Counting the Cost of a National Living Wage

Research commissioned by the Pre-school Learning Alliance and carried out by Ceeda in summer 2014 provided the most detailed analysis of delivery costs for funded childcare provision to date. A lot has happened since then.

The introduction of a National Living Wage of £7.20 per hour from April 2016, rising to £9 by 2020 is set to have a major impact on the cost of delivering funded places for children aged two to four. Added to this are increases in employer pension contributions via auto-enrolment.

With the free entitlement set to increase from 15 to 30 hours for 3 and 4 year old children in working households the stakes have never been higher for the early years sector. A Government review of childcare funding is due to conclude in November and much will hang on its outcome. 

By 2020 we can expect to see delivery costs for funded 3 and 4 year old's in graduate led settings rise to an average of £5.14 per hour; with current funding levels averaging £3.93, the future for many settings will look bleak indeed unless there is major revision of the funding regime.


Click here to see the detail of forecast delivery costs.