Parents face higher nursery fees due to national insurance hike

Parents in the UK are likely to face increased nursery fees due to the recent national insurance hike, as reported by Wales Online. The Early Years Alliance (EYA) has warned that childcare providers may be forced to raise fees for parents or even close down, as changes in national insurance and minimum wage rates are putting significant pressure on the sector. The EYA is urging the Government to take action to protect the sector from the financial impact brought on by the changes outlined in the Budget.

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A poll conducted by the EYA amongst 1,007 senior staff in nurseries, preschools, and childminders in England revealed that 95% of settings are considering raising fees for non-government funded hours to cope with the cost pressures from the national insurance and minimum wage rises. Additionally, 87% are likely to introduce or increase charges for optional extras such as meals, consumables, and trips, while 61% are considering restrictions on when early entitlement funding can be claimed. Alarming statistics show that 40% of providers are facing the possibility of permanent closure.
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Charity Pregnant Then Screwed (PTS) emphasises the impact of rising childcare costs on parents, who may be forced to leave the workforce or rethink their family plans. The Government’s initiative to expand funded childcare for working parents in England is underway, but the EYA survey signals potential reductions in early entitlement places and complete withdrawal from offers without adequate support from the Government.

In the recent Budget, changes to employers’ national insurance contributions and the increase in the national living wage were announced, posing further challenges for the already strained early years sector. Neil Leitch, chief executive of the EYA, highlights the urgent need for the Government to either fully fund the national insurance rises for early years settings or exempt the sector from the changes altogether. The financial strain caused by these increases is expected to reach over £18,600 per setting annually on average.

Education Secretary Bridget Phillipson has assured that more details on funding rates will be provided soon to address the concerns raised by the sector. The Government’s commitment to providing £8.1 billion for early years entitlements in 2025/26 is intended to support families and childcare providers during these challenging times. However, the sector continues to call for more certainty and confidence in funding arrangements to fulfil promises made to parents.

Despite the Government’s mission to ensure equal opportunities through a reformed early years system, the sector is grappling with the reality of unsustainable financial burdens. The EYA and other stakeholders are advocating for immediate intervention to prevent the collapse of childcare services and alleviate the financial strain on parents. The future of childcare provision in the UK hinges on proactive measures to address the escalating challenges faced by the sector.