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Rupert Murdoch’s resignation as chairman of Fox and News Corporation brings a formal end to a 70-year career that brought him huge commercial success, profound political influence and deep controversy.

A disruptive and divisive figure, Murdoch’s talent for innovation and appetite for confrontation broke new ground in newspapers, broadcasting and entertainment, and with mass audiences came the ability to shape politics in the UK, the US and his native Australia.

As a consequence his professional legacy is contentious. To his supporters, Murdoch is a champion of popular entertainment, accessible news and a free and fearless press; to his detractors, he has been a malign influence who coarsened public debate, enabled a new wave of populism, and whose business was tainted by criminality.

Few would argue however that he has been one of the most significant business and political figures of the age.

Rupert Murdoch photographed in 1969 Pic: AP
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Rupert Murdoch photographed in 1969. Pic: AP

Foundations of an empire

Rupert Keith Murdoch, born in Melbourne in 1931, has always presented himself as an outsider with no time for elites, but he is a child of the Australian media establishment.

His father was reporter and newspaper proprietor Keith Murdoch, who made his name evading military censors to report on the chaotic and deadly Gallipoli campaign, which cost the lives of more than 40,000 Allied troops, many of them from Australia and New Zealand.

Eventually knighted for his services to journalism, Sir Keith passed on to his son a love of newspapers, a taste for the power of journalism and a platform to exercise it.

Sir Keith would become editor, managing director and finally chairman of the Melbourne-based Herald Group, and then bought his own papers including The News in Adelaide, a title with 75,000 readers that he left to his son when he died in 1952.

It was the foundation stone of an empire that today still includes two-thirds of Australian media.

The media magnate pictured in 2005
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Murdoch’s profound and often controversial career spanned seven decades

‘Sex, sport and contests’

By the 1960s, having completed an Oxford degree (PPE) and served a proprietor’s apprenticeship at home, Murdoch turned his attention to international expansion, starting in London.

In 1969 he bought the News Of The World and then, wanting a daily paper to share the overheads, The Sun – at the time a nondescript broadsheet that cost him barely £1m.

He was a genuine outsider in a British newspaper establishment dominated by editorial giants like Hugh Cudlipp and William Beaverbrook, editor and proprietor respectively of the Mirror and the Daily Express, who claimed close to eight million readers a day between them. Within a decade, Murdoch’s papers would eclipse them both.

He set out his priorities in an early meeting, telling Sun staff that “sex, sport and contests” would revive circulation. Rebranded in tabloid format with a distinctive red masthead, with topless models featuring daily on Page 3 from 1970, it was a wildly successful formula that pushed its rivals to compete in similar vein.

Driven by an aggressive price war with Robert Maxwell’s Mirror Group, the tabloid culture reached its apogee in the 1980s and 1990s, with no area of public life spared. Sensation sold, whether it was the breakup of Charles and Diana, reported in excruciating detail, or endless celebrity transgressions.

The media magnate is photographed reading The Sun newspaper as he is driven away from his central London home in 2012
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Murdoch reading The Sun as he is driven away from his central London home in 2012

Murdoch’s popular papers were patriotic to the point of jingoism – cheering British troops off to the Falklands in 1982, and celebrating the sinking of Argentine warship the General Belgrano with the infamous headline “GOTCHA”. They also nurtured an intolerant streak, demonising homosexuality at the height of the AIDS epidemic.

The tone chimed with the times and the government of Margaret Thatcher, for whom The Sun was a champion and cheerleader, praising her transformational economic policies and relentlessly attacking Labour to its four million readers.

When Thatcher’s successor John Major won an unlikely majority at the 1992 general election, The Sun claimed victory for a polling day front page ridiculing Labour leader Neil Kinnock, running the follow-up “IT WAS THE SUN WOT WON IT!”

Murdoch presenting former prime minister Margaret Thatcher with a humanitarian award in 1991 Pic: AP
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Murdoch presenting Margaret Thatcher with a humanitarian award in 1991. Pic: AP

The paper also tapped into Thatcher’s growing euroscepticism at the turn of 90s, running regular critiques of perceived EU meddling and turning previously anonymous Brussels bureaucrats into pantomime villains.

