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Nursery director Andrew Howarth says nurseries are paying such high business rates it threatens their survival
English nurseries are “horrified” not to have been included in a tax holiday being given to small businesses to help them in the face of the coronavirus.
“We are being pushed to the edge,” said Andrew Howarth, director of Manchester-based firm Paint Pots.
Nurseries like his are warning they will struggle to survive if forced to close doors due to the coronavirus.
High business rates were already forcing nurseries in his borough to go out of business, Mr Howarth said.
Nurseries fear they may be forced to close temporarily due to the virus and that some businesses won’t withstand the loss of income, on top of already stretched finances.
On Wednesday, Chancellor Rishi Sunak announced that tens of thousands of England’s small retail, leisure and hospitality firms will not pay any business rates for the next 12 months.
The tax holiday is part of a package of measures to support the UK economy in the face of disruption from the coronavirus outbreak, but the list of firms did not include nurseries.
“In Wythenshawe, a deprived area in South Manchester, our business rates are more than our rents,” Mr Howarth told the BBC. He owns three nurseries in the borough. He says although business rates are supposed to relate to the rentable value of the property he pays rates equivalent to 115% of the rental value, when it should be 40-50%.
Five nurseries located within two square miles of his Wythenshawe nursery have closed in the last six months, he says.
There are 12,387 day nurseries and play schools in England that are liable for business rates according to the real estate adviser Altus Group.
Altus Group’s analysis shows that nurseries will pay £134.5m in business rates for 2020-2021, a fourth year cumulative increase of 45.3%, compared with bills during 2016-2017, the final year before the 2017 revaluation of business rates came into effect.
Sector under ‘huge strain’
Victoria Banfield, owner of the Little Lane Nursery in Stamford, says temporary closures would amount to “business suicide” for nurseries.
“We would be relying on our parents to continue to pay nursery fees whilst we are closed.”
“The sector is already under huge strain,” she said. “Most nurseries could be put out of business if forced to close for any period of time, with nursery insurers advising that no cover will be available if we are forced to close our doors.
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Nurseries may have to close if staffing levels are affected by the spread of the virus
Both nursery providers point out that any widespread shutdown of the childcare sector would have a huge knock-on effect on other industries, because parents wouldn’t be able to go out to work if they lose access to childcare.
“We’re horrified that this government favours pubs and hotels above essential nursery businesses which support children’s development and enable parents to work and train,” said Purnima Tanuku, chief executive of nursery industry body National Day Nurseries Association (NDNA), which has lobbied the government to change business rates for nurseries over the last three years.
“Despite our evidence-based submission to the Treasury, the chancellor has chosen to ignore the fact that nurseries are really struggling financially,” she said.
A Budget measure to provide government funding for Statutory Sick Pay for staff who are off work due to the coronavirus will be a help to childcare businesses, the body added.
However, it is concerned that there will be no support or compensation if nurseries are forced to shut.
“Nurseries are fearful that any temporary closure as a result of coronavirus outbreak may push them out of business altogether. This risk appears to be uninsurable and they need support now.”