Sue Johnson, manager of Scamps private day nursery in Oxfordshire, has recently started a petition to abolish business rates for childcare providers and make them zero VAT rated.
Sue hopes to highlight the plight of the childcare sector, as many providers have recently faced huge increases in business rates for their properties. In addition to this, nurseries like Scamps must pay VAT on purchases but are unable to reclaim this to offset against the business.
Now, with the full rollout of the Government’s 30-hour ‘free’ childcare offer, the squeeze on some settings is becoming financially unbearable.
“We’re hearing almost daily, both locally and nationally, of childcare businesses closing their doors now. From individual childminders to large day nurseries, including outstanding providers who simply cannot afford to carry on,” Sue explained.
She added: “I don’t know what more the Government expects us to do. We have to fund the shortfall in the 30 hours by asking for voluntary contributions from parents or charging for additional services.
“And yet we’re also feeling the squeeze from things like the introduction of pensions this year, the increase in minimum wage and also not being able to claim VAT back on products and services like other businesses do.”
Maintained providers are already able to claim taxes paid under Section 33 of the VAT Act 1994, this does not extend to private providers.
Sue said: “Childcare providers like Scamps have to pay to have their general waste to be removed and have to have an additional service for nappies. These services are not included in your typical business rates. It’s crippling. Everything just keeps adding up and it makes the provision of childcare completely unsustainable.”
Nurseries in Scotland will no longer have to pay business rates from 1 April 2018. Sue would like the
Government to take note and implement the same model throughout England and Wales.
Sue is being supported by the National Day Nurseries Association who have highlighted the financial struggles faced by childcare providers in their 2017 Annual Survey results and by the Champagne Nurseries Lemonade Funding campaign (CNLF) who have set up a survey specifically asking about the effects of business rates on providers’ sustainability.
CNLF spokesperson Jo Morris said: “We have heard from providers who have faced increases of up to 300% on their business rates. As Sue quite rightly points out, the underfunded 30 hours, coupled with increases in National Minimum Wage, statutory pensions, apprenticeship levies and increases in business rates is crippling the sector and we are seeing too many closures.
“We know that providers have been asked to undertake a huge amount of consultations and surveys recently but we are confident that this fabulous sector of ours will respond again because we all know what is at stake.
“The results of this survey will provide evidence which will be used in a legal challenge and used ultimately to see if the Government is prepared to follow the Scottish Government in abolishing business rates for the childcare sector, which, as part of a wider reform of Government funding, would have a very positive effect on the sustainability of many providers.”
Sue’s petition needs 10,000 signatures to get the Government to respond on the matter and 100,000 for the issue to be considered for debate in Parliament.