For nursery settings in all UK nations, the rise in national insurance contributions (NICs) and staffing costs will drastically impact their setting, putting them under huge financial pressure.
Childcare in the UK is underfunded
The continuous underfunding of the early years sector cannot go on. The Government must put our children at the heart of their agenda and decision-making.
Higher parent fees
The shortfall in government funding puts unbearable financial pressure on settings and will force these costs on to parents. From September the Government will be buying 80% of all childcare in England. The sector will be paying on average 11% more in wages/staffing costs from April, or around £2000-£2500 per staff member.
Higher employer costs
Higher employer costs mean that nurseries are more likely to freeze staff recruitment, be less able to offer pay differentials to better qualified staff and offer fewer incentives for staff to stay employed. Fewer staff members means nurseries can’t provide the number of places required to meet demand.
More nursery closures
The combination of all these factors will be the last straw for some nurseries which will result in more settings closing rather than expanding to meet expected demand. All three Governments must act urgently to exempt all private and voluntary early years providers from paying the National Insurance Contribution increases.
Updated “charging parents” nursery guidance April 2025
In February 2025, the Department for Education updated its early education and childcare funded places guidance that local authorities and consequently providers, must follow. This could cause huge challenges for nurseries and impact on settings, staff, families and children. It includes information about charging parents.
Find out more
Why not contact your MP and parents?
Use our MP and parent letter templates to voice your concerns and fight for better outcomes for nurseries, families and children.
Parents and carers can learn more about the value of early childhood education and care with our parent resources here.
NDNA members can access a template letter to parents that addresses concerns around the April 2025 charging parents guidance here.
Results of our Sustainability and Budget Impact Survey 2025 – England
NDNA’s recent Budget Impact survey has revealed that statutory employment cost increases from April, including NICs will force nurseries to raise fees for parents by an average of 10% as one in seven nursery businesses are at risk.
While the funding rates that the Government pays providers for childcare places will increase, they will not account for NIC changes. These funding rates are due to rise by an average of 4% while nursery staffing costs are set to rise by an average of 15%.
A total of 92% of nurseries – up from 83% last year – said their current rates did not cover their costs. For those respondents who do know their new rates for 2025/26, 85% said they will make a loss on each place.
Impact of NICs on nurseries:
- 96% will increase fees to parents
- 69% will reduce spending on nursery resources
- 48% will reduce spending on nursery premises
- 39% will offer fewer places.
Thank you for your support during the week of action
Thank you to everyone who pledged their support to the campaign, downloaded our campaign resources and shared their perspective and concerns on their channels about the current state of childcare funding.
We know that this is just the beginning and there is still a lot of work to be done. Childcare funding is woefully short across the UK and we need action from the Government to make this right and protect our nurseries.
We have listened to your concerns. We have more activities planned over the coming weeks and months in response to the latest DfE guidance on charging parents. Keep your eyes peeled to our social media channels and visit our campaign page for the latest news and updates.
Join our campaign and together we can be a stronger voice to influence positive change for early years.
Find out more
