Tax-Free Childcare important to solving the productivity puzzle

Responding to government research on the impact of Tax-Free Childcare on the labour market participation of working parents, published today, Shazia Ejaz, Recruitment and Employment Confederation (REC) Director of Campaigns, said:

“Childcare support and provision are important to solving the UK’s productivity puzzle, as significant as transport, skills and immigration policy. Its role in supporting labour market participation cannot be underestimated at a time when so many employers are struggling to recruit people with the right skills and availability. This new government research shows that better childcare support enables people to work and to work longer. The finding that one in four respondents said at least one parent would work fewer hours if Tax-Free Childcare were withdrawn should chill any thoughts of ending it. The same research also shows that lack of awareness remains the main barrier to take-up, suggesting the policy is underused rather than flawed. Tax-Free Childcare should remain in place, alongside reforms to childcare funding and access that support working families and providers alike.”

Notes to editors

Research and analysis, Impact of Tax-Free Childcare on the labour market participation of working parents, published 29 January 2026. HMRC commissioned Ipsos to conduct research into the impact of the Tax-Free Childcare (TFC) offer on the labour market participation of working parents.