February 2020

Financial Returns to Early Education Spending

Report summary

Aims and methods

This report uses data on the cost of delivering early education with estimated monetary valuations of the impacts on child development in order to compare the potential financial return for each pound invested across different types of provision and for children with different levels of disadvantage.

The report builds on two earlier elements of SEED which collected information from 166 settings to estimate hourly delivery costs for different ages of children and which developed a model to estimate the lifetime financial returns to improvements in child development outcomes at ages three and four. The findings from these elements were combined with new estimates of the impacts of early education on children at ages three and four to estimate the benefit-to-cost ratio for different types of providers and quality of provision.

Key findings

  • The returns were generally higher for early education at age two than for early education at age three, driven by larger impacts which were not outweighed by a higher delivery cost for early education at age two.


  • The return was generally higher for children attending childminders than for other types of providers such as private nurseries and nursery classes, primarily reflecting larger impacts rather than lower costs.


  • There was no consistent pattern in the return across setting quality level, reflecting an absence of strong associations between cost and quality or between impact and quality.


  • The returns were higher for children in the moderately and least disadvantaged groups than those in the most disadvantaged group: although there were higher annual costs for children in the moderately and least disadvantaged groups, these were outweighed by higher impacts.