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by Jess Gibson and Caroline Wadham

The government has today published new guidance on a government grant for increasing National Insurance contributions that confirms private and voluntary early years providers are not eligible for support. 

As announced by the Chancellor in October’s Budget, from 6 April 2025, employer national insurance contributions will increase to 15%, with the per-employee threshold at which employers start to pay National Insurance reduced from £9,100 to £5,000 per year.  

The guidance announced today details how schools and maintained nurseries will be supported to meet the costs of these increases, confirming that they will receive additional government funding to manage the changes. The grant will be available to early years provision run by: 

• schools (both maintained and academies)  

• governor-run academies and maintained nursery schools  

• all other maintained nursery schools.  

However, no additional support or funding has been confirmed for private, independent and voluntary early years settings. 

The early years NICs grant funding will be paid to local authorities in September 2025 to distribute to eligible early years settings in their area. It will be the responsibility of local authorities to notify eligible early years providers in their area of their NICs rates ahead of the 2025 to 2026 financial year. 

This payment is separate to the entitlements funding rates announced in December 2024.  

Further information on grant eligibility and methodology can be found . 

Neil Leitch, CEO of the Early Years Alliance, said: "It beggars belief that the government is willing to provide millions in additional funding to support state-run early years settings with the cost of National Insurance contribution rises, and yet is offering no equivalent support to private and voluntary providers. 

"The expansion of the early entitlement offer means that for many PVI settings, government funding now makes up the vast majority of their income. How can it be then, that the Treasury – having failed to reflect these additional costs this year's early years funding rates – has now excluded these providers from the support so readily offered to their state-run counterparts? 

"The harsh reality is that for all the current focus on school-based nursery provision, it is the PVI sector that delivers the vast majority of early years places, particularly for younger age groups. As such, if the government is to have any hope of making the expansion of the funded entitlement a success, it surely has no choice but to provide the financial support private and voluntary providers need to remain sustainable. The faster the government wakes up to this reality, the better for everyone."