The National Day Nurseries Association has highlighted the burden that business rates place on settings and has long campaigned for them to be made exempt and given 100 per cent relief from business rates.
In response to calls from the sector, childcare minister Sam Gyimah has asked the Department for Communities and Local Government to write to councils urging them to offer business rate relief to nurseries (see letter below).
For those councils that offer this to nurseries, central Government will meet 50 per cent of the costs involved.
Mr Gyimah is also calling for closer working between early years leaders and their financial colleagues in local authorities.
Voluntary sector and maintained early years settings benefit from relief and exemptions, but private nurseries do not, unless they are eligible for a discount under the small business rate relief scheme in England.
To qualify businesses must only occupy one property and it must have a rateable value below £12,000.
However, most nurseries are unable to benefit from small business rate relief, as their average rateable value is £30,000. According to the NDNA the average business rates bill is £15,841.
In a speech at a parliamentary reception held by the NDNA later today (14 January) to launch the association’s annual nursery survey, Mr Gyimah will say that the Government is ‘toughening up on local authorities’ and asking them to support settings.
The childcare minister is also urging local authorities to pass on funding to nurseries promptly, in response to the survey’s findings that 37 per cent of nurseries have to wait for nearly a month or more for early education funding.
Mr Gyimah will say, ‘Regulation requires nurseries to have certain sized premises, which can be relative to the size of their business, and I’ve been considering what I can do to help.
‘So I’m pleased to be able to say that the government is, quite rightly, toughening up on local authorities.
‘Today, at my request, DCLG will be writing to all councils reminding them of the importance of prompt payment to you and your businesses. I’ll also be urging them to work closely with you – to understand your business models and how they could provide further support.
‘The letter will also remind your local authorities how valuable it is apply business rates relief to nurseries – to help you out and encourage our growing and thriving sector. For councils that give this discount, central government will meet 50 per cent of the costs involved.
‘And I’ll also be writing personally to our early years contacts in councils – I want them to get talking to their finance colleagues, working together to deliver the best service to nurseries in their area.
‘And I urge you to get talking to your local authorities too. Write to them yourselves, as I’ll be doing, and explain why business rates relief would make such a difference to your businesses.’
Local authorities have the flexibility to offer local discounts to businesses.
Commenting on the plan, Claire Schofield, director of membership, policy and communications at NDNA, said, ‘It’s a welcome step and we would encourage local authorities to offer discounted business rates to nurseries, recognising the contribution they make to children’s education and the local economy.’
NDNA also said that it hoped that in future business rate relief for nurseries could be applied by central Government on a nationwide basis.
The letter from the DCLG urges local authorities to consider using their business rates local discounts powers to support access to high quality childcare provision.
It says, 'The Government believes the provision of high quality childcare is crucial to stopping development gaps emerging and ensuring all children get the best start in life.
'Good childcare provision can also help aid economic growth.
'We would therefore encourage authorities to consider using their powers to provide relief to childcare providers where there is a clear community benefit, such as where it would help with narrowing the gap, school readiness, or maternal employment. We would also like to remind authorities that central Government funds 50% of the cost of any local discount granted.'