An official petition calling on the government to exempt all early years settings in England from paying unfair business rates and be zero rated for VAT has been launched

Nursery owner Debbie Moliterno set up the parliamentary petition, supported by National Day Nurseries Association (NDNA) and Federation of Small Businesses (FSB).

Research by NDNA reports that the average nursery in England pays £21,000 per year in business rates. For many, bills are much higher especially in London and other large cities. The revaluation exercise in 2022 increased bills by an average of 40% for nurseries in April 2023.

Early years providers in Wales and Scotland have been exempt for a number of years from paying business rates because their governments acknowledge the social good that they do, their financial pressures and the government-funded places they deliver.

NDNA’s chief executive Purnima Tanuku OBE said: “With the government-funded childcare expansion ongoing, early education and care providers are working extremely hard to meet local demand. The Institute for Fiscal Studies estimates that the government will soon be paying for 80% of hours in nurseries. However, providers’ budgets are stretched, they are making an average loss on three and four-year-old places of £2.36 per hour per child.

“Exempting them from paying business rates – which school settings do not have to pay – would really help towards their overall sustainability. We need a thriving early years sector to fulfil the Government’s ambitious expansion plans, not a shrinking one.

“Early years settings should not be penalised for having space for children to play, grow, explore and develop. The Valuation Office Agency has been changing the way they calculate business rates – rather than on space, it is sometimes being done on number of children that nurseries can support, amounting to as much as £500 per child.

“This is an unnecessary burden on childcare providers which they have to pass onto parents. If the government is serious about supporting parents with their childcare bills, they need to remove this tax and support the early years sector so they can get on with the job of educating our youngest children and helping them reach their full potential. Please sign this petition to show the strength of feeling within the sector and beyond.”

Debbie Moliterno owns Cheeky Monkeys Two Day Nursery in Bedford and is co-owner of Cheeky Monkeys Day Nursery in Borehamwood.

She said: “As providers of early education and care we want to do the absolute best for our children but we are trying to meet legislative requirements whilst being underfunded and having to pay business rates. If we all stick together then we will be able to make a difference and help stop more quality nurseries from being forced to close down. We are simply the forgotten sector.”

Tina McKenzie, policy chair at the Federation of Small Businesses (FSB), said: “Small childcare providers are having to deal with a barrage of ever-increasing operating costs, with utilities, employment costs, rent and business rates bills all stacking up. At the same time these nurseries and pre-schools must meet strict requirements to ensure staffing levels and have up-to-date training, all while working hard to keep up with the current increasing demand for childcare places and providing quality care.

“Taking business rates bills out of the equation with a 100 per cent rates relief scheme in England – matching the crucial support given to nurseries in Scotland and Wales, which are facing the same issues – would make a huge difference to small childcare businesses across the country.”

During the Covid pandemic in 2020-21, nurseries were given 100% rates relief, followed by a 66% reduction the following year due to the essential nature of their business.

An NDNA survey discovered that if they did not have to pay business rates, 61% of nurseries would be able to pay their staff more; 50% would reduce business losses and 41% would reduce their fee increases to parents. https://ndna.org.uk/news/nurseries-could-pay-staff-more-if-they-didnt-have-to-pay-business-rates/

The petition is now live here – https://petition.parliament.uk/petitions/660129/

It will run for six months. If it attracts 10,000 signatures the government will be required to review it and respond. If it exceeds 100,000 signatories, it will be eligible for a formal debate in parliament.