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Monday, 28 August 2017

As childcare costs soar nurseries call for Government to axe business rates hike

Written by Ben Woods

Parents are facing soaring childcare costs as the Government's controversial business rates review heaps financial pressure on nurseries, new research has shown.

Nurseries and play schools will have to stomach a 26% business rates hike to £110.72 million per year until 2022, according to figures compiled for the Press Association by business rent and rates specialists CVS.

The National Day Nurseries Association (NDNA) said nurseries are having no choice but to pass on the costs to parents or risk closure.

The organisation is calling on the Government to follow in Scotland's footsteps and consider exempting nurseries from the tax.

Such a move would hand the industry a total tax break of more than half a billion pounds over the next five years.

It comes after a long-awaited business rates review in Scotland recommended that nurseries should not have to pay the levy as part of efforts to boost free childcare.

NDNA chief executive Purnima Tanuku said: "The review in Scotland has recommended that nurseries be given an exemption to business rates.

"England and Wales should follow suit - particularly in England, where nurseries have the added financial burden of delivering 30 hours expanded childcare next month.

"We have long campaigned for exemption. Our argument is that nurseries offer a social and economic good in providing good-quality early years education and allowing parents to work.

"Increasing business costs, including National Minimum Wage rises, mean many nurseries are struggling to stay in business and fees are rising for parents whose children don't qualify for free hours."

Analysis by CVS found that 11,204 nurseries and play schools had rateable value of £183.20 million before the review, but have seen this rise by 32% to £242.54 million under the new regime.

As a result, the sector will have to fork out an extra £23.1 million per year until 2022 in order to meet the extra costs.

The revelation comes as a raft of small businesses saw the amount they pay rise - in some cases by 3,000% - when rateable values were updated earlier this year.

New rateable values determine tax bills for the next five years and are based upon property valuations as of April 1 2015.

Ms Tanuku added: "Our latest annual nursery survey revealed that 51% of nurseries in England said that removing business rates costs would help them deliver 30 hours in lieu of an increase of their hourly rate.

"In Wales, cost of business rates was listed as third biggest challenge facing nurseries - along with achieving profit or surplus and cost of utilities."

The Press Association revealed on Monday that private hospitals are enjoying a £52 million tax break on their business rates bill through their charitable status while NHS hospitals are facing crippling hikes.

More than one in four - 27% - of all private hospitals are estimated to be registered as charities and can receive rate relief of 80%, according to CVS.

A Department for Communities and Local Government spokesman said: "Rateable values are set independently by the Valuation Office Agency and our £3.6 billion transitional relief scheme gives support to those businesses that have seen increases.

"Our reforms mean 600,000 small businesses will pay no business rates at all and we've also provided a £435 million package to support those businesses most impacted by the recent revaluation."

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