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by Jess Gibson

National living wage and minimum wage will both undergo significant increases, Chancellor of the exchequer Rachel Reeves announced at today’s Autumn Budget.

From April 2025, national living wage will increase 6.7% to £12.21 per hour, and the national minimum wage for 18–20-year-olds will increase 16.3% to £10 per hour. The government also confirmed its intention to move toward a single adult wage rate.  

The Chancellor also confirmed that employer national insurance contributions will increase from 13.8% 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.  

Other key announcements included the following 

• From April 2025, the national minimum wage for both under-18s and apprentices will increase from £6.40 to £7.55 (an 18% increase). 

• Employment Allowance will increase from £5,000 to £10,500, while the £100,000 threshold for eligibility will be removed and expanded to all eligible employers with employer National Insurance contribution bills from April 2025. 

• £1 billion in funding will be allocated for SEND provision – though no detail has been provided on what this will mean in practice and whether this will include early years SEND provision. 

While the government has confirmed that early years spending priorities will be protected, it is yet to confirm future increases to early years funding. 

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."