Child Day-Care Centres in the UK Industry Market Research Report Now Updated by IBISWorld

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Child Day-Care operators have suffered some setbacks in recent years. The recession caused unemployment to rise and household incomes to fall, which undermined demand for childcare services. This follows a period of strong growth, kicked off by the introduction of a government voucher scheme in 2005. Industry revenue fell in 2009-10 by 1.3% and a lessor 0.1% in 2011-12, as households tightened their budgets and in some cases substituted professional child care services for home care, with more people out of work or on reduced hours. Government policy has strongly affected the industry's fortunes. The voucher scheme has supported industry expansion and reduced revenue volatility. Nevertheless, as part of wide-ranging austerity measures in the wake of the financial crisis, the current government has reduced childcare assistance for higher income families through tax reforms. In contrast, the child tax credit and working tax credit reforms encourage lower income individuals to work more hours, thus increasing demand for childcare. Over the five years through 2012-13, industry revenue is expected to grow by 6.6% per annum, due primarily to strong growth in the early years. Profits are under pressure from higher wage costs brought on by regulatory changes to early years education, and lower occupancy rates due to lower enrolments. In the next five years, and in the absence of any notable policy changes, industry revenue is forecast to rise through to 2017-18. Growth will be supported by rising workforce participation and falling unemployment, as well as rising household disposable income. Projected growth in the population aged 0-12 years will also drive demand for child day-care centres over this period. For these reasons, industry research firm IBISWorld has updated its report on the Child Day-Care Centres industry.

IBISWorld Market Research

IBISWorld Market Research

Revenue slows as high unemployment reduces demand for childcare

Child Day-Care operators have suffered some setbacks in recent years. According to IBISWorld industry analyst Angela Kidson, “the recession caused unemployment to rise and household incomes to fall, which undermined demand for childcare services”. This follows a period of strong growth, kicked off by the introduction of a government voucher scheme in 2005. Industry revenue fell in 2009-10 by 1.3% and a lessor 0.1% in 2011-12, as households tightened their budgets and in some cases substituted professional child care services for home care, with more people out of work or on reduced hours. Government policy has strongly affected the industry's fortunes. The voucher scheme has supported industry expansion and reduced revenue volatility. Nevertheless, as part of wide-ranging austerity measures in the wake of the financial crisis, the current government has reduced childcare assistance for higher income families through tax reforms. In contrast, the child tax credit and working tax credit reforms encourage lower income individuals to work more hours, thus increasing demand for childcare.

In 2012-13, industry revenue is forecast to grow by 1.8% to £3.03 billion, supported by rising household income and falling unemployment. Over the five years through 2012-13, industry revenue is expected to grow by 6.6% per annum, due primarily to strong growth in the early years. Profitability is expected to fall in 2012-13. Profits are under pressure from higher wage costs brought on by regulatory changes to early years education, and lower occupancy rates due to lower enrolments. Kidson adds, “in the next five years, and in the absence of any notable policy changes, industry revenue is forecast to rise through to 2017-18”. Growth will be supported by rising workforce participation and falling unemployment, as well as rising household disposable income. Projected growth in the population aged 0-12 years will also drive demand for child day-care centres over this period.

The Child Day-Care Centres industry has a low level of market share concentration, with no company controlling even 3.0% of revenue. The industry is overwhelmingly comprised of small players, which is largely due to the nature of childcare business, which involves a high level of supervision and care. This puts a limit on the number of children that a successful centre can enrol, and to the benefits of economies of scale via ownership of a large number of centres. The branding benefits of a large company are minimal as parents will usually rely upon word-of-mouth recommendation to select a childcare provider, and will indeed tend to be sceptical of the ability of large operators to put the interests of their child first. Location is also a primary factor in choosing day-care services, and this is a further reason for the large number of small size establishments.

For more information on the Child Day-Care Centres industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.

IBISWorld industry Report Key Topics

Companies in this industry provide childcare. These services are principally provided for children under 12 and include long day care, occasional care, after-school care and holiday care. Increasingly, childcare is incorporated with education and holiday care as parents work greater hours and develop more reliance on care providers. The industry excludes early-childhood education and welfare-based social care for children.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalisation & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on many UK industries. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in London, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.co.uk or call (020) 3008 6568.

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