95% of childminders, nurseries and childcare providers say their process are about to rise
Childcare providers could be forced to increase fees for parents or close as national insurance and minimum wage rises are set to push the sector “to the brink”, a charity has warned. Parents will face higher costs if the Government fails to take action to help protect the sector from the impact of changes set out in the Budget, according to the Early Years Alliance .
Two in five said permanent closure of the early years setting was likely, the poll found. Some parents will be forced to leave the workforce – or they will have to reconsider plans to have another child – if childcare costs rise, according to charity Pregnant Then Screwed . In the Budget, the rate of NI for employers was raised from 13.8% to 15%, and the salary threshold at which employers start to pay the tax was lowered from £9,100 to £5,000 per year. Chancellor Rachel Reeves also announced that the national living wage will increase by 6.7% for employees aged 21 or older – from £11.44 an hour to £12.21 – from April.
Among the third of survey respondents who calculated the impact of the NI hike on their provider, the poll suggested that the changes will result in additional costs of over £18,600 per setting per year on average. One respondent said: “Our collective increases are going to be in excess of £300,000 for the year over our 10 settings. We have 185 staff and care for 2,000 children per week.
Costs were “too high” and funding rates were “too low” to stay open, they said. Mr Leitch added: “The financial pressure created by the sharp increases in the minimum wage announced at Budget alone would have been cause for significant concern in the sector given that, despite government claims to the contrary, funding increases have never actually reflected the need for settings to maintain wage differentials between different staff when increasing wages.
Ms Phillipson added that the Government will provide £8.1 billion for the early years entitlements in 2025/26. A separate poll by PTS, of 3,847 parents who currently have a child in a nursery in the UK, suggested that 92% believe childcare providers should be exempt from NI increases.
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