Autumn statement: Wage increase without extra funding 'could force nurseries to close'

Chancellor of the Exchequer Hunt announced an increase in the National Living Wage for over-23s in his autumn statement, to support people amid the cost-of-living crisis.

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The increase will see the National Living Wage rise from £9.50 to £10.42 per hour.

Hunt also announced that additional funding will be allocated to schools and social care budgets, to assist with increased costs.

However, the statement does not include any specific funding to support early years education, which has led to criticism from early years leaders. 

They argue that the sector is already underfunded, and that increasing wages without any additional support from the government could result in setting closures.

Purnima Tanuku, chief executive of National Day Nurseries Association (NDNA) said that the statement “demonstrates how this government does not value the future of our youngest children” and indicates “a lack of respect for the amazing work that early years educators do day in, day out to support children and families".

“With the statutory wage increasing around 10 per cent next year, providers will have to find ways to increase pay with no corresponding increase to their funding. Since the 30 hours policy was brought in from 2017, minimum wages have risen by 39 per cent but lowest funding rates have only been uplifted by seven per cent. With no additional funding announced for 2023/34 this amounts to a big cut in real terms," she said.

She added that the NDNA has seen a rise in the rate of nursery closures compared with last year, saying: “The economy needs people to work but if there is insufficient childcare available, this will impact all other sectors. The childcare sector is absolutely vital to boosting our economy.”

Neil Leitch, chief executive of the Early Years Alliance said that raising wages without any additional early years funding will “wreak havoc” on the sector.

He added: “There’s no doubt that those working in the early years sector deserve to be paid more, but years of underfunding has pushed settings to a cliff edge, and with soaring inflation and rising energy prices, it will be impossible for settings to stay open if wages increase to this extent without additional government investment.

“This year alone, 4,000 early years settings have closed their doors and with the cost-of-living crisis set to worsen, this number will only rise.

“As such, the government must put forward a long-term strategy for the sector that includes adequate long-term funding, so that the need for better pay does not lead to more closures.”