Nursery Fees Surge Amid Tax Hike Sparks Financial Strain and Provider Risks

either raise fees or risk the viability of their services.

The survey highlights that the steep rise in statutory employment costs, particularly with staffing representing around 75 percent of nursery spending, is compelling many providers to plan further measures. On average, staffing costs are expected to jump by 15 percent, with nearly 40 percent of nurseries considering a reduction in the number of childcare places they offer, and a significant fraction fearing losses or even closure.

Critics of the policy, including various political figures, have called on government officials to reconsider the tax hikes affecting nurseries. They argue that the additional financial burdens are not being adequately addressed by the government's childcare funding schemes, which are set to provide a major portion of childcare costs without including the extra national insurance expenses, effectively leaving the nursery providers to absorb the shortfall.

At a time when the government is poised to roll out up to 30 hours of free childcare per week for eligible working parents, the survey’s findings cast a shadow over the planned expansion of early years provision. Parents are already feeling the squeeze, with some reporting that their childcare expenses have become more costly than other major expenditures like mortgages. As the pressures on the sector mount, stakeholders continue to urge for exemptions or reimbursement measures to alleviate the financial strain on both providers and families, warning that without corrective action, the quality and accessibility of early years education may be severely compromised.