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Please find a comment below from the Early Years Alliance following today's Budget which has confirmed that from April 2025, national living wage will increase to £12.21 per hour and the national minimum wage for 18-20 year-olds will increase to £10 per hour. The government also confirmed its intention to launch a single adult wage rate. 

The Chancellor also confirmed that employer national insurance contributions will increase to 15% from 6 April 2025, with the per-employee threshold at which employers start to pay National Insurance reduced from £9,100 to £5,000 per year. While the government has confirmed that early years spending priorities will be protected, there has been no further funding announced to cover wage or national insurance increases. 

Commenting, Neil Leitch, CEO of the Early Years Alliance, said: 

"At the Alliance, we wholeheartedly believe that early educators should be paid fairly for the vital work they do – and so, in theory, confirmation of significant rises to the national living and minimum wages should be positive news for the sector.

"And yet, given that staffing costs account for around three-quarters of setting outgoings, the reality is that the combination of wage increases and rises to employer national insurance contributions will make it increasingly difficult for early years providers to remain viable unless these rises are matched by increases in early years funding - particularly given the government's plans to move towards a single minimum wage for all adults.

"As such, it’s absolutely vital that early years funding rates for the next financial year accurately reflect these increased cost pressures if we are to avoid sharp fee increases for parents and, in the worst cases, settings forced to close altogether.

"Given the government's previous emphasis on the importance of the early years, it is both frustrating and disappointing that today's Budget made no mention whatsoever of our sector, despite announcements of additional funding for schools and further education. Looking to the future, the government must make clear its long-term plan for the sector and how it will ensure that funding consistently reflects the cost of delivering high-quality care and early education. We look forward to working with ministers to make this both a priority and a reality."