Notoriously, EU Commission President Jacques Delors was dismissed with the headline “UP YOURS DELORS!”

Support for Thatcher smoothed the way for expansion. While The Sun and News Of The World scandalised, Murdoch furthered his influence by purchasing the ultimate establishment title, The Times, in 1981 – adding The Sunday Times when the prime minister decided not to refer the takeover to the Monopoly Commission.

Murdoch seen holding a copy of The Times newspaper in 2011

With a stable of titles under his News International brand all dependent on the goodwill of print unions still operating with almost comically restrictive working practices, Murdoch executed perhaps his most audacious and impactful intervention in the UK market.

Secretly he constructed new printworks at Wapping in east London, where electronic composition would replace the labour-intensive hot metal process. After a redundancy offer was refused and a strike announced by union staff in January 1986, at a stroke he switched all production to the new plant.

A protracted and sometimes violent dispute followed, lasting more than a year but ending in victory for Murdoch, enabled by the Thatcher government’s legislation to curb union power. Coming a year after the miners’ strike, it helped embed a fundamental shift in industrial relations.

Murdoch and the late Queen Elizabeth II watching The Times go to press in 1985 in a royal visit to mark the newspaper's bicentenary Pic: AP
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Murdoch and the late Queen watching The Times go to press in 1985 during a royal visit. Pic: AP

Within two years the rest of Fleet Street had followed Murdoch’s lead, but politically he proved himself a pragmatist as the Conservatives’ star waned. After 20 years of enthusiastic support for the Conservatives, Murdoch’s titles switched their support to Tony Blair in 1997, when it was clear New Labour was on course for victory.

Despite a consistent backing for right-of-centre politicians around the world, Murdoch above all backed winners, mindful of the benefits they could bring him.

The media tycoon poses with a Sky camera during the launch of his multi-channel package in 1993 Pic: AP
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Pic: AP

Reach for the sky

While newspapers were in Murdoch’s blood they were just one arm of the media, and in the 1980s he sought expansion into broadcasting and competition with another establishment brand, this time the BBC.

When the government auctioned a single satellite broadcasting licence, Murdoch lost out to British Satellite Broadcasting. He went ahead anyway – founding Sky on a brownfield site near Heathrow in west London, but broadcasting initially from Luxembourg.

It was a scrappy start-up operation led largely by veterans of Murdoch’s Australian operations, and one that could have cost him everything.

He claimed to have “bet the farm” on a package that began with Sky News, movies and a handful of American channels, but sport was to prove the game changer.

In 1992, Sky won the rights to air top-flight football – with the first division rebranded as the Premier League and matches broadcast live across the week.

It transformed the company and the game, spawning a rights market now worth almost £2bn a year to the clubs, and becoming the foundation of a subscription model that in 2018 saw Sky, by now Europe’s largest broadcaster, valued at $39bn in a takeover by American cable giant Comcast.

The Australian newspaper magnate seen in 1984 Pic: AP
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Pic: AP

Breaking America

Murdoch’s restless drive for empire building had taken him to America in the 1970s, where expansion followed a familiar pattern.

He bought the New York Daily Post in 1976, fashioned it into a rambunctious tabloid in keeping with the city’s character, then turned it to political effect.

He nurtured links with Ronald Reagan’s campaign for the presidency, who reportedly appreciated his support in helping win New York state for the Republicans, and in 1994 Murdoch bought a stake in 20th Century Fox, expanding his empire into Hollywood movies and entertainment as well as a network of local television stations.

Regulatory obstacles to co-ownership of newspapers and television stations in the same city melted away, thanks in part to Murdoch’s ability to deliver favourable coverage of political candidates or incumbents.

That ability moved into another gear in 1996 when Murdoch founded Fox News with former Richard Nixon adviser Roger Ailes.

Rupert Murdoch and Roger Ailes at a Fox News party in New York in 2007 Pic: AP
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Pic: AP

With President Reagan having revoked the “Fairness Doctrine”, requiring broadcasters to present both sides of the story, Murdoch and Ailes were free to create a partisan platform the likes of which had never been seen.

