Parents are set to bear the brunt of a 10 percent increase in nursery fees, following Rachel Reeves’s tax hikes on employers, according to a new survey. The National Day Nurseries Association (NDNA) warns that parents may also struggle to secure a place for their child, with one in seven nursery companies at risk.
Purnima Tanuku, chief executive of NDNA, described the survey results, based on responses from more than 700 nurseries, as “alarming”. She highlighted the “awful situation” nurseries face, having to “increase their fees to parents or face an uncertain future”.
A staggering 96 percent of those surveyed said they would hike fees by an average of 10 percent. Meanwhile, staffing costs are expected to rise by 15 percent from April due to the budget changes.
This has led to 17 percent of respondents predicting a net loss and 14 percent admitting their company is at risk. Despite the government’s increased funding for childcare places, it falls short of covering the national insurance amount, leaving parents to “pick up the shortfall”, warns the NDNA.
Ms Tanuku added: “The alarming results of this survey come just months before the biggest phase of the government’s funded childcare expansion, putting this policy at risk. Nurseries do not want to be in this awful situation where they are forced to either significantly increase their fees to parents or face an uncertain future, with 14 per cent of nurseries saying their business is at risk.”
She warned: “High quality comes at a cost and unfortunately the government appears to be unwilling to pay that price. Instead, we are left with a situation where they are increasing statutory employment costs, which impact hugely on nurseries because staffing makes up 75 percent of their expenditure – but not taking these increases into consideration when paying for childcare places.
“From September, the government will be paying for 80 percent of childcare places in England. Simply put, if the sector’s most significant customer is not paying their fair share, nurseries have to find this money from somewhere else or close their doors.”
From September, eligible working parents can get up to 30 hours of free childcare per week for children aged nine months and older. However, the cost of a nursery place varies depending on the age of the child, the region, and whether full or part-time care is required.
Meanwhile, working parents with children aged between 9 and 23-months-old on 31st August 2024, could apply to receive 15 hours childcare.
According to DayNurseries.co.uk: “The average cost of a part-time (25 hours a week) nursery place for a child under two in England is £159.61 a week (£8,299.72 a year for 52 weeks). The average cost of a part-time nursery place for a two year old is £153.69 a week (£7,991.88 a year.)”
They added: “The average cost of a full-time (50 hours a week) nursery place for a child under two in England is £305.11 a week. For a two-year-old child, a full-time nursery place is £290.77 a week (£15,120.04 a year).”
