MPs have spoken up in the House of Commons on the impact of  the government’s planned changes to employer National Insurance contributions (NICs) on nurseries.

Chancellor Rachel Reeves revealed employer’s NICs will rise to 15% from April next year in the recent Budget.

MPs debated the impact of increased contributions on the employers as the National Insurance Contributions (Secondary Class 1 Contributions) Bill was read for a second time.

Liz Jarvis, Liberal Democrat MP for Eastleigh, said she had been contacted by owners of many small businesses, including those in the early years sector who “are hugely concerned about the impact that changes to employer national insurance contributions will have on their businesses.”

She said one charity-run preschool had told her the increase would add “tens of thousands” to its annual costs, while  YMCA Eastleigh nursery and community centre said the combined impact of changes to the minimum wage and NIC would cost an extra £95,000 a year. 

“Across the country, nurseries, pre-schools and childminders are warning that rising employer national insurance contributions coupled with inadequate government funding will lead to higher fees for parents, reductions in staff pay and closures in those essential early years settings, which would not only harm working families but risk deepening the staffing crisis in the sector,” she said.

Purnima Tanuku, chief executive of National Day Nurseries Association (NDNA) said the organisation had briefed MPs on the challenges that early years providers will face regarding increased employer National Insurance Contributions before the debate.

She said: “Early years providers will be badly impacted because staffing costs make up 75% of their overall expenditure. Our calculations show that nurseries on average will have to find an additional 11% on top of their usual staffing bills from April 2025.

“If this additional amount is not included in the funding rates due to be announced this month, then nurseries will have no choice but to pass this extra burden onto parents in the form of fees, reduce the number of places they offer or go out of business. With the final phase of the childcare expansion only a few months away, it’s vital that the government supports nurseries to be able to meet this increased demand.”