While LaingBuisson's 16th report on the childcare market was written before the Covid-19 crisis, the Government's 30-hour childcare offer will be key to supporting parents back to work as the lockdown eases, said report co-author Arun Kanwar from Cairneagle Associates.
According to the report, there are 378,800 children in a 30 hours funded place.
As nurseries have stayed open for key worker parents, the crisis has also led to greater recognition of the sector’s vital importance, LaingBuisson said.
The report covers private, voluntary and independent group-based (PVI) registered settings that provide full day care services and are open all-year round for children from birth to four-years-old.
For the first time, the report also includes school-based nursery classes and maintained nursery schools, which provide services under the definition of full-day childcare. While the report covers the UK, most of the data is for England only.
According to the report, nurseries are a resilient sector for investors and ‘childcare remains an exciting market where both private equity and larger international corporates are increasingly active.’
The report is being published against the backdrop of the Covid-19 pandemic leading to the temporary closure of many nurseries across the country.
But it points out that 'nurseries performed better than many other services and industries during the 2008-09 recession and the nursery market managed modest growth despite GDP shrinking by 6 per cent and consumer spending being down 5 per cent, demonstrating the economic resilience of the sector.'
Mr Kanwar, partner, from Cairneagle Associates, told Nursery World, ‘Our report was written before the Covid crisis brought the UK to a standstill. In a way the timing of the report being completed then was very helpful, as it highlights that once we get through these exceptionally challenging times, nurseries are one of the most fundamentally resilient and investible sectors in the UK – over the last 20 years they have moved from being “discretionary” to increasingly social infrastructure to both help parents to stay in the workplace and to give children the best start in life.
'In fact, the funded offer to help parents to get back to work will need to be a key tool in the Government’s strategy to get the country back to work once the lockdown lifts.
‘The crisis - not covered in our report - will no doubt have some lasting impact on the sector including potentially more funding austerity and a difficult employment market for parents. There are always some “silver linings” in that there is increasing recognition of what our incredible sector does in helping parents working in essential sectors to support the country, and that operators of all shapes and sizes are removing their barriers and co-operating much more closely for the greater good.’
Key findings
- 14,750 settings, providing a total capacity of 872,500 places for children from birth to four
- There are 609,948 full-time equivalent childcare places taken up in full daycare settings
- Average occupancy 70 per cent
- 254,300 care staff employees
- £6.7 billion 2018/19 market value
- For-profit operators £5,500 million
- £3,000m incorporated companies
- £2,500m sole traders/partnerships
- Not-for-profit operators £1,200m
- £900m Voluntary
- £300m School-based
- Market growth 6.2 per cent
Market
LaingBuisson estimates the nursery market value at £6.7 billion in 2018-19. The report highlights the return of mid-size nursery groups, which disappeared during the consolidation of the sector over the last few years.
‘Our view is that the market is like the care home market of the 1990s – poised to grow, consolidate further and innovate with the independent sector acting as the catalyst and source of capital,’ it said.
While the overall sector remains ‘fragmented’, with 14,750 settings, the report notes the two ‘supergroups’ of Busy Bees and Bright Horizons, which represent 6.5 per cent of the market.
The rest of the market, it says, is made up of 18 emerging mid-sized groups with 20-300 settings, more than 1,600 smaller operators of between five and 19 settings, and more than 9,000 individual settings.
It also highlights the entry to the UK market of French groups Les Petits Chaperons Rouges – which acquired Magic and Kiddicaru - and La Maison Bleue, which bought Old Station, Premier Nurseries and Sandhills.
Mr Kanwar added, ‘In addition – and accelerated by the current crisis – there are increasing benefits for group operators – these include the ability to invest in staffing solutions, early years compliance, a differentiated proposition, and procurement (both from a cost efficiency and quality perspective). Furthermore, they are able to invest in technology (which is becoming an increasingly important enabler) – in particular enquiry management, staff rostering, KPI tracking and parent communications.'
Occupancy
The total number of full-time equivalent places in the UK children’ s full day care nursery market in 2019 is estimated at 609,900, up 4.7 per cent on the previous year. These full-time places are in 14,750 settings in the UK with a total capacity of 872,500 places and an average occupancy in 2019 of 70 per cent.
- LaingBuisson's 16th Childcare UK Market report is available now here.
