Early Years Sector Writes To Chancellor Over Post-Budget Concerns
3 min read
Exclusive: "The silence from Treasury" in the aftermath of the Budget is "illogical and unacceptable", the early years sector has warned.
Neil Leitch, CEO of the Early Years Alliance – the largest early years membership organisation – has warned that the Treasury must make the sector exempt from National Insurance changes or commit to fully funding them, otherwise its wish that every family should be able to access affordable early education "will be nothing more than a pipe dream".
PoliticsHome understands that the Early Years Alliance has written to the Chancellor outlining the sector's concerns.
The letter sent by the Alliance to the Chancellor also warns of the "significant effect" the changes announced in the Budget – specifically the rise in employers' National Insurance contributions – will have on early years providers, not just on their ability to deliver high-quality early education and care, but on a setting's overall viability.
It comes as the sector gears up for the final phase of the childcare expansion next year, amid high costs and continuing concerns over the recruitment and retention of key staff.
In her first Budget, Chancellor Rachel Reeves announced that National Insurance for employers will be increased by 1.2 per cent to 15 per cent from April 2025.
The level at which employers start paying national insurance on each employee’s salary will also be decreased from £9,100 per year to £5,000, raising £25bn per year.
Leitch told PoliticsHome that settings were struggling before the budget, but the national insurance and wage changes "could sound the death knell for even more settings".
Following talks with the Department for Education (DfE) after the Budget, the Early Years Alliance released a statement from the DfE saying that the funding rates - set to be announced shortly - "take into consideration national living wage and national minimum wage increases across all age groups".
But concerns remain that the rates will not be enough to maintain the wage differentials between junior and senior staff.
PoliticsHome understands that the organisation has not yet been informed of any further support for the sector to combat the increase in costs the national insurance rises are likely to bring.
While the Government announced extra funding for some public sectors to combat the rise in employers' national insurance, the majority of the sector is made up of private, voluntary and independent providers.
The Early Years Alliance has also carried out a survey of its members in the aftermath of the Budget, the results of which are set to be published later this week.
Leitch said: “At a time when the sector is in the midst of an expansion that will ultimately make the government responsible for 80 per cent of the sector’s income, the silence from Treasury on this issue is both illogical and unacceptable."
He added: “If the government is truly serious about supporting the sector to deliver high-quality provision that meets demand, it must either make the sector exempt from the National Insurance changes or commit to fully funding the changes – as well as adequately funding wage increases both now and in the future. If it chooses not to, the idea that every family should be able to access affordable early education will be nothing more than a pipe dream."
A government spokesperson said: “We take the concerns of the sector seriously and will continue to work with them and across government to ensure that funding arrangements give as much certainty and confidence as possible to deliver on the promises made to parents.”
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