In direct competition with the orthodox, liberal and self-consciously even-handed CNN, Fox News tacked hard to the right, making primetime stars of bellicose anchors and moving the political dial. Research showed that, when Fox began airing on local cable networks, support for Republican candidates rose. And it was profitable, generating billions of dollars in revenue.

The model reached its zenith with Fox’s support for Donald Trump, the reality show businessman who became president thanks in part to a base activated by Fox’s support.

Donald Trump speaks to media mogul Rupert Murdoch as they walk out of Trump International Golf Links in Aberdeen, Scotland, June 25, 2016. REUTERS/Carlo Allegri/File Photo

It is an association Murdoch came to regret. He is reported to have thought Trump “a f****** idiot”, but that did not prevent the businessman occupying a regular Monday morning slot on the Fox & Friends breakfast show.

Trump used that to routinely attack then President Obama with baseless conspiracies about his place of birth, before parlaying that popularity into a presidential campaign.

Fox’s role in enabling Trump’s successful 2016 campaign and its coverage of the aftermath of his 2020 defeat, in which it amplified entirely false conspiracies that the election was stolen, is perhaps Murdoch’s most contentious career legacy.

Rupert Murdoch and son James face the media in July 2011 as it was announced the News of the World would be closed down Pic: AP
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Rupert Murdoch and son James as it was announced the News Of The World would close. Pic: AP

The reckoning

Murdoch’s greatest successes were also the source of his greatest scandals, leading to the closure of his most notorious paper, and the shaming of Fox News.

In 2006 it was revealed that the News Of The World had “hacked” the mobile phone of Prince William, using a simple override to listen to voice messages and using what they heard as the basis of stories in the paper.

The paper’s royal editor and a private investigator were jailed – but in 2009 and 2010, The Guardian reported that hacking was more widespread, and that News International had reached multimillion-pound settlements with a number of celebrities.

The following year, just as Murdoch was plotting a full takeover of Sky, The Guardian revealed that reporters at the News Of The World had hacked the phone of Milly Dowler, a murdered schoolgirl.

Amid public outrage, with Prime Minister David Cameron announcing a public inquiry and his communications director, former News Of The World editor Andy Coulson, arrested, Murdoch closed the paper.

Murdoch, pictured with then-wife Wendi Deng, smiles as he is driven away after giving evidence to the Leveson Inquiry in the High Court in 2012
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Murdoch, with then-wife Wendi Deng, after giving evidence to the Leveson Inquiry in 2012

It was a ruthless act of self-preservation, sacrificing a lucrative and successful title to try and confine the damage to his newspaper division, and protect – unsuccessfully as it turned out – his bid for full ownership of Sky. His son James, the third of Murdoch’s six children, was forced to resign as chief executive.

At a subsequent parliamentary hearing, Murdoch described his appearance as “the most humble day of my life”, shortly before a protester shoved a plate of shaving foam in his face.

Almost 20 years on, News International is estimated to have privately paid hundreds of millions in damages, and the case rumbles on. In 2023, Prince Harry was among a host of public figures and celebrities seeking damages for hacking by the Sun, which always denied wrongdoing.

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Fox News agrees $settlement in vote-rigging claims lawsuit

In the US a reckoning for Fox News’ excesses took a little longer, but finally came in 2023, the result of a lawsuit brought by Dominion Voting Systems, a manufacturer of vote counting software used in the 2020 election.

In the aftermath of Trump’s defeat, Fox anchors repeated his false claims that the machines had been instructed to switch votes from Trump to Joe Biden. In pre-trial discovery it emerged that they, and Murdoch, did not believe the former president but broadcast the claims anyway, in part from fear of alienating their loyalist audience.

Murdoch was said to have called it “really crazy stuff” and described comments from Trump loyalists on the channel as “terrible stuff damaging everybody, I fear”.

Facing giving evidence in person, he authorised a $787.5m (£641m) payment to settle the case. Tucker Carlson, Fox’s most popular presenter, was fired without notice.

