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Why is it good for society and the economy?

Leaving problems unresolved in childhood doesn’t only impact on the lives of individuals and families – it also impacts on society, in terms of undermining the wellbeing of communities and reducing people’s opportunities to live positive and successful lives. Building healthier, happier and more productive communities can only happen if we support children to fulfil their potential.

Benefits to wider society

Capturing the economic benefits of early intervention requires a broad, holistic view. Many of the potential benefits of early intervention only emerge over the long term, and are dispersed widely across society, from individuals and families to local communities and every tier of government. Additionally, the benefits of investing in early intervention may not show up in the pocket of the government departments, local authorities and public services that have paid for them in the first place.

For example, reducing behavioural problems in childhood will result in children being less disruptive at school and requiring less additional support from teaching staff. This has the potential to lead to improvements in school attainment and lifetime earnings, both for the child who receives the early intervention support, and for their peers, who are less disrupted at school. It may also reduce the likelihood of children being excluded to high-cost pupil referral units, as well reducing the likelihood that they will engage in criminal activity, thereby reducing the burden on the police and youth justice system. It may also lead to children engaging less in risky behaviour, such as alcohol or drug abuse, which can have knock-on consequences in terms of the cost of health provision and improvements in their lifetime wellbeing.

Benefits to the economy

There is evidence to suggest that preventing or resolving problems earlier has the potential to lead to significant economic benefits. In particular, gains in the labour market such as improvements in earnings and employment offer particularly large long-term payoffs. Evidence shows multiple links between poor cognitive development and behavioural problems in childhood and lower qualifications and earnings later in life.

This scale of these benefits increases if we take into account overall gains in productivity, which captures not just increases in earnings and employment that benefit the individual but also the effect of increases in tax revenue and spill-over benefits to employers. From this perspective, there is good evidence that even small improvements in academic attainment at age 16 can have large long-term benefits. Estimates published by the Department for Education show that individuals achieving five or more good GCSEs have lifetime productivity gains worth around £100,000 on average, compared to those whose highest qualifications are below this level. When compared to children with no qualifications, the productivity returns on achieving five or more good GCSEs increase significantly, to around £260,000.

Benefits to the public sector

Well targeted and implemented early intervention can lead to reductions in public service use and reduce demands on frontline practitioners. On the other hand, leaving problems unresolved can create additional costs to the state by increasing the amount of extra support a person may require over the course of their life and the demands placed on expensive public services.

EIF has previously estimated that the cost of late intervention in England and Wales is around £17 billion per year. This estimate captures the costs of acute, statutory services that are required when children and young people experience difficulties, many of which might have been prevented, such as the costs of children taken into care, the costs to the health system of youth alcohol and drug misuse, and the costs to criminal justice system of youth offending. Of course, it will never be possible to reduce the cost of late intervention to £0, as some acute services will always be required, and we can’t say from this analysis how much the public sector might save from investing more in early intervention and preventative services. However, it clearly shows that considerable resources are being spent tackling issues that could have been dealt with sooner.

Nonetheless, early intervention should not be seen as a financial coping strategy for local or central government. In some cases, early intervention may lead to cashable savings – that is, to immediate reductions in what government, local authorities or public services spend on providing support. However, in general, reducing local demand will not lead to immediate reductions in the amount of money required to run services at the local level. Arguments for early intervention that rest solely on short-term cashable savings miss the bigger picture of why maintaining investment is critical.

See: The cost of late intervention

Achieving value for money

There is a compelling argument that investing in early intervention is likely to pay off in the long run, and that the economic benefits of early intervention to society, over time, will be greater than the costs of early intervention.

Developing a robust method for cost/benefit analysis is difficult. It requires reliable estimates of the potential impacts of a preventative activity, evidence on how long these effects will last, and estimates of how this will relate to changes in societal benefits, such as use of public services and changes in earnings over individuals’ later-life.

Despite this, there is a strong case that investing earlier rather than later will lead to cumulative benefits – that is, skills acquired earlier in childhood will lead to greater additional gains as children age. Although producing robust estimates of the return to society from investing in individual programmes is hard, there is a wide literature showing that pay-offs can be considerable. Furthermore, the economic and societal benefits that arise from early intervention are wide-ranging and the value of the benefits to society are often far greater than the costs of intervening.