Nursery fees set to soar by 10% in wake of tax hike

Parents face a significant financial hit with nursery fees set to soar by 10 per cent in the wake of Rachel Reeves’s controversial tax hikes on employers, a major new survey has found.

- KATE DEVLIN BRYONY GOOCH

They could also find themselves struggling to find a place with one in seven nursery businesses – and the government’s flagship expansion of free childcare places – now at risk, the National Day Nurseries Association (NDNA) warned.

Purnima Tanuku, the organisation’s chief executive, said the results of the survey of more than 700 nurseries were “alarming”. Providers were being put in an “awful situation where they are forced to either significantly increase their fees to parents or face an uncertain future”, she said.

In response to the new data, critics called on the chancellor to exempt nurseries and childcare providers from a tax hike “set to cripple them”. Nearly all of those surveyed, 96 per cent, said they would increase fees to parents, by an average of 10 per cent. Nurseries are being hit by the rise in employers’ national insurance announced by the chancellor in the Budget.

Because so much of their spending goes on staff, the survey also found that average staffing costs would increase by 15 per cent from April, when the changes come in.

As a result, 39 per cent also said that they planned to offer fewer childcare places. Nearly one in five, 17 per cent, said they would make a loss, while 14 per cent said their business was at risk.

The NDNA said that while the government has announced that the rates it pays providers for childcare places will increase, they will not account for the national insurance rise. The organisation warned that parents would be left to “pick up the shortfall”.