Early learning and childcare: Sustainable Rates Review Implementation Working Group minutes - September 2024

Attendees and apologies

• Care and Learning Alliance (CALA)
• Scottish Childminding Association (SCMA)
• Early Years Scotland (EYS)
• National Day Nurseries Association (NDNA) Scotland
• Association of Directors of Education in Scotland (ADES) Early Years
• Association of Directors of Education in Scotland (ADES) Resources
• Improvement Service
• Scottish Government (SG)
• Convention of Scottish Local Authorities (Chair) (COSLA)

Apologies

• Directors of Finance Network

Items and actions

Minutes and actions of previous meeting

The chair thanked members for considering the draft minutes of the June meeting and advised that the minutes are now published on the Scottish Government website.

A copy of the action tracker was shared with members in advance of the meeting alongside the meeting papers. There were two outstanding actions:

• secretariat to keep the sustainable rates review implementation working group (SRRIWG) updated on progress with commissioning the cost collection exercise. An update paper has been provided for item 4 of this meeting
• secretariat to explore options for hybrid and/or in-person options for future meetings of the working group. Secretariat has considered and meetings will remain online for now

Provider engagement

At its previous meeting the working group strongly supported wider engagement with providers throughout the development of the cost collection exercise and provided initial thoughts on how this might be approached. Paper SRRIWG 2.01 provided details, and requested members’ views, on the proposed approach to delivering provider reference groups (PRGs). The information gathered from providers at these sessions will be used to develop the methodology of the upcoming cost collection exercise. It was noted that today’s discussion with SRRIWG members will inform the format of the provider reference groups, as well as any short background information to be sent to participants in advance. An invitation to providers to sign up for these events is expected to issue later in September. 

Points raised in the discussion that followed:

• with regard to their experience of previous cost collection exercises, PRG attendees could be asked about the time required, any specific challenges/barriers to completing the exercise or providing specific categories of data and the need to ‘buy in’ additional resources (e.g. accountant) 
• PRG attendees could be asked to advise what information they think is required in order for an evidence based sustainable rate to be set
• consideration should be given to potential information and communication technology (ICT) challenges for some providers and how this could be supported to enable participation
• the PRGs could provide an opportunity to assure providers of data security including clarity as to who will have access to the data, and in what form the information will be made available to local authorities/the sector
• it was noted that even within each of the themed PRGs there would be providers attending with different business models (e.g. variation within the private providers group)
• the following could be tested with the PRGs:
  • proposed survey terminology, given the importance of providers understanding what is being asked in the cost collection exercise (including categories of data). Similarly, attendees could be asked to provide the categories of data that they are used to working with 
  • the suggestion of information sessions (webinars) to support providers to understand requirements 
  • a proposed mix of methods (webinars, focus groups, online survey). Providers will have varying amounts of time, facilities and resources, so providing a wide variety of ways to take part might allow for a better engagement
  • PRG attendees could be asked about who, from their setting, would be most likely to complete the data collection exercise (e.g. office managers, practitioners etc.) and how much time they would be willing to offer to participate 

Actions:

• sector representative organisation members of the working group to share any further views on the content of the provider reference groups with the secretariate by Friday 20 September 2024
• secretariat to share draft communication for the sector with members following the meeting

Procurement of cost collection exercise

It was noted that the Sustainable Rates Review included an action to consider options for obtaining more robust and reliable cost data and that, to support this, Scottish Government are commissioning an external provider to collect data on the costs of delivering funded early learning and childcare (ELC) in private, third sector and childminding settings. Paper SRRIWG 2.02 provided an update on the progress of the procurement exercise, for noting. 

