Nursery market value soars
Alison Mercer
Wednesday, May 14, 2003
The UK day nursery market was worth an estimated Pounds 2.15 billion in 2002, more than five times its value at the start of the 1990s, according to a recent report published by the healthcare consultancy Laing & Buisson. Private sector providers generated 1.93 billion of the total, with the lion's share coming from sole traders or partnerships, which had a total income of 1.05 billion. Providers trading as companies earned 0.88 billion. The remainder of the total was generated by not-for-profit providers such as voluntary sector nurseries and local authorities. The market's total value grew by an estimated 16.5 per cent between 2001 and 2002.
Private sector providers generated 1.93 billion of the total, with the lion's share coming from sole traders or partnerships, which had a total income of 1.05 billion. Providers trading as companies earned 0.88 billion. The remainder of the total was generated by not-for-profit providers such as voluntary sector nurseries and local authorities. The market's total value grew by an estimated 16.5 per cent between 2001 and 2002.
Around 83 per cent of the total cost of nursery care - 1.8 billion - was paid for by parents. Companies chipped in 0.14 billion (140m), funded both by direct provision of workplace nurseries and corporate childcare vouchers, representing 7 per cent of the total.
The Government provided a direct subsidy worth 165m through the funding of nursery places for three- and four-year-olds, and an indirect subsidy worth 130m through the childcare tax credit element of the Working Families Tax Credit.
While the market is dominated by stand-alone nurseries, nursery groups'
share of the market is growing rapidly. The top 20 major providers account for around 10 per cent of the total, with Asquith Court, the market leader, having a 1.4 per cent share.
Full-time fees grew by an estimated 6 per cent in 2002 to a weekly average of 120 in January 2003, rising to 146 a week in Greater London.
Children's Nurseries - UK market sector report 2003 says that fee inflation over the past two years has been driven by the impact of the National Minimum Wage. The report predicts, 'There is likely to be another round of cost-push nursery fee inflation when the NMW rises in October 2003.'
The report estimates that the average wage for a qualified nursery employee was 6.10 per hour in January 2003. The rate for unqualified staff was close to the revised adult minimum wage of 4.20 introduced in October 2002.
The report comments that the Government's childcare expansion programme 'has the potential to undermine demand for nursery services in the private sector'. It adds, 'Laing and Buisson believes the Government will introduce subsidised funding within the next five years for children aged under three years. The Government has also laid the foundations for schools to offer childcare services to children under three years. It is highly likely that the Government plans to encourage the creation of (subsidised) places for under-threes within schools. This poses the greatest threat to demand within the "mature" children's nursery market.'
The report is available for 440.00 from Laing & Buisson on 020 7833 9123, or via the website www.laingbuisson.co.uk.
