The budget also confirmed previous announcements relating to support for childcare and nurseries should think about what the longer-term impact of this could be.
There was welcome news for low-paid employees with an increase in the personal tax allowance by £630 to £8,105 from April 2012. Nurseries as employers may have opportunity to train staff as part of a scheme to create 50,000 apprenticeships over the next four years. The Government also revealed a new consultation will be released to look at the option of integrating the income tax and National Insurance contributions system.
On the business front, predicted growth of the economy has been downgraded for 2011 and 2012 from 2.1 per cent to 1.7 per cent and from 2.6 per cent to 2.5 per cent respectively.
Nurseries are responsive to changes in the economy, especially around working patterns and settings should plan for how they may adapt to changes in demand. The Government revealed that it will be creating 21 'Enterprise Zones' which will look at how new jobs and investment can be generated; nurseries should look out for opportunities to be involved in here, and how they can play a role by delivering high-quality care and early learning for working and training parents. Small businesses, including nurseries with a lower rateable value, may also benefit from the continuation of a business rate holiday.
Although there has been much media coverage about the 1p cut in fuel duty, families using childcare will be less well off following changes in the support available being implemented. For example, the budget also confirmed that the childcare element of working tax credit will be reduced from 80 per cent to 70 per cent from 1 April and there will be a flat-rate tax relief for all those claiming childcare vouchers. Recent research has indicated that two thirds of parents may have to cut down on their childcare usage as a result of cuts in support and rising household expenditure.
The current economy hangs in a delicate balance - inflation is rising and with the recent VAT increase goods and services cost even more. There are fears that if interest rates are raised to try and control this that this will drive the economy back into a recession, and cause hard-pressed families on tracker or variable mortgages and other borrowing to struggle further with their finances.
Although the budget has not raised any new points for childcare as a sector, there is still plenty to think about. The budget confirms that the economy is still on unsteady ground and nurseries need to ensure that they have contingency plans in place and are involved in areas such as local NDNA nursery networks. Being informed and in the know will help you to identify how your nursery can be part of new initiatives that are first glance might not seem relevant, and also help you share how the support available will work best for your setting and the children you care for.