Key points provided in this update:

• an external provider will be selected through open competition, in line with standard Scottish Government procurement processes. The invitation to tender (ITT) is now live
• the information gathered during the provider reference groups will be shared with the service provider to inform the approach to the cost collection exercise
• the service provider will be expected to engage with the SRRIWG in developing their methodology, which we expect will involve a survey with a specific approach for childminders
• upcoming key milestones:
  • contract to be awarded (expected in November 2024)
  • engagement between the service provider and early learning and childcare (ELC) providers (expected in early 2025). The nature of this engagement will depend on the information gathered through the PRGs
  • cost collection exercise fieldwork (expected to take place in Spring 2025, well in advance of the summer holiday period)
  • findings to be presented to the SRRIWG (expected September 2025)
  • the new data will inform the rate setting guidance from 2026 to 2027 onwards

Action:

• the secretariat will keep the working group updated on progress with the procurement exercise

2025 to 2026 rate setting guidance

Paper 2.03 provided an update on the timeline for delivery of the 2025 to 2026 sustainable rates guidance, and requested members’ views on if, and how, the guidance should be updated to inform a more standardised approach to rate setting in 2025 to 2026. A short slide pack was presented, outlining the key changes in each iteration of guidance since the first sustainable rates guidance document was published in April 2019. It was noted that the updated sustainable rates guidance for 2024 to 2025, which focused on supporting delivery of the £12 per hour (increased real living wage) pay commitment, set out an approach, which was agreed by the Scottish Government and the Convention of Scottish Local Authorities (COSLA), which was significantly different from previous years (requiring a minimum uplift to rates in all local authorities in 2024 to 2025 to reflect the estimated costs of delivering the commitment). It was noted that standardisation could cover a number of aspects including the approach to collecting cost data, the assumptions applied to cost data to set a sustainable rate, or the timing of when rates are set. The review recommendations also identified three specific areas in which improvements to the guidance would be beneficial:

• eligible two year olds
• childminding
• delivery of the free meal commitment 

Points raised in discussion, with regard to what aspects of standardisation would be beneficial:

• a more consistent and robust evidence base on costs that local authorities could draw on
• clarity on how cost data should translate to a sustainable rate
• a standard uplift would not address existing challenges in that rates are not intended to cover the same costs across different local authorities and settings (e.g. only some hourly rates include meals). It would also not address the significant variance that already exists  
• recognition of the costs for rural areas and other specific provider types
• with regards to the timing of rate setting it was noted that if rates were confirmed at the same time, across all local authorities, this would support planning for providers, particular those which operate across multiple local authorities. December was noted as being a helpful point in the year to have this confirmed, as this would align with local authority processes. It was also noted that there may be some practical challenges to consider with regards to when the overall Scottish Government budget and the funding settlement for local authorities’ are confirmed
• transparency around how rates have been set, and what data was used to inform this 
• standard methodology to which local authorities could apply their own data. This would provide transparency and consistency 

Points raised in discussion, with regard to how the rate setting process could be strengthened, specifically in relation to a) provision for eligible two year olds, b) childminding provision and c) delivery of the free meal commitment:

• an expectation that the two year old rate is a set at a higher level than three to five year old rate, reflecting the difference in staffing ratio requirements between the two age groups (it was also noted that the cost collection exercise would be provide information as to the average difference in the costs of delivery across the two age groups)
• an expectation that childminders are paid at least the same rate as private and third sector providers delivering funded ELC
• support for childminders with regard to meal provision, as this can be a barrier to contracting with local authorities as a funded provider
• the guidance could be more directive with regard to meal provision (for example, it could advise a consistent approach as to whether meals are to be funded as a stand-alone payment or top up to hourly rate (preference for the former was indicated) 
• funding for meal payments could be increased in line with inflation as a minimum
• recognition that in the case of blended placements, the ‘main’ provider may be responsible for providing the meal, but that the other setting may have to make provision for some type of meal or snack

It was recognised that these issues are complicated, and it was agreed that members should have an opportunity to consider these further before sharing views with the secretariat. 

Action:

• the secretariat will circulate a follow up email, including the slide pack used for this item and guidance on how members can provide further feedback on the approach to 2025 to 2026 sustainable rates guidance 

Forward look and any other business 

The chair thanked members for attending and participating. It was highlighted that some providers have raised concerns with regards to the timeline for implementing the reforms set out in the rates review. It was noted that regular communication with the sector would be vital, to ensure that providers are aware of the actions that are being delivered and why some actions require a longer timescale for delivery. It was advised that dates for future meetings will be scheduled after this meeting, but that the next meeting is expected to take place in December. Meetings are expected to remain online.