Talk of the impending '1 per cent rise in National Insurance' at first glance makes the forthcoming increases sound modest. Far from it. The one per cent rise applies not to the actual contributions, but to gross pay and is roughly equivalent to a one per cent rise in income tax - an income tax hike by stealth.
The rises, announced by Chancellor Gordon Brown in last April's Budget, apply to both employer and employee, so while nursery staff will see a fall in their take-home pay from next month, nursery owners will see substantial rises in their employment costs.
Let us take as an example an employee with gross earnings of 1,500 per month. The employee's monthly contributions will rise from 111.50 to 122.65, leaving them 11.15 worse off. Employer contributions for that staff member, meantime, will rise from 131.57 to 142.72, adding 11.15 to their monthly employment costs - and 8.47 per cent to their NI bill.
Nursery fees are destined to be driven even higher to absorb this additional outlay. So much media focus is on the cost of care with the implications from recent press coverage being that somehow the unaffordable cost of care is a problem of the private sector's making.
Nothing could be further from the truth. The cost burden that is placed upon us needs to be passed on and the same is true of these NI contributions. The alternative is for providers to accept the additional cost burden and see their already narrow margins shrink further.
