To assess how recent expansions in government funding for childcare entitlements have affected the sector – and its capacity to further increase provision – it is important to understand both the financial health of childcare providers and the cost of childcare to the government, providers, and parents.

Key findings:

• There was considerable variation in the financial health of childcare providers. While the average provider brought in £1.07 of income for each £1 of costs, some providers were making a significant loss. In particular, around one in four nursery class childcare settings (26%) and one in three childminders (30%) brought in less than £0.80 of income for each £1 of costs. In contrast, over two in five private group-based providers (43%) brought in more than £1.20 of income for each £1 of costs.
• The unit cost of childcare, the average cost of delivering one hour of childcare, increased by 8% from 2024 to 2025, with the largest increases for childminders (14%).
• Staffing costs continued to make up the majority of providers’ costs (between £0.70 and £0.88 for every £1 spent, dependent on provider type). The significance of staffing costs to providers and an average hourly pay of £13.50 per hour highlights the importance of recent increases in the National Living Wage on childcare providers’ finances.
• Even before the expansion of childcare entitlements was fully rolled out, nearly two-thirds (63%) of the average provider’s income came from government-funded entitlements (paid to providers for providing funded entitlement hours), up from 47% in 2024. This shift from parent-paid fees to entitlement funding was most noticeable among childminders. The proportion of income from parent-paid fees for the average childminder dropped from 71% in 2024 to 48% in 2025.
• Average hourly pay was higher for staff working at school-based providers. This was driven by both a higher concentration of highly qualified staff among school-based providers and a greater hourly pay premium associated with higher-level qualifications (relative to lower-level qualifications) at school-based providers.
• For under two-year-old and two-year-old children, hourly entitlement funding rates were higher than hourly parent-paid fees for all provider types (the average hourly entitlement funding rate was £3.54 per hour higher than hourly parent-paid fees for under two-year-olds and £1.13-£1.18 per hour for two-year-olds depending on the type of entitlement).
• However, for three- and four-year-olds, hourly entitlement funding rates were lower than hourly parent-paid fees for all provider types except nursery class childcare settings where rates were around equal (the average hourly entitlement funding rate was £0.94 per hour lower than hourly parent-paid fees).

The full report can be found on the Department for Education website here.

Ella Lingard is a Senior Economic Consultant at London Economics, working in the Education and Labour Markets team. She leads the research on the Survey of Childcare and Early Years Providers. She can be contacted by email at elingard@londoneconomics.co.uk.

Dr Su-Min Lee is a Principal Economist at London Economics, primarily working in the Education and Labour Markets team. He leads London Economics’ research in childcare and early years, which ranges from evaluating the impact of childcare policies on parental labour market choices to understanding trends in the childcare workforce and childcare affordability. He can be contacted by email at smlee@londoneconomics.co.uk.

Prior to joining London Economics, Izabela worked at a consultancy delivering evaluation, economic impact assessment, as well as exploratory research. She specialised in quantitative methods, including descriptive analysis, econometrics, and bespoke economic modelling. Her work included projects for a variety of clients, including the British Business Bank; the Department for Science, Innovation and Technology (DSIT); and UK Research and Innovation (UKRI).

Izabela holds an MSc International Social and Public Policy (Research stream) from the London School of Economics and Political Science (LSE).

The analysis focuses on English full-time first-degree students only, and investigates:

• Total teaching funding per student, capturing the tuition fee and teaching grant funding received by HE providers in England.
• The ‘Exchequer contribution’ to this funding, including the teaching grant and the share of the tuition fee loan expected to be written off by Treasury.
• The ‘graduate contribution’, capturing the share of the fee loan that is expected to be repaid.

