Alliance gives evidence on business rates at Treasury Select Committee
Alliance gives evidence on business rates at Treasury Select Committee oral session
The Early Years Alliance’s chief executive, Neil Leitch, gave evidence today (7 May 2019) at the Treasury Select Committee’s inquiry on business rates, chaired by Nicky Morgan.
Mr Leitch was the only speaker representing the early years sector, and was joined by witnesses from the hospitality and pub industries.
The invitation to give oral evidence followed the Alliance’s written consultation response which called for the government to create and fund a business rate relief scheme in England similar to schemes available to childcare premises in Scotland and Wales.
Mr Leitch told the panel that business rates relief is just one cost faced by a sector that is woefully underfunded. He was clear that childminders would not benefit from any exemption, nor would childcare premises that are run by charities which currently get relief – and these businesses are still closing at alarming rates. However for childcare premises that do not enjoy any relief through the existing, complex system, business rates often represent the second most important cost and can mean the difference between investing or closing down.
He said: “We are in an unusual position as much as we are trying to deliver a free entitlement that is commercially restrictive, and just about every report, including one from the Treasury Select Committee, has found that the sector is grossly underfunded.
“We have a mandatory requirement in terms of space, we are inspected by Ofsted, and the environments are absolutely critical. We have had more and more drives in recent years for outdoor play, which means we have to invest in equipment and resources. So it’s fundamental for us. When you walk into a nursery it has to feel right, it has to feel safe and it has to feel good for parents, and that means investment.”
When asked about why local authorities may not be offering business rates relief to childcare premises, Mr Leitch said: “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 of 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. 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 sorts of challenges to “just do the right thing”. So it needs a strong directive and I think we should look to Scotland and Wales and follow the example.
“The cost of not doing it is enormous, the position will get worse, and somebody needs to be brave enough to do something about it. We’re dealing with social responsibility. Just last week the Social Mobility Commission said we should be extending the 30 hours. Then we’ve got the economic position of getting parents back into the working environment - so the cost of not doing this is much greater than the cost of giving relief.”
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.”
Notes to editors:
The full Treasury Select Committee hearing can be viewed here, with the second group including the Alliance starting at 14.18: https://parliamentlive.tv/event/index/a0699b04-e8da-4377-aae8-f44f69bc9a71
- Ceeda analysis has shown 53% of nursery premises on the VOA (Valuation Office Agency) database are above thresholds for rates relief and 11% have values which may attract only tapered relief, depending on the value of the organisations overall property portfolio
- Local authorities in England have the flexibility to offer discounts on business rates but so far the only council we have found to have implemented a 50% relief for non-domestic childcare premises is Harrogate.
- Childcare settings that are a registered charity can apply for 80% relief.