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Childcare markets in England and The Netherlands Eva Lloyd UEL Royal Docks Business School research seminar 08/10/09.

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Presentation on theme: "Childcare markets in England and The Netherlands Eva Lloyd UEL Royal Docks Business School research seminar 08/10/09."— Presentation transcript:

1 Childcare markets in England and The Netherlands Eva Lloyd UEL Royal Docks Business School research seminar 08/10/09

2 Overview The wider policy context The wider policy context Childcare markets in England and The Netherlands Childcare markets in England and The Netherlands Contrasts and similarities Contrasts and similarities Emerging themes Emerging themes

3 OECD perspective Early childhood education and care provision - ECEC - a growing priority in many countries, demanded by parents Importance of contribution to social, economic and educational goals increasingly recognised ECEC sector has complex diversity of players and partners The ECEC sector displays a significant lack of investment in many countries (OECD, 2009: 9)

4 Early childhood policy and economic theory …human capital theory is, in fact, a useful unifying framework that encompasses many of the disparate threads of current thinking about early childhood policy… In sum, human capital theory suggests that investments in individuals’ productive capacities have the potential to improve individual outcomes and that these investments might produce the greatest payoffs when made early in individuals’ lives. (Kilburn and Karoly, 2008: pp 5 ff)

5 The childcare policy challenge Reconciling the interests of parents, children and society in a just and equitable way Reconciling the interests of parents, children and society in a just and equitable way addressing social, demographic and economic issues simultaneously and efficiently addressing social, demographic and economic issues simultaneously and efficiently Enabling a COHERENT mix of leave policies, financial support and childcare services, while allowing for parental choice and resolving the macro-division of costs Enabling a COHERENT mix of leave policies, financial support and childcare services, while allowing for parental choice and resolving the macro-division of costs (Plantenga and Remery, 2009)

6 OECD policy recommendations Strong economic grounds for treating early childhood education and care as ‘public good’ Strong economic grounds for treating early childhood education and care as ‘public good’ (Cleveland and Krashinsky, 2003) (Cleveland and Krashinsky, 2003) Substantial public investment in ECEC services and infrastructure key to promoting equitable universal access (OECD, 2006) Substantial public investment in ECEC services and infrastructure key to promoting equitable universal access (OECD, 2006) Increasing maternal workforce participation and promoting work/life balance primary public investment rationale ( OECD, 2007) Increasing maternal workforce participation and promoting work/life balance primary public investment rationale ( OECD, 2007)

7 Framing EU childcare policy rationales Increasing female workforce participation to foster gender equality, economic growth and sustainable welfare states Increasing female workforce participation to foster gender equality, economic growth and sustainable welfare states Encouraging children’s educational outcomes Encouraging children’s educational outcomes Reducing child poverty and increasing social inclusion Reducing child poverty and increasing social inclusion Promoting fertility by reducing career/income constraints of childbearing Promoting fertility by reducing career/income constraints of childbearing Childcare as a social right and public good Childcare as a social right and public good (Penn, 2009a; Plantenga and Remery, 2009)

8 EU Policy background Strategic 2010 goal of 2000 Lisbon declaration: The most dynamic and competitive knowledge- based economy in the world capable of sustained economic growth with more and better jobs and greater social cohesion, and respect for the environment. The most dynamic and competitive knowledge- based economy in the world capable of sustained economic growth with more and better jobs and greater social cohesion, and respect for the environment. (EU High Level Group, 2004)

9 Barcelona 2002 background Barcelona employment targets for 2010: Barcelona employment targets for 2010:  Overall employment rate of 70%  Women’s employment rate of 60% Barcelona Childcare Targets Barcelona Childcare Targets  Childcare places for 33% of 0-3 year olds  Childcare places for 90% of 3-5 year olds “ (Blackburn, 2006:1) “Childcare services continue to be one of the fastest growing care services in Europe.” (Blackburn, 2006:1)

10 Childcare marketisation in England and The Netherlands Choice of market principles to deliver childcare: Choice of market principles to deliver childcare:  contrast with rest of EU  in line with other English speaking countries, except New Zealand Legislative underpinning Legislative underpinning  Childcare Act market management duty for local government  Wet op de Kinderopvang 2005 – deregulation and reduced local government role

11 The childcare policy challenge How to ensure an accessible, high quality and sustainable universal childcare and early education system? How to avoid social stratification in access, while providing choice? How do childcare markets work and can they be equitable? (Penn, 2007; Penn, 2009b; Penn, in press; Lloyd, 2008a) (Penn, 2007; Penn, 2009b; Penn, in press; Lloyd, 2008a) UK Government concern about the impact of market forces on private-for-profit provision. (PriceWaterhouseCoopers, 2006)