We find that:

• 2025-26 (Scenario D): The current Exchequer contribution to total teaching funding per student stands at £2,480 (based on Plan 5 loans). This equates to 23% of the total teaching funding per student.
• 2012-13 (Scenario A): Under the original Plan 2 terms (i.e. the original funding intentions of the Government at the time) and the original discount rates used to estimate the Government’s student loan write-offs at the time, the Exchequer was expected to contribute 54% of total teaching funding per student in 2012-13 (£7,720).
• 2012-13 (Scenario B): Considering the original Plan 2 terms but accounting for changes in wider economic factors (by using the current 2025-26 discount rates), the Exchequer contribution per student in 2012-13 was £4,320 (30% of total teaching funding per student). This means that the Exchequer contribution per student is £1,840 lower (43%) in 2025-26 in real terms than in 2012-13.
• 2012-13 (Scenario C): Looking at the current actual Plan 2 terms (using current 2025-26 discount rates) – the 2012-13 Exchequer contribution to total teaching funding per student stands at £3,580 (25% of total). Hence, even after the Plan 2 system changes, the Exchequer contribution to teaching funding per student in 2025-26 is still £1,100 lower in real terms (31%) than in 2012-13.

In summary, across every measure/scenario, the level of Exchequer contribution to total teaching funding per student in England has declined since 2012-13.

The full report is available here.

The analysis follows our earlier publication on behalf of HEPI and the NUS which looked in more detail at Plan 2 student loan repayment terms, for the 2022-23 student cohort.

For more information on the evaluation panel, please click here.

London Economics conducted a study for the European Space Agency (ESA) to examine this risk in detail. The study assesses the economic importance across five sectors – Maritime, Aviation, Consumer, Energy and Payments – by modelling the effects of a hypothetical seven-day outage of satellite communications across ESA Member States and Canada.

To obtain a copy of the full report, please complete the form below.

Methodology

The study’s findings are based on a scenario in which satellite communications are disrupted for a period of seven-days, affecting all satellite-orbits, irrespective of the underlying cause. Other space -based services, such as satellite navigation, are assumed to remain fully operational.

The analysis draws on a combination of secondary research and primary evidence. London Economics reviewed existing literature and data sources and conducted interviews with 48 stakeholders, including satellite operators, connectivity providers, service users, national regulators, academics, and financial institutions. These inputs informed the development of an economic model to estimate the impact of a disruption on economic activity, measured in terms of Gross Value Added (GVA), as well as the loss of connectivity-related benefits to users.

The study considered wider societal and environmental impacts, including the number of households affected by a loss of connectivity and changes in CO2 emissions from potential efficiency losses.

Given the hypothetical nature of the scenario and the range of factors that could influence outcomes, the analysis presents a set of impact estimates under several scenarios.

Key findings

The analysis shows that satellite connectivity is most critical in environments beyond the reach of ground-based networks, particularly across oceans and in airspace. As a result, the largest economic losses during a seven-day outage are concentrated in the maritime and aviation sectors, which together account for more than 90% of the total estimated impact.

• In the maritime sector alone, losses are estimated at €9.6bn. Disruptions to vessel operations, combined with the loss of systems such as the Global Maritime Distress and Safety System (GMDSS), would affect not only shipping activity but also warehousing and port support services. These effects would extend further through supply chains, increasing the overall impact.
• The aviation sector would face estimated losses of €307.6m. A satcom outage would disrupt more than 4,000 transatlantic flights through cancellations or delays, leading to passenger time losses, knock-on scheduling effects, increased CO2 emissions, and challenges to air traffic management operations.
• Impact on internet consumers are estimated at €262.8m. Around 2.2 million users would be left completely offline, affecting access to online education, remote work, satellite-enabled emergency messaging, particularly in remote or underserved areas.
• In the energy sector, losses are estimated at €73.9m. These are mainly driven paused rig operations, standby costs, and welfare impacts on offshore crewmembers who rely on satellite connectivity for communication
• For payments, no direct monetisable impact was identified. However, the study highlights that localised effects would likely be felt in remote communities where financial infrastructure depends heavily on satellite-enabled connectivity.

To contact the authors about this report or for any other enquiries, please send an email to space@londoneconomics.co.uk

Digital financial technologies were found to offer a huge opportunity to increase the productivity of the UK’s SMEs. The study demonstrates how digital financial tools can dramatically reduce the time spent by SMEs on administrative tasks, boosting productivity and allowing SME leaders to focus on their core business and growth of their firm. Our analysis shows that these tools have already delivered cost savings and efficiency gains of between £45.8 and £59.0 billion. Yet, a vast amount of untapped potential remains; further adoption could unlock additional economic benefits of between £18.4 to £25.3 billion annually.

Read the full study here.