Reeves' budget may hit nurseries in UK

The UK government's plans to expand access to childcare risks unravelling over higher taxes for employers, industry leaders said, as they warned that costs may be passed onto parents or providers could be forced to close.

The UK government will allocate £1.8 billion ($2.3 billion) to meet the costs of an expansion in free government-funded childcare, Chancellor Rachel Reeves said in Wednesday's budget, confirming figures announced by the previous government.

However, experts in the early years sector said that their costs are set to surge due to a 6.7% increase in the minimum wage from April, a hike in National Insurance contributions for employers and a reduced threshold at which these payments begin. These three policies particularly hit the sector as staffing accounts for around 75% of their costs.


The new budget for childcare does not take into account the higher tax costs that childcare centres will have to shoulder.