Nursery fees in the UK are set to increase, placing additional financial pressure on parents. Rising operational costs and changes in government funding are affecting childcare providers. Many nurseries are facing difficult decisions to remain financially viable. The impact on families and the sector as a whole is becoming a growing concern.
Nurseries Facing Financial Difficulties
Parents across the UK are preparing for a significant increase in nursery fees, with a new survey indicating that 96% of nurseries plan to raise costs by an average of 10%. The increase comes as staffing costs rise and government funding falls short, leaving many nurseries with financial difficulties.
Some providers warn that without further support, they may have to either increase fees further or close. A recent survey by the National Day Nurseries Association (NDNA), conducted with over 700 nursery providers, highlights growing concerns about the sustainability of the childcare sector. The survey found that :
- 96% of nurseries plan to increase fees, with an average rise of 10%.
- 17% of nurseries expect to operate at a net loss.
- 14% of nurseries report their business is at risk of closure.
Staffing costs represent 75% of a nursery’s total expenditure, making them a key factor in rising fees. From April 2024, nursery wage bills are expected to increase by 15%, adding further pressure on providers.
The NDNA warns that these increases, combined with existing financial challenges, could impact the availability of nursery places across the country.
Government Childcare Funding and Shortfall
From September 2024, the government will begin funding up to 30 hours of free childcare per week for eligible working parents with children aged nine months and older. In addition, parents of children aged 9 to 23 months can apply for 15 hours of free childcare per week.
The government has committed to paying for 80% of childcare places in England. However, the NDNA warns that this support does not cover the full cost of providing nursery care. The main issue identified is that the increased funding does not account for rising employment costs, including higher national insurance contributions for employers.
Some nurseries are struggling to balance these costs, leading to concerns that they may either charge parents more or reduce the number of available places. The NDNA has raised questions about the long-term sustainability of the sector under the current funding model.
The Impact on Parents and Nursery Fees
The cost of nursery places in England varies based on region, age, and hours of care required. Current average nursery fees are :
- Part-time (25 hours per week) for a child under two: £159.61 per week (£8,299.72 per year).
- Part-time (25 hours per week) for a two-year-old: £153.69 per week (£7,991.88 per year).
- Full-time (50 hours per week) for a child under two: £305.11 per week.
- Full-time (50 hours per week) for a two-year-old: £290.77 per week (£15,120.04 per year).
With an expected 10% increase in nursery fees, these costs could rise further. Parents already managing household budgets amid the cost of living crisis may find childcare affordability even more challenging.
Additionally, some families may struggle to secure a nursery place, as providers facing financial strain consider reducing capacity or closing entirely.
What Lies Ahead for Childcare in the UK?
The upcoming expansion of free childcare places is one of the largest reforms to early years education in recent years. The NDNA has raised concerns that if nursery providers cannot balance rising costs with government funding, some may be forced to exit the market.
The chief executive of NDNA, Purnima Tanuku, has stated :
“Nurseries do not want to be in this awful situation where they are forced to either significantly increase their fees to parents or face an uncertain future.”
The nursery sector remains under financial pressure as it prepares for these changes. The balance between government funding, nursery operational costs, and parental contributions will determine the accessibility and affordability of childcare in the coming years.
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