Select committee: Education Committee
Recommendation 8
Fifth Report - Support for childcare and the early years
Published 26 Jul 2023
Paragraph 48
Addressed to Department for Education
Education Committee Support for childcare and the early years All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Recommendation (the committee's words)
The Government will soon be funding up to 80% of all childcare places in England, up from 50% before the Spring Budget. In recognition of this, and the public benefit that the whole early years sector is providing, the HM Treasury should grant all early years providers an exemption from business rates. Private, Voluntary and Independent (PVI) settings should also be zero-rated for VAT. We heard that VAT costs and business rates facing ECEC settings are taken into account in the DfE’s process of setting funding rates. Following these proposed changes, DfE should not account for any cost savings gained from VAT and business rate exemptions in their calculation of the funding allocations for local authorities. This would allow savings to be channelled back into the settings in recognition for the need for a more qualified (and therefore expensive) workforce. The benefits to retention and development of staff, affordability for parents and expansion of places for children will substantially outweigh the costs of these changes.
From: Education Committee, Fifth Report - Support for childcare and the early years (HC 969), paragraph 48, 26 July 2023
Government response
The government responded to the whole report on 17 October 2023 (deadline 26 September 2023).
Summary written by Accountability Index from the government's response. It is not the government's own words.The Government welcomes the Committee's report and says it is "in full agreement" on the value of childcare and early education, agreeing with some recommendations and declining others, such as VAT and business rates changes.
- On childminders, it says amendments to the Levelling-Up and Regeneration Bill, which it expects to "come into effect from autumn 2024" pending Royal Assent, will raise the number who can work together from 3 to 4 and allow work on non-domestic premises.
- On business rates and VAT, it states it "currently has no plans to make changes" to business rates support for early years businesses or the nursery VAT exemption.
- On local authority funding, it says it intends to increase the minimum pass-through rate from 95% to 97% "once the roll-out of the new entitlements is sufficiently progressed", and will keep the timing "under review".
- On the 30-hours reconfirmation period and funded hours for related childminders, it states there are "no plans at this time" to change eligibility checks and "currently no plans to change" the family-childminder position.