Exclusive - Minister says rates and VAT changes may be considered
Friday, October 18, 2013
Education secretary Michael Gove has mooted the possibility that changes to business rate relief and VAT for nurseries could be considered at the same time as plans being looked into for academies and free schools.
The issue was raised by nursery owner David Shaylor at a local Chamber of Commerce meeting in St Albans last week.
Mr Shaylor, who owns Munns Farm Day Nursery on the Hatfield House Estate, near Hertford, raised the issue of the high business rates with the education secretary, as well as nurseries' inability to claim back VAT, saying they play a key role in childcare costs.
Mr Shaylor told Nursery World, 'In reply, Michael Gove said that the suggestions made seemed sensible and timely as he was already having discussions with George Osborne over the same issue of VAT with free schools and academies. He added that it didn't make sense not to be trying to find a solution for all childcare providers at the same time.'
He added, 'Movement on one or both of these costs (rates and VAT) would ease the loss-making position most nurseries suffer from inadequate funded places for threeand four-year-olds and help many nurseries to have a lower cost base.
'Nurseries deserve no special arrangements by right, but both rates and VAT go a long way to explaining why childcare costs in England and Wales remain as high as they are.'
The National Day Nurseries Association has long campaigned on the issue of business rates and VAT for nurseries.
Chief executive Purnima Tanuku said, 'It's good to hear that Michael Gove is listening to the sector's proposals on business rates and VAT. 'We're encouraging the Secretary of State to make some simple changes to give private and voluntary nurseries a level playing field with the state sector on business rates and VAT and have a real impact on the cost of childcare for families.
'The inability for nurseries to claim back VAT adds to their bottom line and is a barrier to investment in equipment and buildings, while high business rates have a direct impact on fees. Recognising nurseries' vital educational and economic contribution as partners to Government by making childcare zero-rated for VAT and giving nurseries full relief on business rates would go a long way to helping deliver more affordable childcare.'
Commenting after the meeting MP for St Albans Anne Main said, 'I am very grateful that the Secretary of State came to St Albans Chamber of Commerce and gave an enthralling speech about education and particularly early years provision. As he said, we have had some difficulty in getting through changes to child ratios and nursery top-up fees. However, I am glad the Secretary of State is looking at ways in which he can continue to support and help nursery providers.'
A Department for Education spokesperson said, 'Business rate relief is already available for some small childcare businesses. Providers may also qualify for other existing rate reliefs, such as businesses setting up in enterprise zones.
'We are always looking for ways in which Government can help reduce providers' costs.'