Create school-based nurseries

Policy baseline

The manifesto pledged more than 3,000 school-based nurseries. The fiscal risk is capital adaptation, staffing and childcare-subsidy interaction.

• Targets primary schools and young children.
• Staff availability constrains delivery.
• Parental employment gains are uncertain.

Core trade-offs

The direct beneficiaries are parents, children and early-years providers. The costs fall mainly on taxpayers and competing childcare settings. The main economic question is capacity expansion may bid up childcare wages.

• Parents, children and early-years providers gain most directly.
• Costs fall mainly on taxpayers and competing childcare settings.
• Key risk: capacity expansion may bid up childcare wages.

Fiscal impact by 2028-29

+GBP 0.3bn to +GBP 2.0bn. Central estimate: +GBP 0.7bn.

• Positive numbers mean net fiscal cost; negative numbers mean Exchequer savings.
• Main channel is the scored tax, spending or delivery change.
• Offsets depend on tax receipts, behaviour and pass-through.
• Range reflects uncertain implementation and economic response.
• This is not an official costing.

Economic impact by 2028-29

• Jobs: Education hiring rises; shortages and retention problems may cap delivery.
• Wages: Teachers, childcare staff or students gain; taxpayers fund the cost.
• Prices: Childcare prices may fall if supply expands; wage pressure can offset subsidies.
• GDP / productivity: Long-run gains possible; short-run GDP effects depend on staffing and quality.

Assessment

This is a real trade-off, not a free gain. Parents, children and early-years providers benefit, while taxpayers and competing childcare settings bear most costs. Overall output depends on behaviour, capacity and pass-through.

Confidence: Medium-low. Higher on the policy target and fiscal channel; lower on behaviour, pass-through and economy-wide effects.

Main risks

• Staffing shortage: Recruitment and retention can limit delivery.
• Quality variation: Extra places or grants do not guarantee high-quality provision.
• Long payback: Economic returns take years and are hard to score fiscally.

Safeguards

• Target shortages and disadvantaged pupils.
• Audit quality and staff retention.
• Evaluate outcomes before expansion.

Academic evidence

UK government evidence

Sources

• PolicyLens illustrative scenario methodology for create school-based nurseries Internal - PolicyLens, 2026
• Budget 2025 UK government budget - HM Treasury, 2025
• Skill Formation and the Economics of Investing in Children Academic article - Heckman, Science, 2006
• Plan for Change UK government plan - HM Government, 2024
• Returns to Investment in Education Academic article - Psacharopoulos and Patrinos, Education Economics, 2018
• Change: Labour Party Manifesto 2024 Party policy source - Labour Party, 2024

Other Labour policies

• Raise employer National Insurance
• Apply VAT to private school fees
• Replace non-dom tax status
• Raise capital gains tax rates
• Extend the Energy Profits Levy
• Capitalise the National Wealth Fund
• Capitalise Great British Energy
• Expand the Warm Homes Plan