Chancellor urged to abolish business rates for nurseries that 'push businesses into making a loss'

Ahead of the Autumn Statement tomorrow (17 November), the National Day Nurseries Association (NDNA) surveyed providers to understand what the impact would be on nurseries if they no longer had to pay business rates. Survey respondents represented 782 nurseries across England.

A total of 61 per cent said they would increase staff salaries if they no longer had to pay business rates, while more than 49 per cent would use the money to cover losses in the business, and over 4 per cent would reduce childcare fees.

Nurseries in England receive an 80 per cent discount on business rates as not-for-profit organisations. Small nurseries are exempt if their valuation falls below the £12,000 threshold.

NDNA says that a revaluation of property values in 2021, which will take effect from next April, means in reality, most nurseries will see the amount they pay in business rates increase. It is also concerned providers will be faced with increases to the minimum wage rate at the same time, which it claims is expected to be announced by the Chancellor on Thursday.

Karen Simpkin, managing director of Sunflower Children’s Centre in Sheffield, said, ‘Business rates are a huge cost to the sector. My current costs are £10,600 per year.

‘The Local Authority gives the funding with one hand, and we move it across to the business rates department (at a cost to us) with our hand. 

‘If Scotland and Wales can remove business rates to support their sectors, what excuse does England have for not supporting a struggling sector? Most importantly they need to increase the funding to a realistic figure.’

Purnima Tanuku, chief executive of NDNA, said, ‘During a cost-of-living crisis it makes no sense to hit struggling nurseries with more than £13,000 per setting of extra costs that push businesses into making a loss. Providers are clear, abolishing business rates for nurseries could mitigate rising fees for parents, increase pay for staff and just make them a little more sustainable.

‘Nurseries are delivering Government funded childcare on rates that already do not cover their costs. For schools and academies these rates are reimbursed and the same should be true for all nurseries. Adding extra tax burdens on these providers is undermining the Government’s education priorities.

‘Business rates are not a silver bullet, chronic underfunding is still the elephant in the room on childcare that the Government has to address. However, this is one thing the Chancellor could do with the stroke of a pen to treat nurseries more fairly and help with the crisis the sector is facing.’