Early learning and childcare - sustainable rates for funded providers: overview 2023 to 2024

Rates Review and Next Steps

54. During 2023, COSLA and Scottish Government conducted a joint Review of Sustainable Rates ("the Review"). This was an evidence-led review, with input from local government and the childcare sector, and examined the process for setting rates for 2022-23, to identify where rate-setting processes could be improved further and how to best ensure rates are set in-line with the aims of the guidance.

55. Actions recommended by the Review include updating the Sustainable Rates Guidance to provide a more standardised approach to rate-setting and minimise any unwarranted variation between the rates set by local authorities; strengthening the guidance for setting rates for eligible 2 year olds, childminders and for meal payments; and setting clearer expectations around engagement and communications for both local authorities and funded providers.

56. The Review also recommends that COSLA and Scottish Government explore how the cost data upon which rate-setting is based can be improved to produce more robust financial evidence. This includes considering whether it would be beneficial for there to be a more central approach to cost evidence collection and analysis.

57. The Review recommends that further evidence on how local authorities are supporting funded providers to meet the needs of children with Additional Support Needs is collected. Evidence in this area has been collected as part of this data collection exercise and will be used by the Scottish Government and COSLA to help determine if further consideration in this policy area would be beneficial.

58. The Scottish Government will implement the actions recommended within the Review over the remainder of this parliament.

59. The draft Scottish Budget for 2024-25 confirmed that we will provide funding to enable payment of at least £12 per hour to staff delivering funded ELC within the private, third and childminding sectors from April 2024. Further information about the implementation of this commitment and guidance for local authorities on how to reflect this additional funding in 2024-25 rates will be published shortly.

60. The Scottish Government and COSLA will update the guidance for setting rates for 2024-25 to reflect how the additional funding being provided to enable delivery of the £12 per hour commitment will be reflected in the sustainable rates that funded providers in the private, third and childminding sector will receive in 2024-25.

61. The wide range of actions recommended by the Review include the need to examine and improve cost data. The Scottish Government will need to ensure there is sufficient time to carry out this technically complex work and to consult on any proposed improvements to the rate-setting process with local government and the private, third and childminding sectors.

62. We are therefore developing a programme of work with local government and the sector to deliver a comprehensive update to the sustainable rates guidance and will set out more information on timescales and how the sector will be involved soon.