Childcare markets in England and The Netherlands

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
• Childcare markets in England and The Netherlands
• Contrasts and similarities
• 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
• 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
• (Plantenga and Remery, 2009)

6
OECD policy recommendations

• Strong economic grounds for treating early
  childhood education and care as public good
• 
  (Cleveland and Krashinsky, 2003)
• 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)

7
Framing EU childcare policy rationales

• Increasing female workforce participation to
  foster gender equality, economic growth and
  sustainable welfare states
• Encouraging childrens educational outcomes
• Reducing child poverty and increasing social
  inclusion
• Promoting fertility by reducing career/income
  constraints of childbearing
• 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.
• (EU High Level Group, 2004)

9
Barcelona 2002 background

• Barcelona employment targets for 2010
• Overall employment rate of 70
• Womens employment rate of 60
• Barcelona Childcare Targets
• Childcare places for 33 of 0-3 year olds
• Childcare places for 90 of 3-5 year olds
• Childcare services continue to be one of the
  fastest growing care services in Europe.
  (Blackburn, 20061)

10
Childcare marketisation in England and The
Netherlands

• Choice of market principles to deliver childcare
  
• contrast with rest of EU
• in line with other English speaking countries,
  except New Zealand
• Legislative underpinning
• Childcare Act 2006 - 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)
• 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
• Literature and policy document review
• 21 semi-structured interviews with
• Private FP and NFP childcare business leaders
• Policy makers
• Parent representative organisations

13
Childcare market similarities

• Supply-side subsidy to maintain
• Publicly funded early education
• 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-sc
  hool provision and informal care (only in The
  Neths)
• No subsidy for nannies/au pairs

14
Policy rationale similarities in England and The
Netherlands

• Promoting mothers labour force participation
• (From part-time to full-time in The Netherlands)
• Improving educational outcomes
• (Particularly for Dutch minority ethnic
  communities)
• 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
• Tax credits for formal childcare
• Corporate childcare, listed
• Optional employer contribution
• 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
• Encouragement -employer contribution
• Fear - of self-regulation
• 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
• Surplus provision
• Maternal employment rate unchanged
• Quality static
• Budget underspend
• No policy change
• 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
• 34 full daycare providers made profit/surplus
• 10 full daycare providers in Childrens Centres
  made profit/surplus
• 58 full daycare in Childrens Centres run by
  local authorities
• Parents spend about 30 of household disposable
  income on childcare
• (FSB childcare provider survey, 2009Philips et
  al, 2009 Owen, 2007)

19
UK PFP providers 2008

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

20
The Netherlands 2007/08

• 40 increase in tax credit uptake
• 200 increase in childminder registrations
• Childcare provision shifts to urbanised areas
• Increase market share/number FP 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, 2008bNoailly et
  al, 2007)

21
Comment on the English market

• On current British childcare customer debt
  levels
• the group wont 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 wouldnt 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
• 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
• Im 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,
  thats 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 dont 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
• Risk averse
• Regulatory resistance
• Wish for reform
• Superficial social concern?

• The Netherlands
• Ambivalence
• Risk averse
• Regulatory resistance
• Wish for reform
• Superficial social concern?

27
Market challenges in 2 countries

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

28
References

• Blackburn, P. (2006) Sector Futures Childcare
  Services Sector. Dublin European Monitoring
  Centre on Change
• Blackburn, P. (2009) Childrens 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 479-494

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. www.cpb.nl/nl/
• 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 192-207

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. 207. pp 83-89
• 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 2008. 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 Childrens
  Services The Childcare Market. London
  PriceWaterhouseCoopers