Fee increase shock

[StevieNic]

I just got an invoice from my son’s nursery and an email saying they are applying their ‘annual’ fee increase from 1st February (it’s usually March). The fees have gone up 26% plus there’s an extra charge for food that wasn’t there last year.

I expected an increase in March but not of that much. My son has 15 hours funding (11 stretched) and we use the tax free gov account.

Im in tears about this as we’ve been struggling so much. My pay rise was 2% and everything had gone up. Is this really a normal increase in charges? Has anyone else had a similar increase?

I think nurseries will be hit hard by Labour’s rise in employer national insurance contribution as well as the increase in minimum wage. Pair that with a long standing and growing shortage in qualified workers and a sharp increase in parent demand due to the increase in funded hours and I think many good nurseries will be increasing their rates significantly. Basically their costs have gone up massively and they have little incentive to absorb that themselves as they have more potential customers than they can accommodate.

N ursery years has always been a really hard stretch for families, and it is so depressing that policies aimed at making it easier have actually made it worse for many, but it will be over in a couple of years. I don’t know what your situation is career wise, but part time might make more sense if it reduces childcare.

minimum wage plus employer NI aren't anywhere near that much ?

Ours usually go up in April - however they went up in January by 21% & we stretch our hours

It's still one of the cheapest nurseries in our area; and I don't really want to pull dd from it as she's finally settled and it's not long until she starts school (thank god) so I'm struggling through until September then the bill is drastically reduced (I hope!)

That's an obscene increase

Can you look into a childminder in your area? They are significantly cheaper in my area

If they've got staff 18-20 yrs old the MW increase is just over 16%. Then you've got the NI % increase plus reduction in threshold for paying it.

How much is it in total, per day?

Ours went up around 20% in September to £85 a day. That’s for one of the cheaper nurseries in our SE commuter town.

Luckily we only had to pay the increase for 1 week before DDs started school.

@brummumma none have space unfortunately

@coxesorangepippin its £70 a day, they charge £10 a day for ‘consumables’ plus a lunch fee (I can’t find that amount written anywhere). We’re in the north west.

They're saying 3.5 days with 25 hours ‘funded’ now comes to £780pcm

I’ve just paid it but we’re not going to have any money for food after the mortgage and bills go out tomorrow. I’m so stressed.

@Tisthedamnseason the NI employer contribution has gone up 1.2% so for the amount of staff they have I can’t see how that would justify such a huge fee increase tbh

People don’t want to work in childcare anymore so they have increased the wages to be more attractive

Being pedantic (and more accurate…) employers NI is increasing from 13.8% to 15%, which is an 8.7% increase. But the bigger impact at low salaries is the reduction in the level at which it applies from £9,100 to £5,000. So the effect of that on someone on the current living wage, working 35 hours a week (£21k a year) is actually around £800 - so a 4% increase in payroll costs. Then minimum wage is increasing from £11.44 to £12.21, which is a 6.7% increase. So there’s an 11% increase straight away, just because of government policy before any other inflationary pressure.

Sorry but that shows how much you don't understand about the impact of the rise for employers

Yes, I think RR policies are affecting lots of things, increases in nursery fees, food prices going up too ahead of pay increases and NI increases for shop staff. I'm not saying I don't think nursery staff and shop workers don't deserve a pay rise because they do but price increases always follow MW pay increases and it will be higher this year because of increases to employers NI. Government legislation has a knock on effect on price rises. Same as policy on RRB will affect increases in peoples rent.

There are increases to minimum pay too. Nurseries often only pay the MW so they will be hit by this too. Also business rates are increasing everywhere and nurseries will be hit by this too.

This. Then take into account things like utility cost increases. Heating, lights, water. Rent or mortgage, then council tax. Add it all up. And how low funded hours actually are and what they cover. Of course increases will be at this level.

like turkeys at xmas though, we voted for it.

To be fair, I’m not sure the chancellor really understands that either ;)

I mean, that's a different conversation but yeh 😆

Parents energy bills and water has also gone up, mortgages are extortionate, interest rates on small debts mean they spiral, pay hasn’t gone up. I’ve got no chain to pass my increase in expenses down to. So we can’t afford this rise.

Actually at breaking point and we obviously aren’t the only family like this.

Yes, everyone’s has, from the supermarket, to the nursery to the private home and individual . We all have had huge cost increases.

I understand you can’t afford it, but the root cause is their costs have gone up. They can’t afford to subsidise people, they need to cover those costs. It isn’t state provided.

Prices are determined by profitability constraints and market demand, not affordability for parents unfortunately. Demand for nursery outstrips supply and the cost base for providing the service has increased, so price increases are inevitable. Get angry at the government (both Labour and conservative parties bear some blame), but you can’t really get angry at the nursery as a business responding in a rational way to market forces.

Parents energy bills and water has also gone up, mortgages are extortionate, interest rates on small debts mean they spiral, pay hasn’t gone up.

lots of the nursery staff will be parents too, working for nmw, f your nursery charges £70 for a 10 hour day that's £7 an hour, the funding they receive for funded hours is only £4ish an hour. They're already operating at a loss.

The Nursery we used was a ltd company, looking at their most recent accounts online their annual profit was £150k which is taxable, once the tax is paid and some money kept aside for reinvestment the remainder makes the salary of the 3 shareholders, who each work in the business.

DH and I only earned £30k each when we had a DC in FT nursery (he's in reception now) people will think we are mad for it but we actually took out a low rate 18k loan, payable over 5 years - put it into a high interest account and used it to pay for the fees through the tax free childcare account. our fees were approx. £800 a month using that, but our repayments were only £380 we have 1 more year left of paying it but we now overpay and in that time both of our salaries have increased over 10k each so returning to work was absolutely worth it. it made the most financial sense to us.

@Queenofthejabs I’d like to know, from the government, what the heck they actually want me to do. I can’t work less as I couldn’t cover my mortgage and bills then either, even with lower childcare. Grandparents are all in ill health and can’t help.

@QforCucumber I’m struggling to believe things are going to improve enough, to afford to take on more debt. Though it looks unavoidable so perhaps something more structured would be preferable

Maybe not for everyone ....but I got the idea from other posts in here ...I had twins and then ex husband sodded off. In full time childcare. I took a 10 year bank loan out for £25k - drip fed into the tax free accounts and that has covered childcare fees until pre school started (use a school one which doesn't charge top ups)

Repayment is about £270 per month so much more manageable and means I don't have to worry so much and just means spreading the cost of the twins childcare over 10 years rather than 3