Childcare markets in England and The Netherlands

Eva LloydEva Lloyd

UEL Royal Docks Business School UEL Royal Docks Business School research seminarresearch seminar

08/10/0908/10/09

Overview

The wider policy contextThe wider policy context Childcare markets in England and The Childcare markets in England and The

NetherlandsNetherlands Contrasts and similaritiesContrasts and similarities Emerging themes Emerging themes

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)

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)

The childcare policy challenge

Reconciling the interests of parents, children and Reconciling the interests of parents, children and society in a just and equitable way society in a just and equitable way

addressing social, demographic and economic addressing social, demographic and economic issues simultaneously and efficientlyissues simultaneously and efficiently

Enabling a COHERENT mix of leave policies, Enabling a COHERENT mix of leave policies, financial support and childcare services, while financial support and childcare services, while allowing for parental choice and resolving the allowing for parental choice and resolving the macro-division of costsmacro-division of costs

(Plantenga and Remery, (Plantenga and Remery, 2009) 2009)

OECD policy recommendations

Strong economic grounds for treating early Strong economic grounds for treating early childhood education and care as ‘public good’ childhood education and care as ‘public good’

(Cleveland and Krashinsky, 2003)(Cleveland and Krashinsky, 2003)

Substantial public investment in ECEC services Substantial public investment in ECEC services and infrastructure key to promoting equitable and infrastructure key to promoting equitable universal accessuniversal access (OECD, 2006)(OECD, 2006)

Increasing maternal workforce participation and Increasing maternal workforce participation and promoting work/life balance primary public promoting work/life balance primary public investment rationaleinvestment rationale ( (OECD, 2007)OECD, 2007)

Framing EU childcare policy rationales Increasing female workforce participation to foster Increasing female workforce participation to foster

gender equality, economic growth and sustainable gender equality, economic growth and sustainable welfare stateswelfare states

Encouraging children’s educational outcomesEncouraging children’s educational outcomes Reducing child poverty and increasing social Reducing child poverty and increasing social

inclusioninclusion Promoting fertility by reducing career/income Promoting fertility by reducing career/income

constraints of childbearingconstraints of childbearing Childcare as a social right and public goodChildcare as a social right and public good

(Penn, 2009a; Plantenga and Remery, 2009)(Penn, 2009a; Plantenga and Remery, 2009)

EU Policy background

Strategic 2010 goal of 2000 Lisbon declaration:Strategic 2010 goal of 2000 Lisbon declaration:

The most dynamic and competitive knowledge-The most dynamic and competitive knowledge-based economy in the world capable of based economy in the world capable of sustained economic growth with more and sustained economic growth with more and better jobs and greater social cohesion, and better jobs and greater social cohesion, and respect for the environment.respect for the environment.

(EU High Level Group, (EU High Level Group, 2004)2004)

Barcelona 2002 background

Barcelona employment targets for 2010:Barcelona employment targets for 2010: Overall employment rate of 70% Overall employment rate of 70% Women’s employment rate of 60% Women’s employment rate of 60%

Barcelona Childcare TargetsBarcelona Childcare Targets Childcare places for 33% of 0-3 year oldsChildcare places for 33% of 0-3 year olds Childcare places for 90% of 3-5 year oldsChildcare places for 90% of 3-5 year olds

““Childcare services continue to be one of the fastest growing care services in Europe.”

