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A recent survey by the Daycare Trust shows that over half of nurseries in London have seen a fall in demand over the past year. This appears to be part of a wider picture of falling demand for childcare and will be of particular concern to nursery providers. As the economy continues to face uncertain times, more and more mothers are choosing not to return to work after having babies, and that is one factor fueling the fall in demand for childcare places.
Rising childcare costs (more than twice the rate of inflation over the last year) are forcing many mothers to ditch work and look after young family themselves. The average cost of childcare in England is £5,028 a year, rising to over £6,000 a year in London. This is income that has already been taxed, and the cost of putting more than one child into childcare just becomes eye-watering!
Increasingly, at the moment, mothers are leaving work to raise their children at home.
On top of this, nursery providers have found that their costs are rising fast too, which is the main contributing factor to the rising cost of nursery places. Rent rates have jumped hugely over the last few years, but so have many of their other costs including food, staff training and all the essential supplies needed by a nursery. It seems that as the economy has suffered over the last few years, the global reaction has just been to raise prices for goods and services to make up for slump in demand. This isn't going to hold much longer - something is going to break. The logical conclusion of this spiral of rising prices pushing down demand is that we will see nurseries closing and nursery chains going out of business.
This isn't all bad news for private childminders. The additional costs of nursery provision will see a move towards more flexible childminders, with lower associated costs, so we predict a boom in private childcare provision over the next few years. We are also seeing more babies being nurtured by their own families in their domestic setting, and that too has to be a good thing. Whilst nurseries and childcare offer a wonderful service, allowing families to continue working, there is a lot to be said for not having to have two incomes simply to live from day to day. Families that choose to stay home and raise children may have to cut back in some areas, but the marginal difference of a second salary after tax and childcare is making the 'stay at home' option look increasingly attractive!