Welsh Government Permanently Ends Business Rates for Childcare Facilities

Registered childcare facilities throughout Wales are now exempt from paying business rates. The Welsh government has declared that these registered childcare establishments will permanently maintain their small business rates relief (SBRR). The Daisy Day Nursery, a facility located in south Wales, expressed that it had been “feeling a bit of dread” regarding the upcoming year, but characterized the announcement as “huge.” While childcare facilities have benefited from this exemption since 2019, it was scheduled to expire on 31 March 2025. In a joint statement, ministers Dawn Bowden and Mark Drakeford stated, “Making 100% rates relief for childcare providers permanent will provide this sector with stability, helping providers to invest the savings back into their business.” They indicated that this initiative is projected to save childcare providers an estimated £3.4 million annually. Ms Bowden, the minister for children and social care, and Mr Drakeford, the finance secretary, further commented in their joint statement: “This underlines our support for childcare in Wales and our ongoing aim for settings to be financially sustainable.” They added, “It recognises that childcare settings offer positive and caring environments for children, supporting their rights as enshrined in the UNCRC (UN Convention on Rights of a Child) to be safe, to play, to have an education, to be healthy and be happy. It also recognises the essential role childcare plays in our economy, helping parents into work, education or training.” Childcare providers have faced considerable pressure from increasing expenses, and Daisy Day Nursery, located in Cardiff and Barry, Vale of Glamorgan, confirmed it was experiencing similar challenges. Helen Sherrin, the business development manager, remarked, “We were feeling a bit of dread heading into 2025, wondering what that next financial year was going to look like.” The nursery has offered childcare services since 2004 but had concerns regarding the potential reintroduction of business rates. Ms Sherrin stated, “It’s going to mean not just providing for 2025 but seeing it through and being able to invest in their settings and doing the things that they want to be able to do as childcare providers, and provide quality of service to the families that use us. We just can’t do that when there’s so much financial pressure on us.” She added, “We’re hesitant to transfer that to our parents because we know how hard it hits them as well, and they’re already struggling with their income. They’re already seeing a big portion of their outgoings going towards childcare costs. Whatever we can do to minimise the impact that our own struggles has on them, we’d like to be able to do that.” The Welsh government’s decision to extend the tax exemption aims to alleviate financial burdens on facilities throughout the nation. Sarah Rees, head of Oxfam Cymru, commented: “While any investment in childcare is welcome, what parents and providers truly need is a clear, cohesive plan for the future of funded childcare, underpinned by sustained investment.” At present, families in Wales must wait until the school term following their child’s third birthday to qualify for funded childcare. In contrast, families in England are able to access funded childcare for infants as young as nine months. Ms Rees stated, “Affordable, accessible childcare is key to lifting families out of poverty, yet in Wales, parents are navigating a confusing patchwork of provision. The upcoming Welsh budget must commit more money to childcare and outline a concrete plan to deliver on long-promised funded childcare for all two-year-olds. It’s time to move beyond promises and take real action so families across Wales can build better futures.” The Welsh government indicated that this announcement represents a component of a £100 million annual investment in childcare within Wales. Ms Sherrin commented, “Everybody in the sector just wants childcare to be inclusive, and accessible, and for the benefit of the family. I think, with that in mind, there is always going to be more we can do. I think the Welsh government are heading in the right direction with the provisions they’re making. There’s more to be done – how realistic that is, I don’t know.”