Pressure is mounting for early years providers with increases to the National Minimum Wage (NMW) and National Living Wage (NLW) this month.

A new survey by the Early Years Alliance has revealed that 42% of early years providers say they are likely or very likely to reduce staff numbers in the next 12 months, with 90% saying this is partly or entirely due to the rising minimum wages.

Other key findings from the survey, which received more than 1600 responses from early years providers, include the following.

  • 88% of respondents warned that if their funding rate stays the same next year, it will have a negative financial impact on their provision.

  • 67% of respondents have already increased parent fees for non-government funded hours in the past 12 months and 63% say they are likely to increase these fees again in the future.

  • More than half of the survey’s respondents (53%) warned childcare prices would also go up for very young children.

  • 70% of providers said that they expected to spend less on equipment and resources and 40% said they would introduce or increase additional charges for items such as food and trips due to rises in minimum wages.

Government funding rates for providers in England are currently frozen until 2020 despite increases to the minimum wages and rising minimum pension contributions.

Neil Leitch, Chief Executive of the Early Years Alliance, said:

“We should be celebrating a pay increase for our dedicated workforce — but for most providers this is just the latest in a long list of mounting costs they are expected to absorb without a corresponding increase in government funding.

“This simply can’t go on. It’s now inevitable that, without urgent action on funding, the early years workforce and families will suffer: parents will pay more and more for childcare and even more settings will close.

“If ministers want to talk about the importance of a quality early education then they need to put their money where their mouth is and start making sure funding keeps pace with rising costs.”

Last reviewed 8 April 2019