Spring statement: Chancellor criticised for lack of support for early years sector

Kathy Oxtoby
Wednesday, March 23, 2022

Sector organisations have voiced their disappointment that the Chancellor has not addressed early years funding in his Spring statement.

Early years organisations have criticised the chancellor Rishi Sunak for failing to tackle the rising cost of childcare and early years funding in his Spring Statement delivered in the House of Commons today (23 March 2022).

In his statement, the Chancellor announced measures to reduce tax and national insurance for individuals as well as for small businesses. However, there was no mention of any plans to address the financial issues facing the early years sector.

The Early Years Alliance expressed disappointment and frustration that the sector had been ‘ignored’, while National Day Nurseries Association’s (NDNA) called for the Government to offer ‘tangible support’ to childcare providers to help with their rising costs.

The measures announced by the Chancellor during the Spring Statement included:

  • A 5p cut to fuel duty from 23 May.
  • The immediate doubling of the household support payment to £1 billion. The payment helps those most in need to pay for essentials and is decided by local authorities.
  • A £3,000 increase to the amount people can earn before paying income tax or National Insurance, up from a planned £300. From July, people can earn £12,570 a year before they are taxed or pay National Insurance – according to the Chancellor the move represents a tax cut for 30 million people.
  • From April, a £5,000 rise to the Employment Allowance, providing a tax cut for half a million small businesses.
  • Before the end of this parliament in 2024, a cut to the basic rate of tax from 20 per cent to 19 per cent. The Chancellor said it was the first time in 16 years there had been a cut to the basic tax rate. The £5 billion tax cut is expected to benefit 30 million people.

‘Early years sector has been ignored’

Neil Leitch, CEO of the Early Years Alliance, said: ‘We are both frustrated and disappointed that, yet again, the early years sector has been ignored in today’s Spring Statement announcement. 

‘Many providers had hoped that the Government could use this as an opportunity to reallocate the substantial underspend from the tax-free childcare scheme to the early years sector. However, the Government’s failure to do so means that many early years providers will continue to struggle to make ends meet, and sadly, many will have no option but to close their business. 

‘The Government also failed to remedy its decision to exclude early years settings from an extension in business rate support despite the fact that retail, leisure and hospitality businesses will continue to benefit from rates relief over the coming financial year.

‘While we know that not all early years providers are subject to business rates, for those that are, this would have provided vital financial help at a time when so many are struggling in the face of rises in the minimum wage and national insurance contributions from next month. 

‘Today’s Spring Statement was an opportunity for the Government to address the early years funding crisis but, yet again, it has failed to do so. Ultimately, it is parents and providers who will pay the price.’

‘Childcare businesses are continuing to suffer’

Jonathan Broadbery, National Day Nurseries Association’s (NDNA) director of policy and communications said: ‘The Chancellor has talked about supporting sectors affected by Covid and helping working families. There is one immediate step the Government can take and that is exempting nurseries from unfair business rates.

‘Retail, hospitality and leisure are starting to recover from the pandemic as restrictions are removed and have been singled out as requiring support, but childcare businesses are continuing to suffer from lower income and much higher costs.

“The early years sector plays such a huge role in levelling up opportunities for all children and supporting working families. We want to see the Government coming forward with tangible support to childcare providers that will help with their rising costs. Business rates returning in full to nurseries could add up to £12,600 of costs to an average nursery.’ 

‘Lack of support for education and early years’

Helen Osgood, national officer for Voice Community – Community Union’s education and early years section – said: ‘We are disappointed by the lack of support for education and early years, which, in the face of a staff recruitment and retention crisis, need massive investment to support children’s education and wellbeing recovery from the pandemic, and to help meet rising energy bills, staff wages and pension payments, and other costs increasing rapidly with inflation.

‘Early years settings, in particular, are struggling, and face either passing on costs to parents or closure, leaving families to pick up the pieces.’

The Chancellor was also criticised for doing enough to assist families who were ‘struggling’ with the cost of living.

‘Little to ease financial pain’

Action for Children’s director of policy and campaigns Imran Hussain, said: Every day we help ordinary families who are struggling with the absolute basics. The announcements made today by the Chancellor will do relatively little to ease the financial pain these families are grappling with now and in the months ahead. Better off families will be the big winners from the tax cuts, not those who need help the most.  

'Millions of families, still reeling from having had their Universal Credit entitlement reduced by £20 a week, are struggling with a devastating rise in energy bills and soaring inflation.’

‘Highest prices in a generation’

Sara Ogilvie, policy director of Child Poverty Action Group, said: ‘The measures don’t come close to bridging the gap between what the lowest income families have and what they need, and will leave many stranded in the face of the highest prices in a generation. 

‘The Chancellor should have increased benefits to match inflation – the most efficient way to help hard-pressed households.  But on current plans he will impose a real terms cut of £663 on families on universal credit at the worst possible time. That will leave millions without enough to live on.’

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