(Blackburn, 2006:1)(Blackburn, 2006:1)

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 EUcontrast with rest of EU in line with other English speaking countries, in line with other English speaking countries,

except New Zealandexcept New Zealand Legislative underpinningLegislative underpinning

Childcare Act 2006 - market management duty Childcare Act 2006 - market management duty for local governmentfor local government

Wet op de Kinderopvang 2005 – deregulation Wet op de Kinderopvang 2005 – deregulation and reduced local government roleand reduced local government role

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)

Royal Docks Business School funded study

Impact of market operations on accessibility, Impact of market operations on accessibility, sustainability and quality of childcare for sustainability and quality of childcare for children up to 4 in England and The Netherlandschildren up to 4 in England and The Netherlands

1.1. Literature and policy document review Literature and policy document review 2.2. 21 semi-structured interviews with21 semi-structured interviews with

• Private FP and NFP childcare business Private FP and NFP childcare business leadersleaders

• Policy makersPolicy makers• Parent representative organisationsParent representative organisations

Childcare market similarities

Supply-side subsidy to maintainSupply-side subsidy to maintainPublicly funded early educationPublicly funded early education

Demand-side subsidy to stimulate market of Demand-side subsidy to stimulate market of PFP and NFP formal childcare provision: PFP and NFP formal childcare provision:

childminders, day nurseries/small and childminders, day nurseries/small and corporate childcare chains, playgroups/pre-corporate childcare chains, playgroups/pre-schools,out-of-school provision and informal schools,out-of-school provision and informal care (only in The Neths)care (only in The Neths)

No subsidy for nannies/au pairs No subsidy for nannies/au pairs

Policy rationale similarities in England and The Netherlands Promoting mothers’ labour force participationPromoting mothers’ labour force participation

(From part-time to full-time in The Netherlands)(From part-time to full-time in The Netherlands) Improving educational outcomesImproving educational outcomes

(Particularly for Dutch minority ethnic (Particularly for Dutch minority ethnic communities)communities)

Reducing child poverty and promoting social Reducing child poverty and promoting social inclusioninclusion (Primarily among Dutch minority ethnic (Primarily among Dutch minority ethnic

communities)communities)

Childcare market contrastsEnglandEngland

Free early education for Free early education for all 3 and 4 and targeted all 3 and 4 and targeted 2 year olds in FP, NFP 2 year olds in FP, NFP settings and schoolssettings and schools

Tax credits for formal Tax credits for formal childcarechildcare

Corporate childcare, Corporate childcare, listedlisted

Optional employer Optional employer contributioncontribution

OFSTED regulation; OFSTED regulation; formal curriculumformal curriculum

The NetherlandsThe Netherlands School-based free early School-based free early

education from age 4education from age 4 Tax credits for Tax credits for

formal/informal formal/informal childcarechildcare

Corporate childcare, Corporate childcare, unlistedunlisted

Mandatory Mandatory dual dual employer contributionemployer contribution

Deregulation; no Deregulation; no formal curriculum formal curriculum

Policy implementation contrastsEnglandEngland

Ambivalence - about Ambivalence - about market forcesmarket forces

Encouragement -Encouragement -employer contributionemployer contribution

Fear - of self-Fear - of self-regulationregulation

Promotion - of school-Promotion - of school-based provisionbased provision

The NetherlandsThe Netherlands Confidence -in market Confidence -in market

forcesforces Compulsion - Compulsion -

employer contributionemployer contribution Faith - in self-Faith - in self-

regulationregulation Prescription - of Prescription - of

school-based school-based provisionprovision

Childcare market developmentsEnglandEngland

FP consolidation and FP consolidation and NFP attritionNFP attrition

Surplus provisionSurplus provision Maternal employment Maternal employment

rate unchangedrate unchanged Quality staticQuality static Budget underspendBudget underspend No policy changeNo policy change Parental costs high, 2/3Parental costs high, 2/3

The NetherlandsThe Netherlands FP expansion and NFP FP expansion and NFP

attrition attrition Childcare waiting lists Childcare waiting lists Maternal employment Maternal employment

rate unchangedrate unchanged Quality worseQuality worse Budget overspendBudget overspend Policy retrenchmentPolicy retrenchment Parental costs low, 1/3Parental costs low, 1/3

UK PFP providers 2008

75% of all day nursery places in for-profit sector75% 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 19% share held by Major Providers, i.e. with more

than 3 nurseries and/or listedthan 3 nurseries and/or listed UK day nursery market value £3,905 millionUK day nursery market value £3,905 million 13% income government subsidies13% income government subsidies 65% income parents’ fees65% income parents’ fees

