Delivering his Autumn statement today (22 November) in the House of Commons, the Chancellor, Jeremy Hunt, confirmed the national living wage (NLW) will rise to £11.44 per hour. The move is expected to benefit 3 million ‘low-paid workers’ by £1,800 over the course of a year.
Eligibility for the NLW will also be extended by reducing the age threshold from 23 to 21.
While the rise to the national living wage has been welcomed, sector organisations have raised concern about the impact it will have on providers without any increase to funding rates as settings prepare for the roll-out of the expanded offer next year.
The National Day Nurseries Association (NDNA) argued that since 2017 when the national living wage was brought in, it has increased by 52-62 per cent, yet the funding rate for early years places has only risen by 21 per cent. It said this ‘disconnect must be rectified’.
It accused the Government of caring more about pubs, shops and the technology sector, all of which are to benefit from the Statement, and putting at risk its expanded childcare policy.
The Early Years Alliance said, ‘While in theory, today’s announcement should be warmly welcomed by the sector, in reality, this news is likely to spark serious concern among providers.
‘With staff wages accounting for around three-quarters of provider costs, there is no doubt that the announced increase in the national living wage will have a huge impact on setting’s budgets.
'Given that we know the funding announced in the Spring Budget won’t even come close to making up for years of underfunding, it was vital that the Chancellor used today’s Autumn Statement to provide the financial support that nurseries, pre-schools and childminders need to deliver affordable, quality and sustainable care and education. Instead, Government’s actions are likely to achieve the exact opposite, tipping many settings over the edge.'
Cutting National Insurance
Within his Autumn Budget, the Chancellor also announced the Government is to cut the employee National Insurance (NI) rate by 2 percentage points to 10 per cent. Coming in from 6 January, the move is expected to benefit 27 million people.
Action for Children argued that the NI cut will largely benefit the 'better off', and said that the money should have been spent on providing 'targeted help for low-income families that are at the sharp end of the cost of living crisis'.
The National Education Union (NEU) also expressed disappointment over the lack of investment in education within the Budget, calling the current investment completley 'inadequate' and 'making a mockery of the Prime Minister's repeated claim that education is at the heart of this Government's priorities.'