12 Royal Docks Business School funded study Impact of market operations on accessibility, sustainability and quality of childcare for children up to 4 in England and The Netherlands 1. Literature and policy document review semi-structured interviews with Private FP and NFP childcare business leadersPrivate FP and NFP childcare business leaders Policy makersPolicy makers Parent representative organisationsParent representative organisations

13 Childcare market similarities Supply-side subsidy to maintain Supply-side subsidy to maintain  Publicly funded early education Demand-side subsidy to stimulate market of Demand-side subsidy to stimulate market of  PFP and NFP formal childcare provision: childminders, day nurseries/small and corporate childcare chains, playgroups/pre- schools,out-of-school provision and informal care (only in The Neths) No subsidy for nannies/au pairs No subsidy for nannies/au pairs

14 Policy rationale similarities in England and The Netherlands Promoting mothers’ labour force participation Promoting mothers’ labour force participation  (From part-time to full-time in The Netherlands) Improving educational outcomes Improving educational outcomes  (Particularly for Dutch minority ethnic communities) Reducing child poverty and promoting social inclusion Reducing child poverty and promoting social inclusion  (Primarily among Dutch minority ethnic communities)

15 Childcare market contrasts England Free early education for all 3 and 4 and targeted 2 year olds in FP, NFP settings and schools Free early education for all 3 and 4 and targeted 2 year olds in FP, NFP settings and schools Tax credits for formal childcare Tax credits for formal childcare Corporate childcare, listed Corporate childcare, listed Optional employer contribution Optional employer contribution OFSTED regulation; formal curriculum OFSTED regulation; formal curriculum The Netherlands School-based free early education from age 4 Tax credits for formal/informal childcare Corporate childcare, unlisted Mandatory dual employer contribution Deregulation; no formal curriculum

16 Policy implementation contrasts England Ambivalence - about market forces Ambivalence - about market forces Encouragement - employer contribution Encouragement - employer contribution Fear - of self- regulation Fear - of self- regulation Promotion - of school- based provision Promotion - of school- based provision The Netherlands Confidence -in market forces Compulsion - employer contribution Faith - in self- regulation Prescription - of school-based provision

17 Childcare market developments England FP consolidation and NFP attrition FP consolidation and NFP attrition Surplus provision Surplus provision Maternal employment rate unchanged Maternal employment rate unchanged Quality static Quality static Budget underspend Budget underspend No policy change No policy change Parental costs high, 2/3 Parental costs high, 2/3 The Netherlands FP expansion and NFP attrition Childcare waiting lists Maternal employment rate unchanged Quality worse Budget overspend Policy retrenchment Parental costs low, 1/3

18 England 2007/08 41% UK day nurseries considered closure and 56% considered selling their business 41% UK day nurseries considered closure and 56% considered selling their business 34% full daycare providers made profit/surplus 34% full daycare providers made profit/surplus 10% full daycare providers in Children’s Centres made profit/surplus 10% full daycare providers in Children’s Centres made profit/surplus 58% full daycare in Children’s Centres run by local authorities 58% full daycare in Children’s Centres run by local authorities Parents spend about 30 % of household disposable income on childcare Parents spend about 30 % of household disposable income on childcare (FSB childcare provider survey, 2009; (FSB childcare provider survey, 2009;Philips et al, 2009; Owen, 2007)

19 UK PFP providers % of all day nursery places in for-profit sector 75% of all day nursery places in for-profit sector For profit incorporated companies 46% For profit incorporated companies 46% Sole traders/partnerships 29% Sole traders/partnerships 29% 19% share held by Major Providers, i.e. with more than 3 nurseries and/or listed 19% share held by Major Providers, i.e. with more than 3 nurseries and/or listed UK day nursery market value £3,905 million UK day nursery market value £3,905 million 13% income government subsidies 13% income government subsidies 65% income parents’ fees 65% income parents’ fees (Blackburn, 2009) (Blackburn, 2009)

20 The Netherlands 2007/08 40% increase in tax credit uptake 40% increase in tax credit uptake 200% increase in childminder registrations 200% increase in childminder registrations Childcare provision shifts to urbanised areas Childcare provision shifts to urbanised areas Increase market share/number FP providers Increase market share/number FP providers Decrease market share/number NFP providers Decrease market share/number NFP providers On ‘level playing field’ neither FP nor NFP able to sustain operation in low demand/low income/non urbanised markets (Lloyd, 2008b;Noailly et al, 2007) On ‘level playing field’ neither FP nor NFP able to sustain operation in low demand/low income/non urbanised markets (Lloyd, 2008b;Noailly et al, 2007)

21 Comment on the English market On current British childcare customer debt levels: … the group won’t allow this level of debt for any length of time, but because we are within the large group, we are supported. If we were a stand-alone group, we wouldn’t be able to survive, because of the level of debt. (Managing director of not-for-profit childcare chain, part of diversified corporation )