Rupert Murdoch at a New York gala in October 2019 Pic: AP
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Pic: AP

The empire cuts back

By the 2020s and the nadir of Trump’s defeat, Murdoch’s empire was, for the first time, smaller. In 2018 he took the momentous decision to sell his prize asset 21st Century Fox, concluding that even he could not muster the scale to compete with the new social media and streaming giants.

His first choice was a sale to Disney, the home of the permanently smiling Mickey Mouse – apparently the polar opposite of Fox’s snarl. A deal was done in principle with Disney boss Bob Iger that would see the entertainment division sold, while Murdoch hung on to Fox News and Fox Sports, as well as his American papers, The New York Post and The Wall Street Journal.

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December 2017: Rupert Murdoch interview in full

In Europe, Fox’s 39% stake in Sky would be sold too, subject to regulatory approval that had twice proved impossible for Murdoch to clear when he wanted to take full control.

The sale turned into an auction however, with NBC owner Comcast joining the bidding, driving Disney’s eventual price to $71bn from an original $52bn. In the UK, Comcast did outbid Disney and took control of Sky, leaving Murdoch with his British newspapers.

Remarkably, Murdoch concluded the biggest deals of his life in his late 80s, estimated to have netted him $4bn personally and a further $2bn to each of his adult children.

Murdoch with his sons, Lachlan, left, and James, right, in Los Angeles in 1998
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Murdoch with his sons, Lachlan, left, and James, right, in Los Angeles in 1998

Murdoch with his daughter, Elisabeth, at Cheltenham Festival in 2010
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Murdoch with his daughter, Elisabeth, at Cheltenham Festival in 2010

Succession

Murdoch’s private life and the roles of his children in the business empire have long been subject to the sort of scrutiny his titles reserve for other people.

Married and divorced four times, he has six children.

The eldest Prudence was born to his first wife Patricia and has the lowest profile, and he has two children from his third marriage to Chinese television executive Wendi Deng, Grace and Chloe.

Rupert Murdoch and wife Wendi Deng tied the knot on his yacht in New York in 1999
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Rupert Murdoch and wife Wendi Deng tied the knot on his yacht in New York in 1999

His second marriage to Anna brought three children, Elisabeth, Lachlan and James, the three of them cast in a real-life soap opera that is an obvious inspiration for the HBO drama Succession, broadcast, with some irony, by Sky in the UK.

(Murdoch’s 2022 divorce settlement from his fourth wife, model Jerry Hall, is reported to stipulate she is not allowed to pass information to the show’s writers.)

Rupert Murdoch's wife, Anna, pictured in 1998
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Murdoch’s second wife Anna is mother to his sons Lachlan and James and daughter Elisabeth

While Elisabeth built her own successful production company, James and Lachlan worked within the family business in Australia, the US and the UK, their stars rising and falling apparently at their fathers’ whim.

James was chief executive of Sky until the phone hacking scandal forced him out, and after a brief period as joint chiefs of 21st Century Fox beginning in 2015, Lachlan appeared to have emerged as the successor, running the US business as James stepped away to pursue his own ventures.

Lachlan’s victory in the sibling race appears to be confirmed by his appointment as his father’s replacement as chair of News Corporation and sole executive chair of Fox, but this may still be a turning point for the empire.

Rupert Murdoch and Jerry Hall pictured in London in 2016
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Rupert Murdoch with his fourth wife, supermodel Jerry Hall

While Rupert Murdoch’s grasp of operations and decision making at 92 has been questioned in recent years, not least by his biographer Michael Wolff in an impending book, his presence has mattered.

His absence from day-to-day operations, no matter how theoretical that has become in practice, may threaten family control.

Crucial will be what happens to the voting rights over the family shares he has divided with tantalising balance between himself and his four eldest children.

Under the terms of the Murdoch Family Trust, which owns the controlling stake in each business, he has four votes and the children one each. The corporate succession battle may not end with his resignation.

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Payments watchdog could be abolished in PM’s purge of regulators

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Payments watchdog could be abolished in PM's purge of regulators

Britain’s payments watchdog is expected to be abolished as part of a purge of regulators being thrashed out in Whitehall.

