Funded early learning and childcare 2026-27: guidance for setting sustainable rates

Next steps

88. The Scottish Government will provide local authorities with a further £11 million each year from 2026-27 to support sustainable rates to be set that enable staff delivering Early Learning and Childcare in private and third sector commissioned services to continue to be paid at least the Real Living Wage. The Scottish Government is also adding an additional £20 million to the Local Government Settlement in 2026-27, which local authorities can use to fund the real Living Wage increase across adult social care, children’s social care, and for workers delivering funded ELC in private and third sector childcare services.

89. This is in addition to £25.7 million of recurring funding to support the real Living Wage uplifts since 2024-25.

90. Funded providers will then receive the funding to enable them to deliver the real Living Wage increase through the sustainable rates setting process in 2026-27 in line with the approach set out in this guidance (and summarised in Box 1).

91. The Scottish Government will shortly publish the latest annual sustainable rates report. This will set out information on the rates set by local authorities in 2025-26.

92. The Improvement Service will continue to provide a range of support, as set out in Sustainable Rates Review, to local authorities with the sustainable rate setting process.

93. The Diffley Partnership’s ELC Costs Survey report and supporting data tables are due to be published by the Scottish Government shortly.

94. The Scottish Government and COSLA recognise that it is important that both local and national government take time to consider the ELC Costs Survey report and supporting data carefully in partnership with childcare providers and sector representative organisations. Next steps on the continued implementation of the joint Sustainable Rates Review will be considered by the Sustainable Rates Review Implementation Working Group and set out in due course.

95. A further update to the Sustainable Rates setting guidance will be published in early 2027 to support rate setting from 2027-28 onwards.

96. There will also be regular and clear communications to the sector as this work progresses to ensure that providers are aware of developments and where they can input to the process.