Early education and childcare: forecast for 2020 trends

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Patrick Hayes, director of the British Educational Suppliers Association (BESA,) says that forthcoming policy moves should expand the childcare market, but not without challenges

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Since the Government’s first moves to increase the affordability and supply of childcare, there has been a large expansion of provision. A new report, ‘Understanding the childcare provider market: implications for educational suppliers’, from the Family and Childcare Trust in association with the British Educational Suppliers Association (BESA) states that today in the UK, there are an estimated 23,500 day nurseries, 9,600 pre-schools and sessional crèches, 59,500 childminders and 15,000 out-of-school childcare providers. Early education and childcare is booming, with spending predicted to reach £7.5 billion by 2017.

The report certainly backs up our understanding that childcare continues to be high on the political agenda, with the demand for investment in early education and childcare at a record high. At present, to a certain extent parents receive help with their childcare costs, with all three- and four-year-old children eligible for free part-time education.

However, this is soon to improve as this funding is increased under the Universal Credit and new Tax Free Childcare Scheme. From September 2017, the number of free early education hours will double to cover 1,140 hours every year, the equivalent of 30 hours per week over 38 weeks of the year.

Female and maternal employment has been increasing steadily since 2011, with 69.1 per cent of the working age population employed in January 2016. Economic upturn, tax free childcare and additional free early education is likely to further boost maternal employment, creating extra demand for childcare (Paull, 2016). 

There are also important financial adjustments being made to the National Living Wage and hourly funding rate for three- and four-year-olds. The Government has already announced that from 2017, the average hourly funding will be a minimum of £4.88 per hour, with a more equitable funding system ensuring cost adjustments are made for social factors such as deprivation (HM Treasury, 2015). For childcare providers, the National Living Wage rose in April 2016 to £7.20 per hour for those over 25, with plans to increase it again by 2020 to £9 per hour, and the pension auto-enrolment will be implemented in 2018.

Good news for the industry!

Indeed, the Tax Free Childcare Scheme will also grant extra support for disabled children, whose parents may claim help with up to £4,000 of their childcare costs, instead of the £2,000 cap for other children. We can expect this to boost the uptake of after-school and holiday childcare among disabled children, who at present, are less likely to use this form of childcare (Department for Education, 2014).

Another implication of this additional funding is the fact that it will drive up the need for pre-school settings to invest in specific special needs equipment. This may not only be learning resources but also specially adapted furniture and audio equipment.

The additional financial support for parents is also likely to result in an increase in childcare prices as providers see extra money in parent’s pockets as an opportunity to boost their profits.

It is therefore realistic to expect, that at least 500 new nurseries will open in England, to cope with the need for extra places.

So far so good.

However, our research highlights a shortfall. The Department for Education (DfE) has calculated that an additional 45,000 full-time nursery places will be needed to cope with the extra demand caused by the extension of free early education, as childcare for those in the 0-14 population is projected to increase by 300,000 by 2020. To support this, the DfE has made £50 million capital funding available to enable new provision and expand existing provision.

This works out at £3,400 per provider, a figure that many organisations deem inadequate.

Our concern is that, this in turn, is likely to have an impact on the structure of the childcare market, putting financial pressure on small, single site nurseries.

Other expected changes include an increase in the need for technology. As something that is an engrained part of everyday life, it comes as no surprise that there is a predicted increase in the use of IT in the childcare sector too, not only in terms of classroom learning resources but also for IT administration and management systems. For example, the Tax Free Childcare scheme will introduce online payment systems to some in the childcare sector. This will of course require staff to improve their digital skills.

With significant changes being implemented to early education and childcare, it is important that those delivering childcare provision understand the financial, political and societal changes that are expected to occur.

The Tax Free Childcare scheme will endorse a large growth in the number of day nursery providers and places, as will the rapidly increasing female and maternal employment rate. The increase in the National Living Wage and pension auto-enrolment are beneficial to those working in the sector, but the minimal capital funding pot means that institutions may be affected, with many small nurseries likely to become part of regional and national nursery chains.

High quality childcare remains a prerogative and priority for all. With the planned changes and forecasted trends for 2020, the provision is changing and developing constantly, which, I think we can all agree, we hope will be for the better!

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