Funding follows the child and the national standard for early learning and childcare providers: guidance for setting sustainable rates from August 2020

This document provides guidance to enable local authorities to set a sustainable rate that is paid to funded providers in the private and third sectors.

Section 7: Summary

101. This guidance sets out a number of processes to consider when setting a sustainable rate. This includes guidance on how funded provider support packages, which are in addition to the sustainable rate, may be taken into consideration by both local authorities and funded providers. Such provider support packages are a direct benefit of being a funded provider.

102. This guidance is not designed to provide an exhaustive set of principles and processes and local authorities may decide that there are additional factors or processes that need to be considered within their local context.

103. It should also be noted that the rate set by the local authority is for the delivery of the funded hours only.

104. Ensuring a sustainable rate in the current economic climate is challenging. For private and third sector providers, this means an adequate return on investment and being able to recruit and retain staff. For local authorities, it means that the service reflects high quality ELC provision and affordability.

105. Local authorities may wish to consider the following points to ensure an effective process is developed and undertaken:

  • Engage with providers to create and maintain dialogue, including any concerns or queries about the process;
  • Be transparent and share information on numbers and costs without compromising commercial sensitivity;
  • Maintain an audit trail for all stakeholders to document how decisions about sustainable rates have been made (including where cost inclusions and omissions have been made);
  • Where possible, reflect actual, up to date costs;
  • Use a common way of calculating costs; and,
  • Review the process with other groups, or local authorities, to understand best practice in services that have similar considerations[6].



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