Business rates could be scrapped for Scottish nurseries

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A new report recommends business rates be abolished for nurseries in Scotland.

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The report on business rates says the abolishment of rates would save the childcare sector around £8m a year

The Scottish Government-commissioned report on non-domestic business rates by the Barclay review group, published today, recommends a new 100 per cent business rate relief be introduced for nurseries to support childcare provision.

The proposed rate relief, which would come into effect from next April and be evaluated after three years, would, according to the report, save the childcare sector around £8m a year.

The recommendation follows a revaluation of business rates this April, which have resulted in a ‘steep rise’ in rates for a lot of nurseries in Scotland, England and Wales, threatening their sustainability.

National Day Nurseries Association (NDNA) reported its Scottish members saw typical increases of 50 per cent in Aberdeen and more than 70 per cent in Edinburgh. One nursery in Renfrewshire was said to be facing a 215 per cent rise.

In June, the NDNA’s network chair Stephanie Dodds organised a petition calling for business rates to be scrapped or frozen and submitted it to Holyrood’s Public Petitions Committee. Within the petition, she said that ‘soaring rates’ would lead to increased fees for parents and could even put some nurseries out of business.

The Public Petitions Committee committed to consult the Scottish government, local authorities, childcare organisations and parenting groups about the issue.

At the time, the NDNA’s former director of policy, membership and communications Claire Schofield warned the increase in business rates could jeopardise the success of the 1,140 hours of free childcare, being introduced from 2020.

She said, ‘It’s [business rates] a cost pressure that has to be passed on to parents, and when we are looking at expansion to 1,140 hours [the annual free childcare entitlement for parents in Scotland due to commence in 2020] it is actually going to make it that much harder for nurseries to get involved in that and remain viable.’

Ken Barclay, chair of the Barclay review group, said, ‘We received input from hundreds of stakeholders across Scotland and further afield and are grateful for their invaluable insight.

‘A workforce must be inclusive and diverse: childcare provision is crucial to that. So we recommend that nurseries no longer pay rates.’

Purnima Tanuku, chief executive of NDNA, said, 'We are absolutely delighted that our concerns have been heard and the evidence carefully looked at.

'This recommendation sends out a positive message to all childcare providers who are looking at how they can deliver expanded free early learning and childcare which will be brought in over the next few years.

'Nurseries are particularly badly hit with high business rates as they tend to have large properties with plenty of space for children to play. But years of government underfunding for ‘free’ places along with other rising costs such as National Living Wage and pension auto enrolment has left many providers in a precarious position.'

She added, 'We urge the Scottish Government to accept this recommendation which we hope will be a signal to the rest of the UK as a sensible way forward for the early years sector.'

Neil Leitch, chief executive of the Pre-School Learning Alliance, said, 'If the Scottish government proceeds with the recommendations made in this report, then it will undoubtedly have a positive effect on childcare providers north of the border.

'Sadly, in spite of letters of recommendation by the early years minister, a freedom of information request made by the Alliance revealed that very few English local authorities provided any relief to childcare providers.

'I would urge local authorities in England to reconsider their position on rates relief to help ease the financial challenges facing providers as a result of the rollout of 30 hours.'

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