(Blackburn, 2009)(Blackburn, 2009)

The Netherlands 2007/08

40% increase in tax credit uptake40% increase in tax credit uptake 200% increase in childminder registrations200% increase in childminder registrations Childcare provision shifts to urbanised areasChildcare provision shifts to urbanised areas Increase market share/number FP providersIncrease 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 On ‘level playing field’ neither FP nor NFP able to

sustain operation in low demand/low income/non sustain operation in low demand/low income/non urbanised markets urbanised markets (Lloyd, 2008b;Noailly et al, 2007) (Lloyd, 2008b;Noailly et al, 2007)

Comment on the English market

On current British childcare customer debt levels:On current British childcare customer debt levels:

……the group won’t allow this level of debt for the group won’t allow this level of debt for any length of time, but because we are within any length of time, but because we are within the large group, we are supported. If we were a the large group, we are supported. If we were a stand-alone group, we wouldn’t be able to stand-alone group, we wouldn’t be able to survive, because of the level of debt.survive, because of the level of debt.

(Managing director of not-for-profit childcare chain, part of (Managing director of not-for-profit childcare chain, part of diversified corporationdiversified corporation))

Comment on the Dutch market

On local childcare markets:On local childcare markets:

Holland is mostly made up of villages. Of 16.5 Holland is mostly made up of villages. Of 16.5 million inhabitants, 7 million live in the million inhabitants, 7 million live in the urbanised western regions. Yet childcare policy urbanised western regions. Yet childcare policy has been designed with urban areas in mind, has been designed with urban areas in mind, where you can always make a profit.where you can always make a profit.

(CEO of large rural for-profit childcare chain)(CEO of large rural for-profit childcare chain)

Comment on the English market

On the impact of early education subsidyOn the impact of early education subsidy

……I’m looking at childcare and seeing the I’m looking at childcare and seeing the government funding: should we be in it? government funding: should we be in it? Because it is becoming so restrictive for our Because it is becoming so restrictive for our business that it may not help us moving business that it may not help us moving forward, it may block (name of company) from forward, it may block (name of company) from growing. Well, that’s not good for childcare growing. Well, that’s not good for childcare then is it? then is it?

(CEO of major corporate chain)(CEO of major corporate chain)

Comment on the Dutch market

On the impact of the 2005 Dutch Childcare Act:On the impact of the 2005 Dutch Childcare Act:

Current childcare policy is still very unstable. Current childcare policy is still very unstable. Things were getting too expensive, so cuts had Things were getting too expensive, so cuts had to be made. Therefore parents and childcare to be made. Therefore parents and childcare businesses don’t know what to expect.businesses don’t know what to expect.

(sole trader, The Netherlands, who has yet to break (sole trader, The Netherlands, who has yet to break even)even)

Comment on the English market

On the impact of the credit crunch:On the impact of the credit crunch:

How long it will take for buying and selling How long it will take for buying and selling nurseries to recover is unclear. Investors have nurseries to recover is unclear. Investors have realised it is a volatile market and not very realised it is a volatile market and not very attractive from an investment point of view. attractive from an investment point of view. Any change is currently at the level of chains. Any change is currently at the level of chains. Small providers even have trouble finding an Small providers even have trouble finding an overdraft.overdraft.

(CEO of childcare business umbrella organisation)(CEO of childcare business umbrella organisation)

Emerging themes

EnglandEngland AmbivalenceAmbivalence Risk averseRisk averse Regulatory resistanceRegulatory resistance Wish for reformWish for reform Superficial social Superficial social

concern?concern?

The NetherlandsThe Netherlands AmbivalenceAmbivalence Risk averseRisk averse Regulatory resistanceRegulatory resistance Wish for reformWish for reform Superficial social Superficial social

concern?concern?

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 Dutch childcare policy is a good example of state intervention in an atypical market.”intervention in an atypical market.”

