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by Jess Gibson and Shannon Pite

Chancellor Jeremy Hunt has announced that the national living wage will increase from £10.42 to £11.44 in April 2024 – a near 10% increase – and extend to 21- and 22-year-olds. 

The government has also confirmed that the national minimum wage for 18- to 20-year-olds will increase from £7.49 to £8.60, while the minimum wage for both under-18s and apprentices will increase from £5.28 to £6.40. 

However, the Chancellor failed to provide any additional support for the early years during the sector, despite recent Ofsted figures showing the closure of 3,000 providers in the past year due to financial pressures. 

During a Parliamentary session that immediately followed the Autumn Statement, Conservative MP chair of the Education Select Committee Robin Walker warned that the wage increase would put "great pressure" on early years settings, and urged Mr Hunt to work closely with the sector to ensure that providers were able to “meet that pressure”  

In reply, the Chancellor said that “for many schools and nurseries, the issue is recruitment […] and this change will make that much easier”. 

Speaking in response to today’s announcement, Neil Leitch, chief executive of the ��������, warned that early years settings will struggle to meet additional wage responsibilities without the extra finances required to fund them, particularly in light of the imminent roll out of the extended early entitlement offer. 

“Given the significant increase in the national living wage coming into effect next year, it is absolutely appalling that no additional support for the early years was announced at today’s Autumn Statement.   

“While we of course believe that educators should be fairly paid for the work that they do, increasing and extending the living wage without backing this up with additional funding for the sector is a recipe for disaster, and will pile on more pressure on settings at the worst possible time: not only are providers facing their most severe crisis in years – with Ofsted figures released just last week showing a drop of nearly 18,000 early years places and 3,000 providers in the last year alone – but we are just months away from the biggest expansion in the sector’s history.   

“Given that we know that the funding announced in the Spring Budget won’t even come close to making up for years of underfunding, it was vital that the Chancellor used today’s Autumn Statement to provide the financial support that nurseries, pre-schools and childminders need to deliver affordable, quality and sustainable care and education. Instead, government’s actions are likely to achieve the exact opposite, tipping many settings over the edge.  

“Let's be clear: urgent action is needed to safeguard the future of the early years sector in England. If the government is as committed to early education and care as it claims to be, then it is absolutely critical that it invests what is needed to deliver the places that children and families need. Anything less, and the sector will be damaged beyond repair.”  

The Chancellor has also announced that the government will freeze the small business multiplier, though further plans to continue the 75% business rates relief for retail, hospitality and leisure until 2025 were not extended to the early years.  

He went on to confirm that, from April 2024, those in self-employment – which includes childminders – will no longer have to pay Class 2 National Insurance contributions, with Class 4 National Insurance contributions also cut from 9% to 8%. 

In addition, employee National Insurance contributions will be reduced from 12% to 10% in January 2024.