22 Comment on the Dutch market On local childcare markets: On local childcare markets: Holland is mostly made up of villages. Of 16.5 million inhabitants, 7 million live in the urbanised western regions. Yet childcare policy has been designed with urban areas in mind, where you can always make a profit. (CEO of large rural for-profit childcare chain)

23 Comment on the English market On the impact of early education subsidy On the impact of early education subsidy …I’m looking at childcare and seeing the government funding: should we be in it? Because it is becoming so restrictive for our business that it may not help us moving forward, it may block (name of company) from growing. Well, that’s not good for childcare then is it? (CEO of major corporate chain)

24 Comment on the Dutch market On the impact of the 2005 Dutch Childcare Act: Current childcare policy is still very unstable. Things were getting too expensive, so cuts had to be made. Therefore parents and childcare businesses don’t know what to expect. (sole trader, The Netherlands, who has yet to break even)

25 Comment on the English market On the impact of the credit crunch: How long it will take for buying and selling nurseries to recover is unclear. Investors have realised it is a volatile market and not very attractive from an investment point of view. Any change is currently at the level of chains. Small providers even have trouble finding an overdraft. (CEO of childcare business umbrella organisation)

26 Emerging themes England Ambivalence Ambivalence Risk averse Risk averse Regulatory resistance Regulatory resistance Wish for reform Wish for reform Superficial social concern? Superficial social concern? The Netherlands Ambivalence Risk averse Regulatory resistance Wish for reform Superficial social concern?

27 Market challenges in 2 countries Profit/surplus? Profit/surplus? An undercapitalised market? An undercapitalised market? Operations in disadvantaged areas? Operations in disadvantaged areas? Choice, quality and diversity? Choice, quality and diversity? Impact of public attitudes? Impact of public attitudes? Policy and politics? Policy and politics? “Dutch childcare policy is a good example of state intervention in an atypical market.” (Dutch economist) (Dutch economist)

28 References Blackburn, P. (2006) Sector Futures – Childcare Services Sector. Dublin: European Monitoring Centre on Change Blackburn, P. (2009) Children’s Nurseries UK Market Report. London: Laing & Buisson Cleveland, G. and Krashinsky, M. (2003) Financing ECEC services in OECD countries. Paris: OECD EU High Level Group (2004) Facing the Challenge: The Lisbon strategy for growth and development. Luxembourg: publications.eu.int Kilburn, M.R. and Karoly, L. (2008) The Economics of Early Childhood Policy – What the dismal science has to say about investing in children. Rand Corporation Occasional Paper Series. Santa Monica, CA: Rand Corporation Kazimirski, A., Smith, R., Butt, S., Ireland, E. and Lloyd, E. (2008) Childcare and Early Years Survey 2007: Parents’ Use, Views and Experiences. London: DCSF Lloyd, E. (2008a) ‘The interface between childcare, family support and child poverty strategies under New Labour: tensions and contradictions,’ Social Policy and Society, Vol 7 (4), pp

29 References Lloyd, E. (2008b) ‘Informal care too costly for the Dutch.’ Nursery World, 6 November 2008 Noailly, J., Visser, S. and Grout, P. (2007) The Impact of Market Forces on the Provision of Childcare: Insights from the 2005 Childcare Act in the Netherlands. CBP Memorandum 176.The Hague: CPB Netherlands Bureau for Economic Policy Analysis. OECD (2006) Starting Strong II – Early Childhood Education and Care. Paris: OECD OECD (2007) Babies and Bosses, Reconciling Work and Family Life – A Synthesis of Findings for OECD Countries. Paris: OECD OECD (2009) Education Today: the OECD Perspective. Paris: OECD Owen, J. (2007) Childcare Primer – Overview of the US, UK and Australian Markets. Sydney: City Group Australia/NZ Penn, H. (2007) ‘Childcare market management: how the United Kingdom Government has reshaped its role in developing early childhood education and care’, Contemporary Issues in the Early Years, Vol 8, (3), pp

30 References Penn, H. (2009a) Early Childhood Education and Care – Key lessons from Research for Policy Makers. Brussels: European Commission Penn, H. (2009b) ‘International Perspectives on Quality in Mixed Economies of Childcare.’ National Institute Economic Review pp Penn, H. (2010 forthcoming) ‘Gambling on the Market the role of for- profit provision in early childhood education and care.’ Journal of Early Childhood Research Philips, R., Norden, O., McGinigal, S. and Cooper, J. (2009) Childcare and Early Years provider Survey DCSF-RR164. London: DCSF Philips, R., Norden, O., McGinigal, S. and Cooper, J. (2009) Childcare and Early Years provider Survey DCSF-RR164. London: DCSF Plantenga, J. and Remery, C. (2009) The Provision of Childcare Services: a comparative review of 30 European countries. Brussels: European Commission PriceWaterhouseCoopers (2006) DfES Children’s Services – The Childcare Market. London: PriceWaterhouseCoopers


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