Agenda item

Schools and EarlyYears providers Business Rates

To discuss the agenda item.

Minutes:

The Chairman introduced the discussion and said Sarah Cottle had been in conversation with Kevin McDaniel about the business rate charge for maintained nurseries, whilst other school settings were not. 

 

James Norris explained that schools received funding allocation to pay the business rate. Nurseries and Private, Voluntary or Independent’s (PVI) did not receive the same rate relief or funding unless they had a charity status. Under the Local Government Act, the billing authority could not give itself rate relief. Maintained nurseries were deemed an entity of the local authority and therefore could not be given rate relief. Neighbouring authorities did not give discounts to their nurseries, whilst county councils did as they were not the billing authority.

 

Kevin McDaniel said all providers were given business rate relief due to Covid-19 apart from maintained schools, which seemed unfair.

 

Sarah Cottle said she had been in discussion for business rate relief for many years, as maintained nurseries were deemed to be a school. During COVID-19, Cookham Nursery School was one of the only three schools in the Borough to pay rates. The nursery was not a business as all the money made was spent on the pupils. Whilst the Nursery was classed as a school and one of the three outstanding schools, it was not classed as a school when business relief were sought. When AfC changed its policy, nurseries in Kingston and Richmond received support for their business rates. The nursery had to pay £48,000 as part of business rates, which was 12.5% of the budget. Short-term support during COVID-19 and a longer-term solution was requested.

 

The Chairman said this was about clarity, equity and fairness, and if every other requirement was being met by the nursery from DfE and Ofsted, it was unfair to not classify the nursery as a school from a business rate perspective.

Kevin McDaniel said schools also paid business rates, but the DfE paid back a grant after a year which covered the cost. The DfE policy excluded maintained nurseries.

 

The Chairman said this was not a local authority decision, but if other authorities found a way to not pay the rate, the Council could consider doing the same. Members were informed that the Schools Forums in Kingston and Richmond agreed to pay the business rate from the education budget, which was against the legislation.

 

Chris Tomes proposed to adopt the same strategy as Kingston and Richmond, which the Chairman considered. The Chairman asked if the underspend in the Early Years Clock could be used for the business rate. The Panel were informed that the budget could be used, but this would increase the overall net overspend across DSG.

 

James Norris said that nurseries received a different funding than PVI settings, such as lump sum supplement payments for additional responsibilities. Sarah Cottle said this payment was made because by statuary the nursery had to cover costs such as a Special Educational Needs Coordinator (SENCO), headteachers and qualified teachers, whilst PVIs were not obliged to have highly qualified staff. James Norris agreed with this and said there were additional funding streams that recognised the difference between maintained nurseries and PVI settings.

 

James Norris asked if PVIs would also receive the same business rate relief as maintained nurseries. The Chairman said PVIs were a business, whilst schools and maintained nurseries were not, and therefore there was a difference between the two entities.

 

Kevin McDaniel said it was legally against regulations to provide business rate relief, and PVIs could challenge the School Forums that all Early Years funding should be based on a formulaic basis and could also ask for support on their business rates. This would total to £800,000 annually, therefore there was a risk to the decision. Whilst there was a national business rate relief due to COVID-19, the risk was low to provide a one-off support for maintained nurseries, whilst an alternative was sought.

 

Chris Tomes asked if there was a short-term solution that could be provided whilst a longer-term solution was formulated. The Chairman agreed and requested for work to be done to see how other local authorities got around the business rate, what the risks were and find a long-term solution for the future that is fair for all.

 

Chris Tomes asked if the challenge was regarding the difference between local authorities for maintained nurseries and PVIs. The Chairman informed Members that because RBWM was the charging authority, it could not give rate relief, whilst a county council could do so.

 

Kevin McDaniel confirmed that maintained nursery schools in a second-tier district could apply for a business rate relief, as the authority was not the owner of the school. But as RBWM was a unitary authority and therefore the maintained nursery was part of the authority, it could not give itself a rate relief. This would be against the business rates rules and regulations. Therefore, DfE provide a delayed rate relief to avoid challenges. The simplest solution would include DfE recognising maintained nurseries as schools that should be eligible to have business rates repaid. However, the DfE paid different supplements for the differences between nursery schools and PVIs. 

 

Sarah Cottle said the DfE stated that if maintained nursery schools were categorised as schools, maintained nurseries would not be part of the Early Years Block, which would have implications on the other schools within the maintained sector and the budget. There were only 9 authorities in the country that did not support in business rates for maintained nurseries.

 

The Chairman confirmed that Schools Forum would cover the cost of the business rate this year of approximately £48,000. James Norris said a long-term solution would be brought forward to the Forum by the next financial year.

 

RESOLVED UNANIMOUSLY: That the Schools Forum covered the cost of the business rates for this financial year for all maintained nursery settings be approved.

 

The Chairman thanked Members and officers for their contribution and wished Richard Pilgrim, Hugh Boulter and Francis Walsh for their support. On behalf of the local authority, Kevin McDaniel thanked the three leaving members for their significant contribution and wished them the best of luck for the future.