The childcare sector could be pushed "to the brink", prompting providers to hike fees for parents or even shut down entirely, due to the impending rise in national insurance and minimum wage, a charity has warned.
According to the Early Years Alliance (EYA), if the Government doesn't intervene to mitigate the impacts outlined in the Budget, parents will be hit with higher expenses. Last month's main Budget tax increase, a hike in employers' national insurance contributions, is set to generate upwards of GBP25bn.
A recent survey involving 1,007 senior early childhood staff across England discovered that 95% are likely to up their charges for hours not covered by government funding if the increased costs from national insurance and minimum wage rises were not funded or addressed by the Government.
Furthermore, around 87% are considering or planning to add on extra fees for additional services like meals, consumable items, and outings. Around 61% may put in place or enlarge limits on when parents can utilise early entitlement funds.
A total of 40% of those surveyed believe a permanent shutdown of their early years establishment may happen. The charity Pregnant Then Screwed (PTS) said an increase in childcare costs might force some parents out of the job market or make them rethink plans to have more children.
The Government's expansion of funded childcare for working parents is currently being implemented across England. As part of the initiative, working parents with children over nine months old can now access 15 hours of funded childcare, with a full rollout of 30 hours per week for all eligible families set for September 2025.
However, a survey by the Early Years Alliance (EYA), conducted online from November 5-10, has revealed that 52% of staff may cut back on the number of early entitlement places they offer, and 39% are considering pulling out of some or all early entitlement offers without additional support from the Government. The recent Budget saw employer National Insurance (NI) rates climb from 13.8% to 15%, and the salary threshold for paying NI drop from GBP9,100 to GBP5,000 annually.