Many parents were interested in the childcare announcements in the Spring Budget (well I’m a parent, I was interested). It was the £5.4bn rabbit out of the hat – a massive increase in public spending to extend free childcare to children as young as 9 months, increase wrap-around care, and to make Universal Credit payments to parents timelier and more generous.

Both the Conservatives and Labour see this as a crucial vote winner and election battleground (particularly as almost all of the spending is pencilled to fall the other side of a general election).

Childcare as an economic driver

But this isn’t just politically salient. Campaigners have long stressed the economic and social cost of a childcare system that does not work for many working families. For the first time in a long time, policy makers are talking about childcare as infrastructure - something like transport, broadband, or skills - that helps people to work and to do their jobs better. A key economic driver not just a social or family issue.

This announcement was part of a budget aimed at boosting labour market participation. The hope is that one of the major barriers to employment for many working parents would be removed. There are around 435,000 people in England with a child under 3 who aren’t working due to their caring responsibilities, many of whom say that they would like to work but cannot afford childcare.

Will this boost employment?

The hope is that more parents, (and statistically it is more likely to be mothers) will return to paid work or take up more hours. This potentially helps address labour force shortages, as well as boosting opportunities for women to maintain careers, progress at work, contribute to pensions and reduce the gender pay gap and pension gap.

But the policy will need to work in practice, both in terms of whether childcare providers will be adequately subsidised, and in whether there is enough provision available for an already stretched early-years workforce.

The Office for Budget Responsibility estimate that the extension of free childcare will raise employment by 75,000 2027-28 as well as raising the hours worked by parents already in work. But as the Resolution Foundation point out, spending £5.4bn to increase employment by 75,000 works out at £72,000 per job which may not be the best value.

It's not just parents who parent

Childcare isn’t just provided by parents and childcare providers. Half of families with a pre-school-age child don’t make any payments towards childcare. There’s an essential, but largely forgotten workforce of informal childcare providers, tirelessly pushing prams, wiping smudged faces, and playing peekabo. They are Britain’s hidden army of grandparents.

Age UK estimate there are 5 million grandparents over the age of 50 who provide regular childcare, worth an estimated £7.7bn annually to the UK economy. Over 1 million of these grandparents (22% of those over 50) stopped work or reduced their hours to provide regular childcare. Extending free childcare provision could potentially free up grandparents to consider paid work again, in the same way that it frees up parents.

In theory this should fit well with the other big policy aim of the Spring Budget - addressing rising economic inactivity among over 50s. But just because you are less needed in looking after grandchildren, doesn’t mean you will be able to or want to increase your paid work.

It’s easy for economist or policy makers to push people around on an imaginary playing board from “in-work” to “out-of-work” if you just set the right rules. But the real world doesn’t work like that.

Our research into the Great Retirement, shows many people who don’t really want to be pushed around anymore. There is a big ‘fed up’ factor - people who have had enough of paid work that makes them unhappy or damages their health. Many other grandparents would want to continue to look after their grandchildren because they enjoy it and will continue to do so even if free childcare was available.

But if even a small fraction did decide to change their working patterns the potential numbers are huge. Grandparents providing unpaid childcare outnumber the paid childcare workforce by more than 6 to 1.

If just 1% of grandparents over the age of 50 who already provide regular childcare for their own grandchildren, were to go on to provide paid childcare for two children they would more than cover the 65,000 new 30-hour places that the OBR estimate are needed by 2027.

So what needs to be done?

Phoenix Insights research has found that 1 in 4 older workers had left their job because they didn’t like the hours they worked, their commute or a lack of work life balance. We found workers in the UK where much less likely than those in the US or Germany to say they ‘liked’ their job. These things really matter and need to be addressed if people are to choose to return to work.

For this age group, the answer is probably not relaxing childcare staffing ratios (if there’s something harder than looking after four toddlers, it is looking after five toddlers). Rather it is making the job look and feel more appealing.

Long term ill health has been the biggest driver of people leaving the workforce post-pandemic. Nurseries, early-year providers and childcare agencies need to take that into account when designing rotas, schedules and working environments that meet worker needs. The government’s expanding Mid-life MOT offer and 50 PLUS champions, should identify this as a key employment growth area and help people match their skills and experience to a role.

Returnships and outreach campaigns could be targeted at over 50s looking to transfer their existing skills in caring for others. We know that a lack of confidence or unfamiliarity with the job market can be a barrier to people returning. Highlighting the skills and experiences that have been built up caring for someone’s own grandchildren and transferring them to paid childcare could be one route, mirroring successful campaigns in the adult care sector.

The Budget also outlined a ‘golden handshake’ of £600-1,200 for those becoming childminders. This could provide a more flexible employment setting, cutting out the commute, and use one of the key assets that we know over 50s are more likely to have -their own homes.

There is the potential that, if done well, this could be a way of improving health outcomes. Studies have shown that caring for children (whether you are related to them or not) can have positive impacts on health and wellbeing, as well as reducing loneliness.

If it also helps you to pay your bills, save into a pension, and be in better work for longer, so much the better.