Interim results for Laing & Buisson's Children's Nurseries UK Annual Report have found that demand for childcare rose by between 4 and 5 per cent last year, pushing occupancy levels up to 80 per cent.
Higher occupancy stems from fewer nurseries opening, a high level of closures and greater demand for childcare, made possible by a massive rise in employer funding.
The improved operating conditions pushed the value of the UK childcare market up to £3.8bn, a 7.8 per cent increase on 2006, which saw only a 5 per cent rise.
Delivering the interim results of the survey at Laing & Buisson's Annual Children's Nurseries Conference, company economist Philip Blackburn said, 'Demand last year increased pretty strongly and as a result of this, occupancy for the first time on record increased.'
Last year, noted Mr Blackburn, 'the dynamics of the market changed', with the trend of oversupply, as seen over the past five years, now in reverse (see table).
'Closures are still a dominant feature of the market but they may have reached their peak over the last two years. Overall, I think trends look brighter than 12 months ago, but I'm still cautious,' he concluded.
Positive trends emerging from the survey were greater affordability of childcare (with three years of inflation-only rises bringing no increase in real terms) and better planning by local authorities.
While Government funding remains constant, employer funding has soared from 7 per cent in 2004 to represent nearly a quarter of spending on daycare nurseries.
Mr Blackburn said, 'It is crystal clear what has been driving demand in the marketplace, and that is funding from employers. It's an extraordinary growth rate and reflects the willingness of employers to fund childcare.
'Some research now confirms that childcare vouchers are the second most valued and important employee benefit after holiday entitlement. However, conflicting research suggests that only one in 50 eligible employees are actually taking the offer of vouchers.'
On the negative side, he cited underfunding from local authorities and a drop in the numbers of women of child-bearing age within the workforce.
Further information:
The full Children's Nurseries Report 2007 is published later this month. Visit www.laingbuisson.co.uk
- See Analysis, page 10.