July 2017

The potential value for money of early education

Report summary

Aims and Methods

This report identifies the level of impacts required for early childhood education and care (ECEC) to achieve positive value for money (the “breakeven impacts”). This is done by combining cost data collected from 166 settings, published as part of SEED in January 2017, with estimates of the monetary value of impacts derived from existing evidence and from new analysis of the National Pupil Database (NPD). 

Estimation of these breakeven impacts provides early insights into whether positive value for money is feasible and into the variation in the size of the breakeven impacts across different outcomes and types of provision.

Key findings

  • Existing evidence and analysis of NPD data show that improvements in child development at age three and four, and improvements in Key Stage 1 attainment at age seven, can be linked to later monetary benefits including through reduced special educational needs, truancy, school exclusion and from improved qualifications, employment rates and earnings. 


  • The key driver of the monetary value of the returns is higher earnings rather than reductions in the costs of Government services and the benefits mainly accrue to individuals.


  • Breakeven impacts, i.e. the level of impacts required for ECEC to achieve positive value for money, are “small” to “medium” for child outcomes at ages three and four, and “very small” to “small” for KS1 scores at age seven.


  • Due to its higher cost, full-time early education would require considerably larger impacts than part-time ECEC to offer better value for money. However, the smaller cost differences between different types of provider and across varying quality of provision indicate the higher cost options would not require substantially greater impacts to offer better value for money.