Challenges with delivering 1140 hours: Scottish Government’s sustainable rates review

The Scottish Government has published it’s Early learning and childcare: sustainable rates review today (Wednesday 20 December 2023) in which it acknowledges the challenges facing private and voluntary ELC providers.

This report is a joint Scottish Government and COSLA evidence-based review of the approach to setting sustainable rates for childcare providers in the private, third and childminding sector to deliver funded early learning and childcare in 2022 to 2023.

The review was carried out with stakeholders from local government and funded providers and their representatives. The objective of this review was:

–              to learn lessons from the implementation of policy in 2022-23,

–              to identify where the process can be improved further, and

–              to ensure that sustainable rates are set in-line with the guidance. This includes reflecting the costs of delivering funded ELC and payment of the real Living Wage to staff.

The main findings outlined in the review were:

  • that provider sustainability was being eroded by higher energy and food prices, higher staff costs, loss of staff and increases in income not keeping pace with costs.
  • that variation in funding levels is to be expected between different local authority areas (rural and urban) but there were some providers who were not being supported financially as well as others. There’s a growing call for total funding to be distributed evenly across all providers.
  • a broad consensus that the sustainable rates did not provide scope for providers to pay beyond the Real Living Wage which caused significant challenges for their business.
  • workforce challenges reported by providers, citing a lack of equity in funding between local authority and PVI providers as impacting on ability to pay higher wages and retain highly qualified staff.
  • that providers stated that communications with local authorities didn’t include the opportunity to comment or negotiate on setting rates. Clearer expectations are required for local authorities and funded providers.

Purnima Tanuku OBE, Chief Executive of National Day Nurseries Association (NDNA) Scotland said: “The Scottish Government’s review of sustainable rates restates some of the issues that NDNA Scotland has been consistently raising since the expansion began.

“These issues include differential rates between local authority settings and private providers; the difficulties in paying the Real Living Wage when funding rates don’t enable this; and the high turnover of staff in private and voluntary settings. All these concerns make it very challenging for partner providers to deliver high quality early learning and childcare places on behalf of the Scottish Government.

“Earlier in June, Audit Scotland published its own concerns about the levels of data and understanding of costs for partner providers. It is a step in the right direction that this review now outlines recommendations to address these concerns but it may be too little, too late for many providers.

“The Scottish Government’s report echoes NDNA’s own findings that the so-called sustainable rates from local authorities to providers are not keeping pace with ever-rising costs. However, providers cannot wait any longer for this to be resolved, they need action now in order to stem the flow of closing nursery businesses.”

The review recommends:

  • an update to the Sustainable Rates Guidance for 2024-25 to give clarity around rate-setting to provide a more standardised approach.
  • further support for the Improvement Service through to 2024-25.
  • considering options for obtaining more robust and reliable cost data that accurately reflects funded providers’ costs of delivery.
  • collecting evidence on how local authorities are supporting funded providers to meet the needs of children with Additional Support Needs.

  • Scotland

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