Delivering his Spring Statement today in the House of Commons, the chancellor Rishi Sunak, announced measures to reduce tax and national insurance for individuals as well as for small businesses. However, he failed to address the rising cost of childcare and the financial issues faced by the early years sector.
The Early Years Alliance criticised Sunak for his ‘lack of support’ for childcare providers, as did the National Day Nurseries Association (NDNA), while the National Education Union accused the Chancellor of ‘missing an opportunity to protect children’s futures.’
The measures he announced during the Spring Statement included:
- From tonight, a 5p cut to fuel duty.
- Immediately doubling the household support payment that helps those most in need to pay for essentials – decided by local authorities – to £1 billion.
- A £3,000 increase to the amount people can earn before paying income tax or National Insurance, up from a planned £300. From July, people can earn £12,570 a year before they are taxed or pay National Insurance – a move that represents a tax cut for 30 million people, according to the Chancellor.
- From April, a £5,000 rise to the Employment Allowance, providing a tax cut for half a million small businesses.
- Before the end of this parliament in 2024, a cut to the basic rate of tax from 20 per cent to 19 per cent. Sunak said it is the first time in 16 years there has been a cut to the basic tax rate. The £5 billion tax cut is expected to benefit 30 million people.
'Yet again, the early years sector has been ignored'
Commenting on the Spring Statement, Neil Leitch, chief executive of the Early Years Alliance, said, ‘We are frustrated and disappointed that, yet again, the early years sector has been ignored.
‘Many providers had hoped that the Government could use this as an opportunity to reallocate the substantial underspend from the Tax-Free Childcare scheme to the early years sector. However, the failure to do so means that many settings will continue to struggle to make ends meet, and sadly, many will have no option but to close their business.
‘The Government has also failed to remedy its decision to exclude early years settings from an extension in business rate support despite the fact that retail, leisure and hospitality businesses will continue to benefit from rates relief over the coming financial year.
‘Today’s Spring Statement was an opportunity for the Government to address the early years funding crisis but, yet again, it has failed to do so. Ultimately, it is parents and providers who will pay the price.’
Jonathan Broadbery, director of policy and communications, said, 'The Chancellor has talked about supporting sectors affected by Covid and helping working families. There is one immediate step the Government can take and that is exempting nurseries from unfair business rates.
'The early years sector plays such a huge role in levelling up opportunities for all children and supporting working families. We want to see the Government coming forward with tangible support to childcare providers that will help with their rising costs. Business rates returning in full to nurseries could add up to £12,600 of costs to an average nursery.'
Helen Osgood, national Officer for Voice Community – Community Union’s education and early years section – commented, 'We are disappointed by the lack of support for education and early years, which, in the face of a staff recruitment and retention crisis, need massive investment to support children’s education and wellbeing recovery from the pandemic, and to help meet rising energy bills, staff wages and pension payments, and other costs increasing rapidly with inflation.
'Early years settings, in particular, are struggling, and face either passing on costs to parents or closure, leaving families to pick up the pieces.'
Dr Mary Bousted, joint general secretary of the National Education Union, ‘The Chancellor’s refusal to increase education funding in the face of this inflation surge signals a return to the austerity of the 2010s.
‘The Institute for Fiscal Studies estimated recently that at least a quarter of the real terms increase in spending will be wiped out through inflation. The higher inflation goes the more will be lost. The Chancellor has missed an opportunity to protect our children’s futures.’
She added, ‘If the Government is serious about protecting living standards and building a strong economy, it must reverse the real terms cuts to teacher pay. Instead, with RPI inflation reaching 8.2 per cent and in the midst of the worst cost-of-living crisis in decades, the Government plans yet more real terms pay cuts for teachers.
‘More pay cuts will increase the already serious teacher recruitment and retention problems that are clearly impacting negatively on children and young people's education.’
Helping 'struggling' families
The Chancellor was also accused of not doing enough to help families ‘struggling’ with the cost of living.
Action for Children said that the announced measures would ‘do relatively little to ease the financial pain’ experienced by ordinary families struggling with the ‘absolute basics’.
Director of policy and campaigns Imran Hussain, said, ‘Every day we help ordinary families who are struggling with the absolute basics. The announcements made today by the Chancellor will do relatively little to ease the financial pain these families are grappling with now and in the months ahead. Better off families will be the big winners from the tax cuts, not those who need help the most.
'Millions of families, still reeling from having had their Universal Credit entitlement reduced by £20 a week, are struggling with a devastating rise in energy bills and soaring inflation.’
Sara Ogilvie, policy director of Child Poverty Action Group, commented, ‘The measures don’t come close to bridging the gap between what the lowest income families have and what they need, and will leave many stranded in the face of the highest prices in a generation.
‘The Chancellor should have increased benefits to match inflation – the most efficient way to help hard-pressed households. But on current plans he will impose a real terms cut of £663 on families on universal credit at the worst possible time. That will leave millions without enough to live on.’
Anna Feuchtwang, chief executive of the National Children’s Bureau, said, 'Rampant inflation is driving us towards a child poverty catastrophe, and the impact could devastate the lives of this generation of children.
'Without further action, the Chancellor’s welcome investment in children and families at last year’s Spending Review, or today’s announcement of further support for vulnerable families through the Household Support Fund, will be completely undermined by the corrosive effects of poverty, that multiplies the demands on the resources of social services, schools and the NHS.'
'Today, the need to prevent the destruction of living standards has never been so acute. And the case for investment in the early years, social care and health services, that babies children and young people rely on, has never been so urgent.'
Mark Russell, chief executive of The Children’s Society, commented, 'Children were not mentioned once in the Chancellor's plans today.
'We're disappointed the Chancellor missed the chance to announce more targeted measures for children from low-income families, such as getting more children free school meals.
'A group of low-income families who are all too often forgotten are those who have come to the UK to live and work and have been put under No Recourse to Public Funds condition, meaning that when crisis hits, or living costs spike, they have no social security safety net to catch them. The government has temporarily allowed these families to get free school meals, and we urge them to make this permanent.These families pay taxes so will be affected by the NI increase, but still receive no social security help.'
