Today, Chancellor Jeremy Hunt delivered the Autumn Statement which intends to bring stability to businesses and protect growth in the economy

 Jeremy Hunt outlined his package that he claims will grow the UK economy with 110 growth measures, including business tax cuts and an increase to the National Living Wage.

However, the economy is expected to grow slower than expected – 0.7% next year instead of the 1.8% previously forecast by the Office for Budget Responsibility (OBR)

The independent forecaster expects debt will increase as a percentage of gross domestic product (GDP), the measure of everything produced in the economy. This downgrade comes after the Chancellor promised to grow the economy as one of the government’s five pledges.

The Statement covered a range of packages to support businesses and public services including doctors, nurses and teachers. That being said, there was absolutely no mention of additional funding support for the early years sector, despite continued calls from early years organisations and providers.

Neil Leitch, chief executive of the Early Years Alliance said:

“Given the significant increase in the national living and minimum wages coming into effect next year, it is absolutely appalling that no additional support for the early years was announced at today’s Autumn Statement.”

Autumn Statement: National Living Wage

In his speech, Hunt confirmed that the National Minimum Wage will rise to £11.44 per hour from April 2024. This equates to a 9.8% increase. This announcement will benefit. That equates to an increase of £1.02 from the current rate of £10.42.

This rate will now apply to UK workers over 21, bringing the eligible age down from 23. For anyone under 21, the minimum wage is lower – but this is also increasing, as is the lowest legal pay for apprentices.

Those aged 18 to 20 will get at least £8.60 an hour, starting from April. This is an increase of £1.11. For those 16 and 17, and apprentices, the minimum pay will be £6.40 – a rise of £1.12 from 2022.

For workers, an increase to minimum wages is always welcome, but the government has failed to bolster this with financial support for nursery providers who are already struggling to remain open and running with the increasing costs.

Commenting, Neil Leitch added:

“While in theory, today’s announcement should be warmly welcomed by the early years – especially given the historic low rates of pay in the sector – in reality, this news is likely to spark serious concern among providers.

“For years now, government funding for the so-called ‘free entitlement’ offers has failed to keep pace with the rising costs of delivering places. With staff wages accounting for around three-quarters of provider costs, there is no doubt that the announced increase in the national living wage – and plans to extend it to employees aged 21 and 22 – will have a huge impact on setting budgets.

“With the phased extension of the entitlement offers to one- and two-year olds just months away, ensuring that the early years sector is adequately funded, not just today, but in the long term, has never been more vital.

“It is critical, therefore, that the Chancellor uses the Autumn Statement to commit to the additional funding providers need to remain sustainable. If not, this could be the final nail in the coffin for settings across the country.”

Purnima Tanuku OBE, chief executive of National Day Nurseries Association (NDNA) said: “In his Autumn Statement today, the Chancellor announced 110 growth measures to support businesses but not a single one will help the early education and care sector which is at crisis point. The government seems to care more about pubs, shops and the technology sector than our children’s futures.

“Nurseries are a crucial part of our economic infrastructure enabling parents to work and they lay the foundations for our children’s lifelong learning. Only eight months ago, the Chancellor announced the expanded funded childcare offer from April 2024. Despite this promise, he hasn’t offered nurseries any new measures today – such as scrapping business rates or even offering a discount – which could really make the difference between thriving and having to close.

“This was a last chance for the Chancellor to provide much-needed support in the form of addressing underfunding, business rates and staffing. NDNA has been lobbying hard for business rates relief along with other organisations including the Education Committee. Since April, the average nursery’s business rates bill has increased around 40% to £21,000.

“For years the Government funding rate has not kept pace with business costs, especially minimum wages some of which have risen by 62% since 2017. The current funding rate for three and four-year-olds is just 21% above the 2017 rate. Our research shows that 83% of nurseries expect to make a loss or only break even this year, because the average shortfall for funded places is £2.31 per child per hour.

“Nurseries are relying on government funding rates for early years places that will meet their costs. From April with the government buying 80% of childcare places, they are effectively price fixing. They need urgent support now or the expansion policy faces defeat.”