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Economic Review of the Childcare Sector in Wales

The Welsh Government has published a report commissioned by Alma Economics on an economic Review of the Childcare Sector in Wales

The aim of the research was:

  • to quantify the economic impact of the sector in Wales recognising that it supports a large number of businesses and workers across Wales and enables parents into work; and
  • to provide detailed breakdowns of the costs and charges required for childcare providers to operate efficiently and sustainably, and are associated with complying with regulatory requirements.

How was the research carried out?

500 responses were made to the Alma Economics Childcare Survey which was shared by PACEY Cymru in 2017.  Of these 500, 175 were childminders which represents an 8% response rate from all registered childminders in Wales.  Alma Economics also spoke to a small number of childcare providers in Wales (12 settings in total) to seek thoughts and views.

PACEY Cymru and the Welsh Government agree that caution should be exercised when interpreting the results from the Alma Economics Childcare survey, and figures should be considered as indicative only and not used to make comparisons over time given the varying response rates from different parts of the sector.

What were the findings?

  • The report states that the total number of childcare places in Wales increased from 76,000 in 2012 to 84,000 in 2017. Full day care places and after-school care places are most frequently offered and used.
  • Childcare enables a large number of parents to work, and these parents go on to collectively generate an estimated £1.2 billion in income per year, supporting economic growth and poverty reduction across Wales.
  • It is estimated that there are around 17,300 childcare workers in Wales with further expansion expected in coming years. On the make up of the settings providing care, the Alma Economics Childcare Survey found the majority of childcare workers are employed by small businesses or are self-employed (childminders).
  • The Alma Economics Childcare Survey found that employees in the sector are relatively low-paid, with around half of all workers earning between £7- £8 per hour in 2016-2017 which suggests that plans to increase the National Living Wage (NLW) to £9.00 by 2020 are likely to have a major impact on the sector.
  • In 2016-2017, approximately a quarter of the providers surveyed expected to operate at a loss, which is consistent with data from the previous two financial years. Sessional day cares and full day care settings were more likely to report losses.
  • Childminders have far more limited capacity for expansion than many other childcare settings, likely due to their model which is based on serving a small client base and operating out of domestic premises.
  • A few childminders noted in the interviews that they felt the paperwork involved to meet the National Minimum Standards was extensive. The time commitment involved in filling out paperwork is particularly challenging for providers working alone and often requires overtime hours to manage. It was suggested that assistance to develop automated systems to manage ongoing paperwork might reduce this time burden for childminders in particular.
  • Childminders in particular noted that training for professional development was often either too general or prohibitively priced. Distance and securing time to attend training were other barriers encountered.
  • An analysis of CSSIW's Self Assessment of Service (SASS) of settings which receive Flying Start funding showed that approximately 49% were sessional day care settings, 36% full day care settings and only 14% are childminders.

What are the next steps for the Welsh Government?

To better understand the childcare sector and its impact, further research is recommended by Welsh Government into the following areas:

  • the impact of the National Living Wage;
  • the cost of regulations and how it may affect the behaviour of childcare providers;
  • the number of people prevented from working due to lack of sufficient access to childcare in Wales; and
  • specialist staff training requirements to care for children with  additional learning needs. 

Welsh Government are considering  the recommendations for further areas of research suggested by Alma as they develop their priorities for the next few years.  As part of their ongoing #TalkChildcare campaign they will also be speaking with providers to understand what impact changes, such as the introduction of the National Living Wage, are having on their businesses. The  Childcare, Play and Early Years Workforce Plan, launched in December, sets out the Welsh Government's ambitions for the sector and how they will work closely with partners to ensure that the childcare offer continues to develop in a way which supports parents, providers and children.

How will PACEY Cymru use this research to support development and direction?

PACEY Cymru will use the findings of the research to support work locally and nationally in Wales on key areas identified.  This will include:

  • Scoping work on the potential to develop automated systems to support childminders in Wales with paperwork requirements.
  • Lobbying and development work by PACEY Cymru around the funded childcare including the Childcare Offer, Flying Start and Foundation Phase to support sustainability of childminding settings and outcomes for children. This includes work on challenging the position on childminders and related children.
  • Review the training needs of childminders in Wales through the PACEY Building Blocks Survey later this year to support development of further training.

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