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As the 5%increase to the minimum wage starts this week, funding for nurseries will remain frozen until 2020.
Although the rise is good news for some, for others like small businesses who suffer from inflation it could be the beginning of the end.
It is worse for people who can’t raise prices such as nurseries. Nurseries have warned that the increase in minimum wage together with bigger auto-enrolment pension contributions. Would push up staffing costs when they are already struggling to balance poor funding and rising prices.
Research by National Day Nurseries Association found that 58% of Nurseries in England said that they will have to pay 5% and 8% more out in wages and pension contributions from 1st April.
More than 16% will see their wage bill rise between 9%-12%.
This averages out at less than £5 a head, and it is based on rates from 2015 when the minimum wage was 23% lower for over 25s.
While the minimum wage is rising 5% the funding rates per child to deliver free child care will remain frozen until 2020.
One manager of a nursery told us that despite wanting to pay staff at a level that they deserve, we simply do not have the resources. We are a small business working in extremely tight margins. We are constantly struggling to remain afloat. Whilst at the same time providing the quality of care that our parents expect, and our children deserve.
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