Early learning and childcare: sustainable rates review

Next Steps

82. The purpose of this review is to learn lessons that can be utilised to improve the existing sustainable rates process. Some of the evidence presented during the review, notably in the areas of local authority funding and pay for ELC staff within funded provider settings, are wider in scope and would require change to the existing ELC policy framework and funding settlement. This is important evidence for Ministers to consider as part of future Scottish Government Budget processes, and as they consider the design and delivery commitments to deliver funded ELC to one and two year olds, as well as building a system of school age childcare.

83. Within the remit of the current review, and existing budgets, to improve existing policy and process the following actions are recommended:

• Update the Sustainable Rates Guidance for 2024-25, with a view to
  • (i) Enhance guidance on the approach to rate-setting, in order to provide a more standardised approach and minimise any unwarranted variation between the rates set by local authorities (recognising that a certain level of variation is expected), including how frequently they are set
  • (ii) Further develop guidance around the rates payable for eligible 2 year olds to help ensure these rates are sustainable and are reflective of the costs of delivery
  • (iii) Further develop the guidance in relation to meal rates, to help ensure these are set sustainably and are reflective of costs
  • (iv) Set clearer expectations around engagement and communications for both local authorities and funded providers in the private, third and childminding sectors regarding the rate setting process – including ensuring that providers have greater certainty and clarity on rates to support their financial planning
  • (v) Ensure the guidance adequately supports local authorities when setting sustainable rates for, and engaging with, childminders
• Deliver further support for the Improvement Service through to 2024-25, enabling them to:
  • Support local authorities with provider communications, including working with COSLA to create a national communication on the role of local authorities with regard to the delivery of funded ELC. This should cover their roles, responsibilities, statutory duties, local government finance, and associated funding requirements (including those provisions with particularly high costs); and aim to increase funded providers’ awareness of the local authority position when setting rates.
  • Host Regional Focus Groups, to talk through rate-setting processes, share best practice, and support understanding of any updates made to the sustainable rates guidance
  • Publish Rate-setting Case Studies, to further support understanding of the approach to sustainable rate setting and the interpretation of cost data
• Drawing on learning from previous approaches, work with local government and funded providers (and their representatives), to consider:
  • options for obtaining more robust and reliable cost data, that accurately reflects funded providers’ costs of delivery
  • consideration of a more central approach to cost evidence collection and analysis, to produce more robust financial evidence to use when setting rates
  • the timescales for implementing any recommended changes and how the impact of any changes would be monitored
• Collect evidence on how local authorities are supporting funded providers to meet the needs of children with Additional Support Needs, to determine if further consideration of this policy area would be beneficial.