Sky News has learnt that ministers and officials are examining whether to scrap the Payment Systems Regulator (PSR) and fold it into the Financial Conduct Authority (FCA).

A decision is expected to be taken in principle within weeks, although sources indicated this weekend that the government was “actively considering” a decision to scrap the body.

If confirmed, it would form part of a crackdown on Britain’s economic regulators instigated by Sir Keir Starmer, the prime minister, and Rachel Reeves, the chancellor, as they seek to cut red tape and stimulate economic growth.

The chairman of the Competition and Markets Authority (CMA), Marcus Bokkerink, was ousted by ministers last month amid concerns that it was paying too little heed to UK competitiveness.

Mr Bokkerink was replaced by Doug Gurr, a former Amazon executive.

Since then, both the chair and chief executive of the Financial Ombudsman Service have announced plans to step down.

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Speaking in January, Jonathan Reynolds, the business secretary, signalled that a number of watchdogs could be abolished, saying: “We’ve got to genuinely ask ourselves the question: have we got the right number of regulators?”

He did not publicly identify which of them could be axed, although the Financial Times reported this week that the chancellor would order an audit of roughly 130 regulators across the economy to assess whether they were sufficiently focused on growth.

On Christmas Eve, the PM and chancellor wrote to about 15 major regulators – including Ofcom, Ofgem and Ofwat – demanding ideas for how to remove bureaucracy from the economy and more proactively encourage growth.

Ms Reeves has since held a number of roundtable discussions with the recipients of the letter.

The PSR employs roughly 160 people, according to its website, and is directly accountable to parliament.

It was created under the Financial Services (Banking Reform) Act 2013, and became operational two years later.

The body, which is accountable to parliament, has been criticised by industry and politicians over its regulatory approach, including in relation to fraud reimbursement by financial services firms.

Nevertheless, its function is regarded as critical as technology reshapes the global payments industry.

David Geale, the interim managing director of the PSR, has been in post since last summer.

The watchdog is chaired by Aidene Walsh, a former boss of the financial wellbeing charity, the Fairbanking Foundation.

Sheldon Mills, the FCA’s executive director, consumers and competition, also sits on the PSR board.

One source said scrapping the PSR and folding it into the FCA would make sense for several reasons, including the questions over its performance.

“No other major economy has a standalone payments regulator like this, and it is hard to make the case for it continuing to exist,” the source said this weekend.

The Treasury declined to comment, while the PSR did not respond to an emailed enquiry on Saturday morning.

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Low-paid jobs at risk from Labour’s tax increases on businesses

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Low-paid jobs at risk from Labour's tax increases on businesses

Cliff Nicholls runs two trampoline parks and indoor play centres: one in Tamworth in the West Midlands, the other in Bolton, Greater Manchester. He’s already feeling the pressure from the government’s latest budget measures and has been forced to abandon further investment plans.

“The national minimum wage increases coming in April, combined with the reduced thresholds for national insurance and the increased rate of employers’ national insurance, will have a very significant impact,” Cliff said.

To cut costs, he’s already made drastic changes. “We’ve had to take some fairly radical decisions, reducing our opening hours, making a senior staff member redundant because of rising business costs, including business rates and national insurance,” he added.

Cliff
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Cliff Nicholls

While policies like the National Living Wage (NLW) increase are designed to support low-paid workers, other changes could offset these benefits.

One major shift is the reduction in the salary threshold at which businesses start paying employer’s national insurance contributions (NICs).

Currently, employers begin paying NICs when an employee earns more than £9,100 per year. From April 2025, this threshold will drop to £5,000. At the same time, the employer’s NI rate will rise from 13.8% to 15%.

Scroll through to see Cliff’s staffing finances

Under the new system, an employer will be paying nearly £800 more in NICs annually for an employee earning around £23,800 (based on a 37.5-hour week at the new NLW).

The rise in NICs will be proportionally higher for employers of lower-paid workers. For example, they will pay around 7% for someone earning £9,000 a year and 3% for an employee on the NLW. But for someone earning £75,000 a year, employers will pay 2% more.

