Tuesday 30 August 2016 6:04 am

National living wage pushes nurseries towards insolvency

The national living wage has contributed to almost doubled the number of school nurseries falling into insolvency in the last year according to research released today.

Accountancy firm Moore Stephens said that 29 nurseries had become insolvent in the year to March 2016, compared to 16 the year before.

“The introduction of the national living wage has put additional pressure on nurseries. The slim margins these nurseries are operating with and the soaring costs of caring for young children will force more to close," said Mike Finch of Moore Stephens.

(Source: Moore Stephens)

Nurseries are required to have a higher staff-child ratio than other businesses in the education sector which raises staff costs. As a result they are more exposed to wage uplifts.

Earlier this month the National Day Nurseries Association (NDNA) warned nurseries to be careful of falling foul of paying staff appropriately.

“Some nurseries fall foul of this rule if a member of staff has children at their nursery and they deduct childcare costs from their wages before paying them," said NDNA chief executive Purnima Tanuku.