Reeves warned women could be 'driven out of work' by nursery fee hikes

Women could be driven out of the workforce or have fewer children if nurseries hike their fees as a result of the Budget, the Chancellor has been warned.

Rachel Reeves last week announced increases in staffing costs as she put up the national minimum wage and made changes to employers’ national insurance.

Industry leaders warned that childcare providers would have ‘no choice’ but to pass that onto families with higher childcare fees.

Joeli Brearley, CEO and founder of Pregnant Then Screwed, said there may be sweeping consequences if higher nursery fees have to be met by parents.

‘The relentless rise in childcare costs isn’t just impacting family budgets - it’s reshaping family decisions altogether,’ she told the Mail last night.

‘Our research with thousands of women who had an abortion found that six in 10 said childcare costs were a factor in their decision to terminate an otherwise wanted pregnancy.

‘Others are being forced out of the workforce, as it becomes impossible to cover the cost of care and stay employed.

‘Presiding over a situation that may make this worse could result in a devastating drop in fertility rates and a further rollback on women’s economic independence, hitting the economy and equality hard.’

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Nurseries could be forced to hike fees for parents or close down after Rachel Reeves hiked the national minimum wage and rate of employers' national insurance in the Budget

At the Budget, Ms Reeves increased the national minimum wage, hiked the rate of employers’ national insurance and reduced the level at which employers start paying the tax.

Economists have warned that tax hikes will hit the lowest-paid, most labour-intensive jobs the hardest - increasing the risk of job losses.

Nurseries often employ large numbers of low-paid workers - with staffing costs estimated to account for around 75per cent of all outgoings.

Yesterday the Education Secretary was unable to say whether nurseries would be given financial help to pay for increased staffing costs as a result of the Budget.

Bridget Phillipson said she would set out ‘more details on funding rates in due course’, after being urged by MPs to confirm whether the Government would foot the bill.

Newly-appointed shadow education secretary Laura Trott asked Ms Phillipson to ‘confirm that the Government’s early years funding rates for all age groups will increase to reflect the changes in employer national insurance contributions?’

She added: ‘And if she can give us a figure for how much that will cost the Department for Education?’

But Ms Phillipson replied: ‘We will be setting out more detail on funding rates in due course.’

Earlier this year, then-chancellor Jeremy Hunt said the early years funding rate would include any increase to inflation, average earnings and national minimum wages.

But the Labour Government has not said whether the pledge includes increases to employer National Insurance contributions.

Liberal Democrat education spokeswoman Munira Wilson pressed the point again, saying: ‘Two thirds of early years places are delivered by private and voluntary providers.

‘So further to (Ms Trott’s) question, what assessment has the Department for Education made of the impact of last week’s national insurance rise for these providers?

‘How much more does the department expect parents will have to pay in nursery fees? How much additional cost will the department have to bear to fund existing and planned so-called free hours for parents?’

Ms Phillipson said the Government will provide £8.1billion for the early years entitlements in 2025/26.

She added: ‘We are also increasing the employment allowance to £10,500 and expanding this to all eligible employers, so smaller providers may pay no national insurance at all in 2025/26.’

Schools, however, will receive national-level compensation for the national insurance rise for employers.