MPs told action is needed on business rates for nurseries

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The Early Years Alliance has warned MPs that the cost of failing to give business rate relief to nurseries will be ‘enormous’.

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Neil Leitch, chief executive of the Early Years Alliance, gave evidence to the Treasury Select Committee for its business rates inquiry

Giving evidence to the Treasury Select Committee for its inquiry on business rates yesterday, the Alliance’s chief executive Neil Leitch told the panel that for childcare settings who do not ‘enjoy’ any rate relief through the ‘existing, complex system, rates often represent the second most important cost and can mean the difference between investing or closing down.’

He suggested England follow the example of Scotland and Wales where nurseries benefit from 100 per cent relief on business rates.

When asked why local authorities are not offering business rates relief to childcare settings by the Committee, which is chaired by former education secretary Nicky Morgan, he said that he thought there was a conflict of interest as local authorities are facing cuts, but expected to “just do the right thing”.

Just one local authority in England, Harrogate Borough Council, offers rate relief to nurseries.

‘Successive early years ministers have tried to steer local authorities to do what they would describe as the right thing and give discretionary relief. At this point in time we are only aware one local authority that has done so which is Harrogate. I think there is a general conflict of interest here. If you are faced with cuts yourself, and then you have to give even more money away you’re conflicted’, he explained.

‘Isn’t it interesting that when a directive is given by either Scotland or Wales, it happens. It’s a tall order to expect local authorities, which have all sort of challenges, to “just do the right thing”.

He went on to say that without action, the ‘position will get worse’ and the greatest cost will be to parents who are unable to get back into employment.

Mr Leitch concluded, ‘We should adequately fund the sector. We should pay the right rate and have an annual review which keeps it in line.

‘There is no denying that rate relief is a tool, one of the tools that should be there and shouldn’t stifle expansion. If it stifles expansion, that’s contrary to everything we would want.’

The Select Committee also heard from Tom Emlyn Jones, director of Jones Norris Adams Chartered Surveyors, who suggested the Government help nurseries in a different way rather than ‘jigger’ with the ratings system. He said the Government must ‘find a way to offer something per child.’

The National Day Nurseries Association (NDNA) has also been campaigning for business rates relief and was successful in Scotland, where nurseries have been exempt since April 2018.

The move by the Welsh Government to remove business rates for nurseries, effective as of last month, was also down in part to the NDNA campaign.

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