Alliance expresses fear National Living Wage hike could pose existential threat to providers

The Early Years Alliance has responded to reports – ahead of Wednesday's Budget announcement – that the National Living Wage is set to rise to £9.50, alongside increases to the National Minimum Wage levels for younger employees.

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

"While it is absolutely right that all staff receive fair pay for the work they do, news that the national living wage is set to rise to £9.50 next year - alongside other significant minimum wage increases for younger workers - is likely to cause fear and worry throughout the early years sector.

"Over recent years, funding for the so-called ‘free childcare’ offers has seen only marginal increases in the face of significant rises in the living and minimum wage. Given salary costs account for around three-quarters of provider costs, the increases confirmed today are likely to represent nothing short of an existential threat to many early years settings across the country.

"This year alone, more than 3,000 early years providers have already been forced to close as the result of sustained financial pressure. With National Insurance rates are also set to increase, and without a substantial increase in early years funding, this trend will only continue.

"It is therefore absolutely vital the upcoming Spending Review includes a significant increase in funding for early entitlements, if the government is to ensure its desire for better pay does not ultimately cripple the vital service our sector provides to children and families.”