We head into 2023 with significant – but not unexpected – disappointment from the chancellor’s budget regarding support for the early years sector. There has been nothing for the sector on VAT exemption or business rates, and whilst there were subsequently announcements (after the budget) on the increase in funding rate they continue to fall short of the true cost of delivery. This is against the backdrop of another significant increase in the national living wage and continued cost inflation.
Schools fared better in the Budget, but childcare wasn’t the only sector which was overlooked – further education also received limited support. Longer term, FE colleges may fare better in terms of Government spending as they officially return to the public sector, but as nurseries are still predominantly run by private operators, there is a danger that they will continue to be ignored for ‘as long as possible’.
The consequence of this is that operators will push through another high fee increase for this year – we are hearing many groups or single sites planning 10 per cent-plus, having already increased fees in 2022 by 5-9 per cent. The extent to which that rise can be swallowed by parents will vary depending on local parental affluence and demand, and whether this demand can even be served will depend on local staffing availability (we have heard of one nursery allowing registered children in on a ‘first-come-first-served’ basis, so parents don’t know until the morning whether they will get a place).
Some of the people we speak with have said that the Government would only listen and provide meaningful support when the sector reached crisis levels, and certainly we seem to be at that tipping point, with active voices including Pregnant Then Screwed, Early Years Alliance, NDNA, Onward and IPPR among others. If a solution doesn’t come soon and more nurseries have to close, then parents, children and the economy (and government tax receipts) will lose out, and it will be settings in areas of deprivation that will fare worst of all.
