Private nurseries in St Helens have joined forces in solidarity over fears their businesses are becoming unsustainable.
Nursery bosses from St Helens recently met with Nadhim Zahawi, the Under-Secretary of State for Children and Families, to discuss some of the biggest challenges facing the early years sector.
The main issues are high business rates, the 30 hours free childcare scheme and the announced increase in the National Living Wage.
Following the meeting, nurseries have written to the St Helens schools forum outlining their concerns.
In one letter, Nicole Politis, director of Portico Nursery Group, said nursery owners are under “no doubt” that the current trading conditions were “totally unsustainable”.
The Portico boss said the low rate of the Nursery Education Grant – which funds the 30 hours free childcare scheme – is “crippling” businesses.
Ms Politis said: “Although representations were made to the authorities several years ago to express grave concern about fixing the Nursery Education Grant at such low rates, the warnings went unheeded
“The result is that the grants have been fixed until 2020 at rates that are a significantly below the costs of delivering a basic service.
“Coupled with the normal rate of inflation and the huge wages increases, the grant is increasingly unrealistic and is crippling businesses, particularly independent providers who do not have a large estate to offset other costs.”
Ms Politis said the 30 hours free childcare scheme places the financial burden on nurseries, not the local authority.
“It is no surprise to us that some nurseries are refusing to offer grant places at their settings as they are loss making unless an additional service charge is applied,” Ms Politis said in the letter.
Gemma Blake, nursery manager for Holyrood Nursery in Haydock, part of the Bertram Nursery Group, said the gap between the funding rate and hourly cost of delivery continues to increase due to fixed funding rates, increases in operational costs and the introduction of the 30 hours free childcare scheme.
Ms Blake wrote in a letter to the schools forum that the nursery is finding it “increasingly difficult” to bridge this funding gap.
Nurseries have also raised concerns over the impact of the 4.85% rise in the National Living Wage, which is due to come in from April.
Another major concern for private nurseries is the high business rates, which has been raised nationally.
Portico’s newest nursery at Mere Grange Business Park was part funded using a £300,000 grant from the Department for Education, ahead of the introduction of the 30 hours childcare scheme for working parents.
In March, Mere Grange received its first business rates bill of £46,500. Three months later the nursery was re-assessed and was given a rateable value of £71,500 – a 53% rise
Ms Politis said: “The subsequent increases have seriously impacted the business and are counterintuitive, given that the business was part Department for Education-financed to serve the local community yet very quickly jeopardised by the local business rates.
“Our ardent view is that the government should reconsider business rates for private nurseries and bring them in line with school providers.”
The Woodlands Nursery in Newton-le-Willows has also written to the schools forum to express its concerns over the business rates.
The nursery said that the rateable value of its property in June 2017 was £23,250.
Following a survey of the building, which had been refurbished, in August 2018, this increased to £43,250 – an increase of 86%.
“This in itself has a huge impact on the amount of resources that we can provide for our children,” Anne O’Sullivan, director of The Woodlands Nursery, wrote in the letter.
St Helens Council said the reason Mere Grange and The Woodlands Nursery saw such big increases is because the use had changed on their buildings, so the rateable value has changed, resulting in the larger cost.
In a separate letter, Helen Dew, owner of General Day Nursery, called for private nurseries to be exempt from business rates, as is the case in other parts of the UK.
Scotland scrapped business rates for its nurseries in April 2018 and nurseries in Wales will also be exempt from April.
Nurseries across England have been pressuring the government to follow suit, with a petition calling for just that attracting more than 10,000 signatures.
However, in October the government confirmed it had no plans to scrap business rates for childcare providers.
In a letter to Bertram Nursery Group managing director Cary Rankin, Nadhim Zahawi, the Under-Secretary of State for Children and Families, said the government will spend a record £6 billion on childcare support in 2019-20.
Mr Zahawi added that the government has introduced powers to enable local authorities to offer business rates discounts and have increased small business rate relief.
The Conservative MP said the 30 hours scheme is making a “real difference” to the lives of families across the country, with more than 340,000 three and four-year-olds benefitting from the scheme.
Mr Zahawi said: “We are clear that getting the funding right is critical to the successful delivery of the free entitlements.
“We recognise the need to keep our evidence base on costs up to date and we continue to monitor the provider market closely.
“We have a range of regular and one-off research projects that are either in progress or have already been published.
“These provide us with insight into various aspects of the provider market, the impact of the 30 hours policy, market size, workforce, pay and costs.”