Experts at Blick Rothenberg said that when the new minimum wage and employers’ National Insurance contribution (NIC) rates begin to apply in April, nursery fees will rise. The firm warned that the changes will lead to parents dropping out of the workforce, with women disproportionately affected.
Government figures show that more than 70% of parents with children aged up to four years old are using some form of childcare on a regular basis.
Ele Theochari, a partner at Blick Rothenberg, said: “The recent hike in employer’s NIC and the national minimum wage requirements will result in childcare fees dramatically increasing to cover the additional costs nurseries will be facing.
“With over 75% of all nursery costs relating to staff and strict legal mandates in place that dictate the staff-to-child ratio, there is little nurseries will be able to do to mitigate additional staffing related costs.”
‘This will disproportionately affect women’
According to Blick Rothenberg, economists are suggesting that parents will face an increase of up to 20% in fees to cover nurseries’ rising costs. The firm said that more than 35% of parents already find it difficult to meet existing childcare costs, meaning there is “the real risk of a childcare crisis causing wide-reaching consequences for employers and the UK economy.”
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Theochari added: “Childcare fees can often exceed mortgage or rental costs for a family, and many working parents find that there is already little or nothing left in their disposable finances after tax, NIC and existing childcare costs have been accounted for.
“This will increasingly lead to parents leaving the workforce as the cost of working and sending a child to full- or part-time childcare becomes financially unviable. Taking any individual out of the workforce for up to four years will lead to a drop in economic productivity and lower tax receipts overall. This will disproportionately affect women as the primary caretakers of children.”
Blick Rothenberg said that while the Government needs to develop a clear strategy for the UK childcare sector, employers will also need to consider how to support employees who have children. It suggested that this might mean more flexible working opportunities or subsidised workplace childcare.
The Government has already announced that 750 schools with primary-age pupils will be invited to take part in a £7m breakfast club pilot next year. Parents can also apply for free childcare during term time.
