President Trump’s tariffs have added fresh uncertainty to an already fragile UK economy. With government borrowing higher than expected last year, speculation is mounting ahead of the Autumn Statement that tax rises could be on the horizon – further squeezing household budgets and threatening the UK’s already sluggish growth.
But it’s not just households feeling the pressure. Businesses are also under strain. This month alone, they’ve had to absorb a hike in employer National Insurance contributions (NICs), changes to business rate relief, and increases to the legal minimum wage.
The impact is widespread, affecting pubs, restaurants, shops, care homes, hospices and nurseries. While schools have been protected from the employer NICs increase, nurseries – despite their vital role in early years education – have not.
Unlike many sectors, nurseries can't adjust staff numbers or raise prices freely. Strict staff-to-child ratios mean their hands are tied.
The National Day Nurseries Association estimates that an average nursery with 18 staff will see their annual costs rise by £47,000 from NICs and wage increases alone. Add business rates, and that figure climbs by another £21,000.
Yes, government funding for free childcare places has increased, but not enough to cover these added costs. And funding rules mean the government only covers staffing costs for the funded hours (15 or 30 per week). Nurseries can end up having to charge separately for extras like lunches or nappies. Some parents are now sending packed lunches and their own supplies to avoid the charges. Yet the nurseries have little choice.
I’ve heard directly from several local nurseries. Their message is clear, and as one nursery put it: these financial burdens are “making it more difficult for nurseries to operate and is a disincentive to taking on more children or expanding the nursery.”
That’s why I’ve written to the Chancellor urging her to take immediate action to exempt nurseries (and hospices for that matter) from the NICs increase and business rate hikes, and increase early years funding to reflect real world costs, including inflation.
So far, the Treasury has been silent. That silence speaks volumes.
It makes no sense to champion getting more parents into work while simultaneously pushing childcare providers to the brink. If nurseries can’t grow or worse, if they start closing their doors, parents will struggle to find or afford childcare. That risks pulling people out of the workforce and further hampering economic growth.
