Budget 2017 does 'nothing to alleviate' childcare sector's challenges

In his Budget speech, Chancellor Philip Hammond revealed plans for an increase in the National Living Wage (NLW) but offered no additional funding for the early years sector, leaving nurseries 'disappointed' and 'struggling to stay afloat'.

The Chancellor said the National Living Wage (NLW) would rise by 4.4 per cent from £7.50 per hour to £7.83 per hour and the National Minimum Wage (NMW) would rise in line with Low Pay Commission recommendations.

However, on business rates - a cost that nurseries are particularly struggling with - he offered no relief.

Nurseries expected to deliver 30-hour funded places on 'paltry frozen rates'

Purnima Tanuku, National Day Nurseries Association’s (NDNA) chief executive, expressed 'disappointment' that his speech failed to mention early years funding. She said: “This Budget has increased the business costs that private, independent and voluntary nurseries must pay and done nothing to alleviate the challenges the sector is facing.

“With significant rises in National Living Wage and National Minimum Wage taking place in April, along with one per cent pension contribution increases and three per cent inflation, nursery businesses are expected to deliver 30-hour funded places on paltry frozen rates.

“The Chancellor has given a clear message that this Government is not interested in properly investing in early years and just expects the sector to get on with it while faced with all these increases.”

Similarly, The Pre-school Learning Alliance voiced concerns about the sustainability of childcare providers following the Budget announcements.

The early years organisation warned that, while it supports the principle of the NLW and that the early years workforce should be paid a fair wage, such an increase without any additional funding could place further pressure on providers already struggling to stay afloat following years of government underfunding.

While the Government wants the NLW to be at £9 an hour by 2020, the Department for Education (DfE) has confirmed that early years funding levels will be frozen until 2020, with no formal review of rates planned in that time.

‘Ignoring the childcare funding crisis won’t make it go away’

Responding to the announcement, Neil Leitch, chief executive of the Pre-school Learning Alliance, said: “Today’s Budget was an opportunity for the Government to secure the long-term future of childcare providers across this country. Instead, it has risked plunging the early years sector further into a funding crisis.

“The Chancellor’s announcement of an increase in the National Living Wage should, in theory, be warmly welcomed by a workforce which has long been underpaid – and there’s no doubt that pay in the early years sector needs to increase. But without being matched by an increase in Government funding – and given that staff wages make up around 70-80 per cent of childcare providers’ overall costs – this move will only serve to compound providers’ struggles at a time when a lack of Government investment is threatening their long-term sustainability.”

He added: “Ignoring the childcare funding crisis won’t make it go away. Every week we hear from nurseries, pre-schools and childminders – all of them passionate, quality providers – who are being forced out of business because they simply cannot make the 30 hours work. If ministers want to continue to promote ‘free’ childcare, they should make sure they – and not parents or providers – are paying for it.”

Mr Leitch also highlighted that the pressure on the childcare sector is likely to ‘get worse’ as the 30-hour policy continues to roll-out.

“Rather than small, ad-hoc pots of funding, the Government simply needs to fund the childcare sector adequately, and ensure that early years providers can deliver the provision that parents need without risking the viability of their businesses,” he added.