Chancellor of the Exchequer, Sajid Javid, has promised to raise the UK’s national living wage.
Speaking yesterday at the Conservative party conference in Manchester, the chancellor said the Conservatives would raise the wage to £10.50 and give ‘four million people a well-earned pay rise’. He also pledged to lower the threshold for those who qualify from 25 to 21.
Making the wage available to those as young as 21 will come in two stages, with 23-year-olds qualifying for the rise in 2021 and 21-year-olds in 2024.
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Those who are 25 and over are currently paid £8.21 an hour. For those aged between 21 and 24, the pay is £7.70, decreasing to £6.15 for those aged between 18 and 20. The wage is as low as £3.90 for those on an apprenticeship.
Mr Javid said: ‘Over the next five years, we will make the UK one of the first major economies in the world to end low pay altogether.
‘To do that, I am setting a new target for the national living wage, raising it to match two thirds of median earnings. That means, on current forecasts, this ambitious plan will bring the national living wage up to £10.50, giving four million people a well-earned pay rise.’
While the news is well received by early years organisations, the concern has been raised that changing national living wage will put a further burden on cash-strapped providers.
Neil Leitch, chief executive of the Early Years Alliance, said: ‘A rise in the national living wage is fantastic for younger workers, but for the early years sector, this could be an additional cost that many providers will not be able to afford to bear. Pay differentials across the sector are so marginal that an increase in the national living wage often means that all staff within a childcare setting have to get a pay rise.’
During the Government’s spending round at the beginning of September, it was announced that an extra £66m will be made available for the early years sector, but organisations have stated this is not enough to overcome the £662m funding shortfall. Pressures such as the introduction of ‘free’ childcare have taken their toll on settings, with many closing down as a result.
Mr Leitch continued: ‘We warned at the time that any national living wage increase would all but wipe out the extra funding, and today’s announcement confirms that money given with one hand has now been taken away with another. There is no doubt that childcare professionals deserve a pay rise, but without proper funding of the government’s flagship childcare schemes, this will inflict significant damage on the early years sector and there will be further closures.’
Purnima Tanuku, chief executive of National Day Nurseries Association (NDNA), said: ‘The Chancellor’s announcement will be welcomed by people working in lower paid sectors, which childcare has traditionally been. However, continually raising the rate and offering it to younger people will sound alarm bells for many nursery providers, the majority of whom are small businesses. The Government has a poor record on paying rates which cover the existing costs of delivery. If these higher staffing costs are not fully reflected in the hourly rates, more nurseries will be forced to close their doors.
‘Plans to widen eligibility for the National Living Wage to include 21 year olds will bring in a further 16 per cent of the early years workforce, which will impact hugely on nursery business costs. The Government’s chronic underfunding creates a ceiling for providers that makes it harder to reward more qualified or experienced staff, damaging efforts to drive high quality.
‘The Chancellor needs to recognise the impact of the promises he has made and ensure the funding is made available to allow the early years sector to meet this challenge.’