rich countries?

The usual source for trying to answer such questions is the Family Data Base produced by the Organisation for Economic Co-operation and Development. The self-professed aim of the influential Paris-based OECD is 'to promote policies that will improve the economic and social well-being of people around the world'. Its Family Data Base has a section on 'Public spending on childcare and early education'. This shows the UK coming in equal fifth out of 33 countries listed, alongside France and Finland, and behind only the four Nordic leaders - Iceland, Denmark, Sweden and Norway.

It is this source, we think, that 'More Great Childcare' relied on when making the claim we have quoted. To be more precise, the OECD data shows UK public spending on 'childcare and early education services' running at 1.1% of GDP in 2009, well ahead of the OECD average of 0.7%. France does indeed come in at a similar level, and Germany at 0.5% is far behind. The Nordic countries (excluding Finland) are shown as spending between 1.2% and 1.7% of GDP.

This all looks very impressive, an authoritative source showing the UK nearly topping the international league table. But there's a problem. The figures don't seem to add up.

Let us return to 'More Great Childcare' to illustrate what we mean. On page 15, immediately before the reference to our position in the international league table, there is a section on actual expenditure, which states that the English '(g)overnment spends almost £5 billion a year on early education and childcare'. The overall figure is made up of 'funded early education ... around £2 billion'; 'tax credits and benefits disregards ... £1.5 billion'; and 'employer supported childcare ... around £800 million'.

Actually, these individual items do not add up to almost £5 billion; so it is not clear if some items are left out (children's centres perhaps?), or whether the £5 billion includes future increases - early education, for instance, will be 'rising to around £3 billion a year by the end of the Parliament'.

Let's for the sake of argument, stay with the overall figure of £5 billion as the English government spend on early childhood education and care. What is this as a proportion of national GDP? Certainly not 1.1%. The UK's GDP in 2012 was around £1.5 trillion (that's 15 followed by 11 zeros!) - making £5 billion about one third of one per cent of this global output figure. But we need to make some adjustments.

First, we need to compare English expenditure with English, not UK, GDP. This means reducing the UK's GDP by about 15% to around £1.25 trillion, which brings English early education and childcare expenditure up to around 0.4%.

This is identical to the figure produced by Professor Mike Brewer, from the Institute of Fiscal Studies, for public expenditure on these services as a proportion of GDP for England in 2009. His estimate of £5.2 billion spent on early childhood education and care includes the items listed in 'More Great Childcare' but also others, including £1.2 billion for Sure Start local programmes and children's centres. Even after this adjustment, we are still well adrift from the 1.1% in the OECD Family Database, and the claims made in 'More Great Childcare'.

There is, however, one more adjustment to make. OECD member states vary in when children start primary school. England is at one extreme, with compulsory school age at five (in most countries it is six).

To get comparable figures, therefore, OECD has to make some allowance for this variation in school starting age. OECD does this for countries where school starting age is five by adding a sum of money 'corresponding to children aged five years who are enrolled in primary school', ie, to the figures for public expenditure on early childhood education and care, OECD adds expenditure on five-year-olds in school.

In this way, the OECD league table provides data on expenditure on care and education services for children from birth to six years of age.

What this 'five-year-old' supplement comes to in the case of England or the UK is not specified by OECD. But even if we assume (generously) that it increases public expenditure on early education and childcare by a half, it would still only bring England's spend on children aged nought to six up to 0.6% of GDP. This revised figure drops England down to the middle of the OECD rankings, a bit below the OECD average - a long way from its ranking by OECD and the claims of the Government based on this source.

This suggests that increased public expenditure on early education and childcare, post-1997, has pulled England up from the bottom end of the international league table to somewhere around the average of rich countries.

If our calculations are correct, it would also help explain an apparent anomaly. While, according to OECD we are not far behind Nordic countries in our spend, we are in fact still trailing them when measured against entitlement (a right to access from birth or the end of parental leave in the Nordic countries), workforce qualification and pay (with up to a half of the Nordic workforce being graduates), and cost to parents.

If England really spends 1.1% of GDP on ECEC, then we are doing so rather inefficiently; 0.6-0.7% of GDP seems more in line with how things actually are.

Of course, we may have got our calculations wrong. But these contradictions and discrepancies could easily be avoided. All that needs doing is for the English government (and the governments of Northern Ireland, Scotland and Wales) to publish each year clear and comprehensive breakdowns of public (and private) spending on early childhood education and care; and compare these figures to national GDP to show the share of the cake that went on these services.

So one moral is to improve the statistical information nationally. A second is to be wary of international league tables and not just to take them at face value. Usually they are only as good as the national data fed into them. OECD data is often very useful, but it is not infallible - and, as the saying goes, if something looks too good to be true, it probably is!

Nor of course does accurate information on public expenditure tell us if we are spending our money well and wisely. The Nordics spend more than us - and produce a system of early childhood education and care that is comprehensive, integrated and truly affordable. England needs to spend more money on early childhood services; but first the Government should do something about the fragmented, divisive and dysfunctional system we are used to. More money certainly, but not to pay for more of the same.

Professor Peter Moss is Emeritus Professor of Early Childhood Provision, Institute of Education University of London

Dr Eva Lloyd is Reader in Early Childhood, Cass School of Education and Communities, University of East London and co-director of ICMEC, the International Centre for the Study of the Mixed Economy of Childcare

FURTHER INFORMATION

• OECD Family Data Base http://www.oecd.org/els/soc/oecdfamilydata base.htm

• Mike Brewer's estimates of early childhood spending http://www.daycaretrust.org.uk/data/files/Events/ National_conference_2009/quality_costs__emma_knights_ and_mike_brewer_compatibility_mode.pdf.