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Paving the path: addressing market imbalances to achieve quality and affordable childcare in more places
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 Paving the path: addressing market imbalances to achieve quality and affordable childcare in more places
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Growth in the supply of childcare places over the last decade has been instrumental to more children accessing the lifelong benefits of quality care. However, access currently depends on where a child lives and the fees families can afford to pay.
This report looks at the impact of policy settings on Long Day Care (LDC) market composition over the past 10 years, finding that rising demand has driven an increase in supply but that supply is unevenly distributed, with fewer places in lower socio economic areas and a smaller share of places provided by not-for-profit (NFP) services.
The report also finds that the decline in not-for-profit providers is in spite of the fact that NFPs, on average, offer higher quality care, pay staff more and have lower fees. The authors argue that as access improves, policy needs to ensure a more balanced LDC market across all regions, to provide quality and affordable care for all. The authors urge policymakers to consider how quality services can be incentivised to expand, particularly in communities that have unmet need.
Key findings
- 52% of childcare providers are LDC centres.
- LDC places have increased 69% since 2013.
- Increased demand is driven by higher female workforce participation, a growing child population and increased government funding.
- However, distribution isn’t even: in low social economic areas there are 41% fewer places.
- 70% of LDC services are run by for-profit providers, an increase from 60% in 2013.
- Not-for-profit services are declining, from 32% in 2013 to 23% in 2024.
- This trend is most stark in ‘gentrifying’ local government areas, where not-for-profit places declined by 10% between 2021-2024 and for-profits grew by 25%.
- 28% of not-for-profits LDCs are rated above the National Quality Standard (NQS) compared to 15% of for-profits.
- 95% of staff working for NFPs are paid above the award rate wage, compared to 64% of staff in for-profits.
- Amongst large not-for-profits only 15% charge a fee above the hourly rate cap, compared to 43% amongst large for-profits.
