According to Childcare, a new Market Report from business intelligence provider Key Note, the childcare market has faced a number of difficulties in recent years, with supply continuing to outweigh demand, while childcare costs have become increasingly unaffordable, particularly for low-income families, many of which have suffered as a result of the Coalition's ongoing austerity drive and widespread welfare reforms. According to the Family and Childcare Trust, the price of childcare has increased rapidly by 27% since 2009, with the average family now estimated to spend around a third of their household budget on childcare provision. At the same time the availability of childcare has deteriorated over the past 5 years, with just under half (49%) of local authorities providing enough childcare for working parents during 2014, while only a third (33%) had enough childcare for children aged 5 to 11 years old, despite the legal obligations of the Childcare Act 2006, which stipulate that all local authorities must ensure that there is sufficient childcare provision for working parents and those undertaking training.
Although the current Coalition Government has attempted to ease the burden of childcare costs on families in recent years by extending the free weekly childcare of entitlement -- which currently stands at 15 hours per week, to all 3 and 4 year-olds, as well as 40% of disadvantaged 2 year-olds -- and by rolling out new proposals for a tax-free childcare costs scheme -- which is expected to come into force in autumn 2015 and will see the Government commit to cover 20% of childcare costs (up to £10,000) for 2 million families -- some critics have suggested that these measures have not done enough to help UK households which have continued to struggle since the recession of 2008, following stagnant wage growth, and sharp rises in the cost of living. The continued public-sector funding cuts are also likely to see the Government come under intense scrutiny from rival political parties, particularly during the run-up to the 2015 General Election, which is due to be held in May, with the Labour Party already attacking the Coalition after revealing figures which appeared to show that the number of Sure Start Children's Centres had fallen by over 600 since the current Parliament was elected back in 2010, following an estimated 30% cuts to local council spending over the past 4 years. Indeed, both Labour and the Liberal Democrats have already outlined several key manifesto pledges regarding childcare, which is expected to represent one of the central issues of the 2015 General Election. Labour, for example, has pledged to extend the current free weekly childcare provision for 3 and 4 year-olds from 15 hours per week to 25 hours per week; the party estimates that this will help an additional 135,000 women to re-enter the workforce. Meanwhile, the Liberal Democrats have pledged to extend the free early years provision of 15 hours per week to all 2 year-olds and has outlined longer-term plans to expand the scheme to all children aged between 9 and 24 months, thus closing the gap for working parents between the end of parental leave and the start of formal childcare. In addition, the political party aims to increase the provision of free care to 20 hours per week, starting with 4 year-olds before extending it to younger children, for all eligible families.
Whatever the result of the General Election, childcare is likely to continue to represent one of the key areas of public policy going forward, with childcare costs expected to continue to rise in line with inflation, while wages continue to observe slow growth. Continued demand for childcare services targeting children aged between 0 and 8 is also likely to increase over the next 5 years, driven by population growth within this particular age demographic. Key Note estimates that these factors, combined, will serve to stimulate further growth in the childcare market going forward, with market value forecast to increase by 16.9% overall between 2015 and 2019.
The 2015 Childcare Market Report is available to purchase for £575.