How Are Nurseries Responding To The Autumn Budget? We Asked Them

‘Let's be clear, if the National Insurance changes and wage rises announced at last month’s Budget are introduced without further support for the early years sector, it will be disastrous for both providers and families,’ says Neil Leitch, CEO of the Early Years Alliance. ‘Even before the Budget, countless nurseries, pre-schools and childminders were already teetering on the brink. Now, our survey findings show these increases will push even more providers to closure.’

He says those that do stay open will be left with no choice but to increase their fees, which will push up childcare costs for UK parents.

‘For as long as the government has provided funded childcare hours, they’ve underfunded it,’ says Lucy Whitehead, who owns a private nursery in Surrey. ‘The rate at which they fund never keeps in line with staffing costs.’ Lucy says that while many small businesses like pubs or restaurants can cut staffing to bring costs down to counter the recent NI increases, strict adult-to-child ratios in childcare settings mean nurseries are unable to do this – forcing many into the red.

All this comes after the government pledged 30 hours of free childcare for all under-fives from September 2025 to working parents, providing they earn more than £9,518 and less than £100,000 per year. But Lucy says that with both minimum wage and NI increasing, the only option left to nurseries is to increase their prices.

‘Studies show if nursery fees go up by 10%, parents will have to leave the workplace, and we all know that usually means mothers,' she says. 'Childcare funding is doing the exact opposite of what it’s intending. The government is trying to encourage mothers back to work, but they’re not funding childcare places properly. Nursery fees then go up, mothers have to stop work, or female run nurseries staffed mainly by females shut their doors. It’s a female led industry after all, so these changes adversely affect women. But no one [in government] is listening to us.’

Lucy thinks that sexism may also play a role. ‘Keir Starmer recently said that he wants to crack down on rip-off nursery fees, and the rhetoric seems to be that it’s wrong to make a profit in the childcare industry, which is female led. Profit is celebrated in male dominated industries, but nurseries are supposed to just about break even, or run at a loss? I know many nursery owners who set up nurseries because they love children, but end up working at a loss. How is that fair?

‘None of us want to make childcare so expensive. Most of us are working parents ourselves, and we understand the pressures. But nurseries need to be financially viable for the people running them.'

Joeli Brearley, founder of campaign group Pregnant Then Screwed, told us: ‘It’s really disappointing that after so many promises from Labour that childcare would be a top priority, it now looks as though costs will rise and providers will close. Parents cannot absorb increased rates right now. They are struggling beyond belief. We believe this is an unintended consequence of the chancellor’s budget, but we are pleading with them to protect our childcare sector by increasing rates and exempting nurseries from national insurance increases immediately.’

‘The time for action is now,’ says Neil Leitch. ‘Anything less, and it is parents who are likely to pay the price.’