Childcare minister Sam Gyimah is calling on English councils to offer private nurseries a discount on their business rates.

Mr Gyimah’s call came as the Huddersfield-based National Day Nurseries Association (NDNA) highlighted the sector’s financial worries in its annual survey.

Speaking at the launch of NDNA’s Annual Nursery Survey at the House of Commons, Mr Gyimah said a rates discount could save childcare providers thousands of pounds a year and help reduce fees for parents.

Among other key findings, the survey also outlined shortfalls in Government funding for free nursery places which are forcing up fees for paying parents.

Mr Gyimah announced that he has asked the Department for Communities and Local Government to write to English councils urging them to offer business rate relief to nurseries and pledging that the Government will meet 50% of the costs to councils as a result.

The letter also called on local authorities to make prompt payments to nurseries for funded places after reports from the sector about slow payments.

Mr Gyimah told his audience: “Nurseries need large buildings, even though in relative terms the value of your business may be low.

“The letter will also remind your local authorities how valuable it is apply business rates relief to nurseries to help you out and encourage our growing and thriving sector.

“For councils that give this discount, central Government will meet 50% of the costs involved.”

Welcoming Mr Gyimah’s announcement, NDNA chief executive Purnima Tanuku said: “Business rates push up fees. Our solution is for Government to recognise the community benefit all nurseries provide by giving the childcare sector 100% relief on business rates.

“This move is a real step in the right direction and looking to the future we would like the Government to apply this rate relief for nurseries nationwide.”

Currently, voluntary sector and maintained early years nurseries can get business rate relief or exemptions but private nurseries – which provide the majority of nursery places – must pay in full, unless they have a rateable value of under £12,000.

Average rateable value for a nursery is £30,000 and, according to NDNA, the average business rates bill is £15,841.