(Dutch economist)(Dutch economist)

ReferencesBlackburn, P. (2006) Blackburn, P. (2006) Sector Futures – Childcare Services Sector.Sector Futures – Childcare Services Sector. Dublin: European Dublin: European Monitoring Centre on ChangeMonitoring Centre on ChangeBlackburn, P. (2009) Blackburn, P. (2009) Children’s Nurseries UK Market ReportChildren’s Nurseries UK Market Report. London: Laing & . London: Laing & BuissonBuissonCleveland, G. and Krashinsky, M. (2003) Financing ECEC services in OECD countries. Paris: OECDEU High Level Group (2004) Facing the Challenge: The Lisbon strategy for growth and development. Luxembourg: publications.eu.intKilburn, 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: DCSFLloyd, 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

References Lloyd, E. (2008b) ‘Informal care too costly for the Dutch.’ Nursery World, 6 November 2008Noailly, 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) OECD (2006) Starting Strong II – Early Childhood Education andStarting Strong II – Early Childhood Education and Care.Care. Paris: OECDParis: OECDOECD (2007) OECD (2007) Babies and Bosses, Reconciling Work and Family Life –A Babies and Bosses, Reconciling Work and Family Life –A Synthesis of Findings for OECD Countries.Synthesis of Findings for OECD Countries. Paris: OECD Paris: OECDOECD (2009) OECD (2009) Education Today: the OECD PerspectiveEducation Today: the OECD Perspective. Paris: OECD. Paris: OECDOwen, J. (2007) Owen, J. (2007) Childcare Primer – Overview of the US, UK and Childcare Primer – Overview of the US, UK and Australian MarketsAustralian Markets. Sydney: City Group Australia/NZ. Sydney: City Group Australia/NZPenn, H. (2007) ‘Childcare market management: how the United Kingdom Penn, H. (2007) ‘Childcare market management: how the United Kingdom Government has reshaped its role in developing early childhood education Government has reshaped its role in developing early childhood education and care’, and care’, Contemporary Issues in the Early YearsContemporary Issues in the Early Years, Vol 8, (3), pp 192-207, Vol 8, (3), pp 192-207

ReferencesPenn, H. (2009a) Penn, H. (2009a) Early Childhood Education and Care – Key lessons Early Childhood Education and Care – Key lessons from Research for Policy Makersfrom Research for Policy Makers. Brussels: European Commission. Brussels: European CommissionPenn, H. (2009b) ‘International Perspectives on Quality in Mixed Penn, H. (2009b) ‘International Perspectives on Quality in Mixed Economies of Childcare.’ Economies of Childcare.’ National Institute Economic Review. National Institute Economic Review. 207. 207. pp 83-89pp 83-89Penn, H. (2010 forthcoming) ‘Gambling on the Market the role of for-Penn, H. (2010 forthcoming) ‘Gambling on the Market the role of for-profit provision in early childhood education and care.’ profit provision in early childhood education and care.’ Journal of Journal of Early Childhood ResearchEarly Childhood Research

   Philips, R., Norden, O., McGinigal, S. and Cooper, J. (2009) Philips, R., Norden, O., McGinigal, S. and Cooper, J. (2009) Childcare Childcare and Early Years provider Survey 2008.and Early Years provider Survey 2008. DCSF-RR164. London: DCSF DCSF-RR164. London: DCSFPlantenga, J. and Remery, C. (2009) Plantenga, J. and Remery, C. (2009) The Provision of Childcare The Provision of Childcare Services: a comparative review of 30 EuropeanServices: a comparative review of 30 European countries.countries. Brussels: Brussels: European CommissionEuropean CommissionPriceWaterhouseCoopers (2006) PriceWaterhouseCoopers (2006) DfES Children’s Services – The DfES Children’s Services – The Childcare Market.Childcare Market. London: PriceWaterhouseCoopers London: PriceWaterhouseCoopers