Nearly half of councils yet to decide on childcare providers’ pay rate

Nearly half of councils in Scotland are yet to decide on the hourly rates they will pay childcare providers when the academic year starts next week.

A freedom of information request by the National Day Nurseries Association (NDNA) revealed 15 out of 32 local authorities are still to reach a decision on the funding rates to be received from August.

Responses were received from 27 councils.

Only one in five councils has plans in place to increase rates at partner provider nurseries despite the cost-of-living crisis, inflation and a new real living wage, NDNA found, while just two areas have plans to keep pace with the current rate of inflation of 9.4% – Angus (9.6%) and Stirling (12.9%).

The group reported four councils will keep the same hourly rates as last year, and it said this means the nurseries are facing real-term cuts for funded places.

It was acknowledged that Highland Council responded to the request but NDNA had no previous data for the area, while Orkney also issued a response but has no partner providers.

NDNA said the increases in funding rates range from 4.3% in Aberdeenshire to 17% in Stirling, with the average increase for rates for two-year-olds being 8.68% and three t -five-year-olds 7.8%.

Purnima Tanuku, NDNA Scotland chief executive, said: “Every year we work to help providers understand what the sustainable rate will be in their area but we have never seen a picture with this much uncertainty.

“Early learning and childcare settings are facing a really challenging time supporting children with their post-pandemic recovery, workforce challenges, and the cost of delivery rising month on month.

“The responses from councils show that the majority of nurseries and other providers are being expected to deliver the Government’s funded childcare offer without knowing how much they will be getting to do this.

“With new children joining from next week but many having to wait until next month to know how each child will be funded, it makes it impossible to plan ahead.

“Local government officials cannot ignore that costs are spiralling for providers, so we need to see new rates that accurately reflect the financial strains settings are facing. In areas where rates have yet to be set we want to see councils reflect this.

“With rising costs these rates are nowhere near sustainable and the sector cannot be expected to deliver places at a loss.”

Scottish Conservative children and young people spokeswoman Meghan Gallacher said: “The stark findings show how nurseries in Scotland are being left in limbo.

“It is unacceptable that so many of our local authorities are in the dark over the hourly rates they will be paying to childcare providers so close to the new school year starting again.

“Given the huge impact of the cost-of-living crisis and the SNP’s continued savage cuts to local authority budgets, this is the last thing they need at this time.”

A Scottish Government spokesperson said: “Local authorities are responsible for setting sustainable rates for the delivery of funded early learning and childcare in 2022-23. Joint Scottish Government and Cosla guidance is clear that rates should reflect the costs of delivery, provide scope for reinvestment and enable private and third sector services to pay at least the Real Living Wage to staff delivering funded ELC.

“The guidance also emphasises the importance of ongoing consultation and dialogue between local authorities and their local early learning and childcare providers.”

A Cosla spokesperson said: “Rate setting is a matter for each individual council, to reflect its own operating context. Following the recent local government elections, councils are in the process of working through necessary governance processes to set early learning and childcare rates, recognising the need for this information to be made available to providers as quickly as possible.

“All councils are working with constrained budgets, made worse this year by rising inflation and soaring energy costs, requiring all service areas, including early learning and childcare, to revisit budgets as a matter of urgency – this has undoubtedly affected some councils’ rate setting decisions.

“Cosla remains committed to working collectively towards sustainable rate setting for early learning and childcare providers.”