Budget 2025: measures to reduce child poverty but little for nursery businesses
The Chancellor announced her Budget measures today (Wednesday 26 November) which included an end to the two child benefit cap, free training for apprentices but only business rates relief for retail and leisure sectors.
Yesterday (Tuesday 25 November) she revealed the new statutory minimum wage rates from April 2026 which will be increasing by between 4.1 and 8.5% depending on ages https://ndna.org.uk/nurseries-need-funding-to-pay-wage-increases/
The Chancellor promised to: “Bring down inflation and provide immediate relief for families.” As well as removing the two child limit, she will reduce household energy bills and spend £18m on playgrounds.
She said new funding for free training for apprentices under the age of 25 for small and medium businesses. Those eligible would have fewer than 250 staff and less than/equal to £44m annual turnover. This will make up the vast majority of single site nurseries and small nursery groups.
Despite campaigning hard for the Treasury to exempt nurseries from paying unfair business rates – something that schools don’t pay – there will only be a lower rate for retail, hospitality and leisure businesses. There was no relief announced for nurseries.
Other announcements included:
- Income taxation will freeze for another three years
- Accepting recommendations of Low Pay Commission and increasing National living and minimum wages from April 2026 https://ndna.org.uk/nurseries-need-funding-to-pay-wage-increases/
- “Salary sacrifice” pension contributions above £2,000 will face National Insurance costs from April 2029
- DfE to lead a review of childcare provision to simplify the system
- Additional settlement for Wales £505m and for Scotland £820m under the Barnett formula
Purnima Tanuku CBE, Executive Chair and Tim McLachlan, Chief Executive of National Day Nurseries Association (NDNA), said:
“Nurseries are the cornerstone of local economies in this country, helping parents to work and providing the best start in life for our youngest children. There were some helpful measures in this budget but critical opportunities around business rates and addressing underfunding have been missed.
“As a charity that wants to see all children and families thrive we are delighted to see the Chancellor’s announcement on lifting the two-child benefit cap. There are a number of issues with the childcare element of universal credit which need to be addressed urgently and this reform could kickstart that work.
“The measures announced in the budget must be reflected in higher funding rates for early years places. Energy and food bills continue to rise, employers face an additional charge on pension contributions and salary costs are increasing yet again. Earlier this year, 92% of nurseries said they were making a loss on three and four-year-old funded places, so more than 76% of nurseries expected to break even or make a loss.
“Most nurseries in the country are small businesses or single sites so help with apprenticeship training costs will be welcomed. With the sector facing a recruitment and retention crisis this measure could support more progression within the workforce. However, there was little more in the budget to support these vital businesses.
“Once again the Chancellor has chosen to prioritise pubs and restaurants over our vital nurseries in giving support with the unfair burden of business rates. This could have had a massive impact on the sustainability of nurseries and supported them in keeping childcare costs down for families.
“The review of childcare funding needs to tackle inefficiencies in the system to genuinely make it easier for parents and providers while ensuring money allocated for children actually reaches the frontline.
“We have called for an online account for each child which could pool all childcare support that parents could then use to pay their provider of choice. This would mean that nurseries can continue to run as individual businesses offering a range of services that parents and children can benefit from.”
Papers released after the announcement was made showed the take-up of funded childcare since April 2024:
According to this chart, demand is around 100,000 higher than expected. This could have implications for the funding allocations and could put too much strain the sector.
The Chancellor also announced £820 million for the Youth Guarantee which guarantees work, training or an apprenticeship for 18 to 21 year olds https://www.gov.uk/government/news/new-youth-guarantee-for-eligible-young-people-and-funding-for-libraries-in-all-primary-schools.
- Budget
- business rates
- child poverty
- early education
- early years
- funding
- NDNA
- nurseries
Similar Articles
Nurseries need funding boosted to pay statutory wage rises from April
What nurseries need to know about DBS checks