Extended employment rights and business rates add pressure

Labour also announced a series of employment rights reforms aimed at improving working conditions. These include extending statutory sick pay to lower-paid employees who were previously ineligible and making it available from the first day of illness for all workers.

The changes would also enable employees to claim unpaid parental leave from their first day in a job, strengthen protections against unfair dismissal, and enhance rights for those on zero-hours contracts.

The government estimates that these employment rights changes will cost businesses around £5bn.

Nye Cominetti, principal economist at the Resolution Foundation, said: “What concerns me is that employer national insurance increases, like the minimum wage and employment rights changes, disproportionately impact low-paid workers.

“For instance, extending statutory sick pay to those previously ineligible adds costs for employers already facing higher NICs and rising wages. In this context, it would have been more sensible to raise tax revenue in a way that didn’t hit low-paid workers the hardest.”

Trampoline
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Cliff is having to abandon expansion plans due to budget changes

But for Cliff, the changes to business rates relief are an even bigger challenge. Budget changes will mean business rates relief will drop from 75% to 45% for retail, leisure, and hospitality businesses, significantly increasing his costs.

“The business rates changes probably have a bigger impact on us than national insurance,” he explained.

“One of our buildings used to be in a prime edge-of-town retail park 25 years ago. The rental value has dropped significantly since but business rates haven’t kept pace. Next year, we’ll be paying between £55,000 and £60,000 more just in business rates.”

Cliff is not alone in his concerns.

Research conducted by the Federation of Small Businesses found that in the final three months of last year, confidence among small firms fell to its lowest level in a decade, excluding the pandemic.

Are these changes impacting inflation?

Higher prices for food, goods, and services will also put pressure on working people.

New data from the Office for National Statistics shows that inflation rose to 3% in January 2025, the highest level in 10 months.

Many businesses had warned this would happen, saying that rising national insurance costs and the increase in the NLW would leave them with no choice but to raise prices.

The latest Quarterly Economic Survey by the British Chambers of Commerce, conducted after the budget, surveyed more than 4,800 businesses. It found that more than half expect to increase prices in the next three months, up from 39% in the third quarter of 2024.

Businesses are making tough decisions

Signs of pressure are already emerging.

Lord Wolfson, a Conservative peer and chief executive of Next, has warned that it will become harder for people to enter the workforce.

In an interview with the BBC, he said that the rise in NICs for businesses would hit the retail sector particularly hard, with entry-level jobs most affected.

He urged the government to phase in the tax changes rather than implement them in full in April, warning that otherwise, businesses would be forced to cut jobs or reduce working hours.

While it is not possible to fully attribute this to budget announcements, early data suggests that the workforce has been shrinking across various industries since October 2024, with the biggest declines in sectors that employ large numbers of lower-paid workers, such as manufacturing, retail, and hospitality.

Since the budget, the number of payrolled employees has fallen by more than 10,000 in manufacturing and nearly 9,000 in hospitality.

Since the budget, voluntary liquidations have remained consistently high and from December 2024 to January 2025 voluntary business closures have gone up by 9%.

While this can’t be solely attributed to upcoming budget measures, it does highlight the challenges businesses are facing and the difficult decisions they are making as a result.

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An HM Treasury spokesperson said: “We delivered a once-in-a-parliament budget to wipe the slate clean and deliver the stability businesses need to invest and grow, while protecting working people’s payslips from higher taxes, ensuring more than half of employers either see a cut or no change in their National Insurance bills, and delivering a record pay boost for millions of workers.

“Now we are going further and faster to kickstart economic growth and raise living standards, with a majority of business leaders confident that the chancellor’s plans will help drive business investment.

“This includes backing businesses to create wealth across Britain by capping corporation tax, making full expensing permanent and permanently cutting business rates for retail, hospitality, and leisure businesses on the high street from next year.”

The Data and Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open-source information. Through multimedia storytelling we aim to better explain the world while also showing how our journalism is done.

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Parents must not pay mandatory extra charges to access free childcare, government says

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Parents must not pay mandatory extra charges to access free childcare, government says

Parents who are entitled to hours of free childcare should not have to pay mandatory extra charges to secure their nursery place, the government has said.

