Autumn Budget - First Labour Budget since 2010

Autumn Budget - First Labour Budget since 2010

At the end of October, Chancellor Rachel Reeves delivered Labour’s first budget in 14 years. While there was no direct mention of the early years sector, something which frustrated leading voices within the sector, there were key points that will have a direct impact upon the early years sector. Some of these include:

• Firms to pay National Insurance on workers’ earnings above £5,000 from April, down from £9,100 currently, with the rate increasing from 13.8% to 15%
• Minimum wage for over-21s to rise from £11.44 to £12.21 per hour from April
• Main rate of corporation tax to stay at 25% 
• Basic rate capital gains tax on profits from selling shares to increase from 10% to 18%, with the higher rate rising from 20% to 24%
• Employment allowance increase from £5,000 to £10,500
• An increased budget of £6.7bn allocated for education investment 
• Confirmed £1.8bn would be allocated for the expansion of government-funded childcare, with a further £15m of capital funding for school-based nurseries.
• Investment in breakfast clubs is to be tripled and SEND funding will be uplifted by £1bn

The immediate reaction throughout the sector was discontent with the announcements. Numerous voices within the sector have indicated that settings will struggle to cope with the increase in minimum wage and national insurance., with fears the costs will have to be passed on to parents. However, the commitment to providing funding for the expanded hours, investments in breakfast clubs and offsets for businesses employing fewer than 5 staff have been welcomed.

There is a strong sense that the funding allocations will be important in determining the full extent of impact of these changes. The rates are expected to be announced before the end of the year. Once that has happened, we will be able to assess the impact of these changes, both positive and negative. 

The full budget announcement is available on the government website.