Early literacy matters: Economic impact and regional disparities in England

Think tank: Pro Bono Economics

Author(s): Karol Rodriguez Cabrera; Rachel Gomez; Jon Franklin

February 26, 2024

This report from UK think tank Pro Bono Economics looks at the economic impact and regional disparities in England of early literacy matters.

The early years are the most critical time for the development of a child’s abilities to master language, to read and to communicate.

However, with early years settings under pressure and families not receiving adequate support, more than a quarter of five-year-olds in England – 187,000 children – did not meet the expected standard for literacy in 2022/23. It is likely that many of these children could reasonably have achieved the expected level in literacy if they were provided with more tailored support. The current early years standards were only introduced in 2021/22. This means there is not yet robust evidence on the long-term impact of these children not reaching the expected level for the current standards. However, by linking previous versions of early years literacy assessments to later economic outcomes, it is possible to estimate that an additional 106,000 children could reasonably have achieved the expected level in literacy in 2018/19 if they had received the additional support they needed.

The economic cost of insufficient early literacy support is likely to be significant. Each year group of children who do not meet the expected early years standard generates lifetime economic costs of around £830 million. This equates to £7,800 for each five-year-old who could reasonably have been expected to meet the standard. Much of this loss stems from the knock-on effects on academic success and later employment outcomes. The typical child who does not meet the literacy standard at age five loses out on around £5,300 of earnings over their lifetime and costs the government around £2,500 more over their lifetimes through higher spending on education and welfare, as well as lower tax revenue.