Updated guidance from the Department for Education states that while nurseries are entitled to ask parents to pay for extras – including meals, snacks, nappies or sun cream – these charges must be voluntary rather than mandatory.

The guidance, which comes amid concerns that parents have faced high additional charges on top of the funded hours, also states that local councils should intervene if a childcare provider seeks to make additional charges a condition for parents accessing their hours.

Since September last year, parents and carers with children aged nine months and older have been entitled to 15 hours of government-funded childcare a week, rising to 30 hours for three to four year-olds.

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From this September, the 30 hours of care will be made available to all families – a rollout that was first introduced under the previous Conservative government.

However, there have been concerns that in order to subsidise shortfalls in funding, nurseries have charged parents extra for essentials that would normally have been included in fees.

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Under the new guidance, nurseries will be now obliged to clearly set out any additional costs parents will have to pay, including on their websites.

It says invoices should be itemised so parents can see a breakdown of the free entitlement hours, additional private paid hours and all the additional charges.

‘Fundamental financial challenges facing the sector’

Representatives of childcare providers welcomed the announcement but pointed out the financial stress that many nurseries were under.

Neil Leitch, chief executive of the Early Years Alliance, said: “While we fully agree that families should be able to access early entitlement hours without incurring additional costs, in reality, years of underfunding have made it impossible for the vast majority of settings to keep their doors open without relying on some form of additional fees or charges.

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Free childcare in England

“As such, while it is absolutely right that providers should be transparent with parents on any optional additional fees, today’s guidance does absolutely nothing to address – or even acknowledge – the fundamental financial challenges facing the sector.”

He added: “Given that from September, government will control the price of around 80% of early years provision, it has never been more important for that funding to genuinely reflect the true cost of delivering places.

“And yet we know in many areas, this year’s rate increases won’t come close to mitigating the impact April’s National Insurance and wage rises, meaning that costs for both providers and families are likely to spiral.”

In last year’s budget, Chancellor Rachel Reeves announced that the amount businesses will pay on their employees’ national insurance contributions will increase from 13.8% to 15% from April this year.

She also lowered the current £9,100 threshold employers start paying national insurance on employees’ earnings to £5,000, in what she called a “difficult choice” to make.

Last month a survey from the National Day Nurseries Association (NDNA) found that cost increases from April will force nurseries to raise fees by an average of 10%.

Analysis by Anjum Peerbacos, education reporter

This could be welcome news for working parents as they approach the end of another half term break during which they will have incurred childcare costs.

But this money would not affect school age children.

It is dedicated to very young children, aged two or below and is targeting parents, predominantly mothers, that want to return to work.

Previously after doing the sums and factoring in childcare costs, many mums would have felt that it wasn’t worth it.

And so, if these funds are easily accessible on a local level it could make a real difference to those wanting to get back to work.

The survey, covering nurseries in England, revealed that staffing costs will increase by an average of 15%, with respondents saying that more than half of the increase was due to the national insurance decision in the budget.

Purnima Tanuku CBE, chief executive of the NDNA, said “taking away the flexibility for providers around charges could seriously threaten sustainability”.

“The funding government pays to providers has never been about paying for meals, snacks or consumables, it is to provide early education and care,” she said.

“Childcare places have historically been underfunded with the gap widening year on year.

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Parents ‘frustrated’ over rising childcare demand

“From April, the operating costs for the average nursery will go up by around £47,000 once statutory minimum wages and changes to national insurance contributions are implemented. NIC changes have not been factored into the latest funding rates, further widening the underfunding gap.”

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The Department for Education said its offer to parents meant they could save up to £7,500 on average when using the full 30 hours a week of government-funded childcare support, compared to if they were paying for it themselves.

In December, the government also announced that a £75m expansion grant would be distributed to nurseries and childminders to help increase places ahead of the full rollout of funded childcare. 

Local authority allocations for the expansion grant will be confirmed before the end of February. Some of the largest areas could be provided with funding of up to £2.1m.

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