Fee increases - what's normal for 2024/5?

[Duv]

Our nursery has written to us about 2025 fees, and there is an 8% increase Vs this year.

I know that they now have to account for the higher rate of employer NI contributions, but inflation is currently 1.7% so this sounds high to me. What is normal? What increases are you guys seeing?

I'm a CM and increasing my fees from £60 to £65 which I think is 8%. Doesn't seem too much to me. Most parents get funding and TFC that help.

Food, fuel and heating costs have gone up more than 1.7% so I think that's unrealistic on your behalf to expect that when my expenses have gone up so much as well and I don't see why I should make less money this year because of that.

Minimum wage is going up by 6.7%. Add on the increased NI (not just the % increase but the reduction in the threshold).

If they have any staff aged 18-20, minimum wage is going up 16%.

I forgot about minimum wage increases, that's a good point.

The other thing is, the increases in fees with funded hours is increasing way more than 8% at my nursery, more like double that. Can they do that? I can't work out why this is happening

Between minimum wage increase and the NI increase the cost of employing a min wage worker is going up 8-10%. Insurance, food and heating costs are probably also rising.

RE funded hours - if the actual cost of delivering the service is going up by 8%, but the government reimbursement is going up by less than that, then they have to increase the top up fees by more than 8% to make up the difference.

Well the government aren't increasing the rates paid for funded hours so the increase needs to cover that shortfall too.

I'm confused by your question asking if they can do that? It's a private business, you can choose to go elsewhere.

Well the government aren't increasing the rates paid for funded hours so the increase needs to cover that shortfall too.

Is that confirmed? Because that is a joke when nurseries are not allowed to charge top up fees. Some preschools that run term time school hours must be almost entirely filled with children on funded hours.

My understanding from following Pregnant Then Screwed's analysis is that the government are increasing funding for the funded hours in line with min wage increase.

When I say 'can they do that', I mean because there are restrictions about how the funded hours can be applied. Like my understanding is that they must charge the same hourly rate for non funded and funded hours, but the can charge for extras, so maybe that's where the extra costs are coming from (I don't have a fee breakdown). But charging more extras seems odd because it's their staff costs that have most significantly increased, not the cost of food/nappies.

@Duv technically they can only charge for extras if you're allowed to opt out of them eg if you are allowed to send in your own nappies and food, you won't get charged these amounts. If they don't allow that as an option, they can't charge it as an extra during the funded hours. Basically it has to be possible to attend the funded hours totally free.

But if the increased funding only covers the minimum wage increase and not the NI increase (and I've no idea if it does), that is still increasing the shortfall in what was already insufficient funding.

Pregnant then screwed are known to be very anti childcare settings, they hate anything they do and will say it's 'not allowed'.

There's nothing to say our rates have to be the same as the funded rates the government pay. Otherwise every setting.in the area would charge the same.

8% of my fees would be an extra £160 a month.

My tax rate is ~50% so I will need to rant £320 to pay that.

Meaning I need a £4k pay rise to break even.

I don't think that's what OP meant. I think she meant a nursery charging eg £10 an hour to a non-funded child, and £12 an hour to a child who gets funding (obviously only charging them on their non-funded hours).

This is what I meant

Looking at the small print I can see that the cost per funded hour of 'extras' has more than doubled. Why would it have doubled? The cost of these items has certainly not seen a 50% increase. I do get that nurseries work on really tight margins, but I don't understand why they would need such a steep increase in the funded hours 'extras' on top of the 8% increase?

Also Ive just looked up the rate the government pay for funded hours vs what our hourly rate works out at.

Gov pay £11.22 for under 2s, and our hourly rate works out around £8. So are the nursery not benefiting from me using funded hours?

I understand the 8% rise in overall fees to account for min wage/NI changes, but I don't understand why the extras that go with funded hours are increasing.