Industry revenue is forecast to increase by an average 1.7% per year to reach £3.2 billion in 2016-17
London, UK (PRWEB) November 20, 2011
Despite ongoing economic challenges, the UK Child Day-Care Centres industry is expected to continue to grow and remain profitable over the next five years, according to IBISWorld, the United Kingdom’s largest publisher of industry research. However, there is an element of uncertainty. In November 2009, then-Prime Minister Gordon Brown's announcement that his government was considering removing the childcare vouchers scheme added an element of unpredictability to the industry's fortunes. As part of its austerity measures, the new administration put a comparable plan into action, lowering the assistance available to higher income parents. According to IBISWorld, this is unlikely to adversely affect industry revenue as wealthier families are more willing to pay full price for childcare. A removal of similar benefits from lower income families would have a far more detrimental effect on the industry.
One of the major by-products of the rapid modernisation of the UK and global economies has been the introduction of more women into the workforce. Women now have an employment rate of 70%, compared with 78% for men, a distinct shift from the 56% to 92% dichotomy of the 1970s. A major offshoot of this shift has been a rapidly increasing need for childcare services in the UK to cater for the increase in working mothers, single parents and two-income families.
Recognising this, the government introduced a childcare voucher scheme in 2005 to encourage parents to return to the workforce. The aim was to stabilise a volatile but rapidly growing industry, which is expected to be worth £3.0 billion in 2011-12. The demand for childcare, which existed prior to the introduction of the vouchers scheme, lifted further in its wake, and the industry is forecast to grow by an average 9.0% per year in real terms over the five years through 2011-12.
Although government-sponsored projects have removed some of the industry's fluctuations, they were insufficient to prevent a contraction in 2009-10 as the economy slid, unemployment rose and incomes fell. The 1.3% fall in revenue for that year, however, compared favourably with the previous downturn, when the Child Day-Care Centres industry in the UK contracted by 10.5% in 2002-03. Industry revenue is forecast to decline again in 2011-12, though by only 0.1%.
According to IBISWorld analyst, Paul McMillan, one concern for potential users of the industry's services has been the likelihood that government money being given directly to individuals demanding childcare will only result in an increase in the cost of childcare, increasing profit and freezing out low-income families from accessing the service. In response, then-Prime Minister Gordon Brown suggested amending the scheme by withdrawing a large slice of vouchers funding and dedicating that money to low-income families with children aged below pre-school level. As part of wide-ranging austerity measures, the incoming administration has moved forward with a similar policy, cutting government childcare assistance for higher income families.
Despite this, the ongoing presence of government-assisted childcare, and constant demand for the service from families, indicates that the industry is set for another five years of growth. However, considering the expected ongoing high rate of unemployment, revenue growth will not be as rapid as in the past five years. Revenue in the UK Child Day-Care Centres industry is forecast to increase by an average 1.7% per year to reach £3.2 billion in 2016-17.
For more information, download the full report from IBISWorld on the UK Child Day-Care Centres
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