Sustainable Rates Review Implementation Working Group Minutes: May 2025

Attendees and apologies

• Care and Learning Alliance (CALA)
• Improvement Service
• 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
• Scottish Government (SG) (Chair)
• Convention of Scottish Local Authorities (COSLA)
• Directors of Finance Network

Apologies 

Apologies were received from Early Years Scotland (EYS) and some members of the ADES Early Years Network and ADES Resources Networks.

Items and actions

Minutes and actions of previous meeting

The Chair thanked members for providing comments and feedback on the minutes from the working group meeting on 2 April 2025 and advised that the minutes have now been finalised and published on the Scottish Government website. 

Following the working group meeting on 1 May 2025, a copy of the draft survey and accompanying guidance was circulated to members for comment. Helpful feedback was received and the Chair thanked members for their continued engagement. 

A copy of the draft minutes from the working group meeting on 1 May 2025 was shared with members in advance of the meeting. There were no comments on the minutes.

The Chair advised that the intention is for the working group to meet again before the summer recess period to discuss survey response rates and next steps. The next meeting of the working group will follow shortly after at the end of August, followed by an intensive period from September to November to work through the outputs from the exercise and determine next steps.

Actions 

• an electronic link to the minutes from the working group meeting on 2 April 2025 will be cascaded to members alongside any follow up actions from the meeting
• scottish Government colleagues will share a copy of the draft communication materials with members for their consideration in due course

Cost Collection Exercise

The Cost Collection survey is expected to go live by Thursday 29 May 2025 and preparations have begun to consider what the results will mean, both in terms of the inputs local authorities will need, and what resources will be available for the wider sector to draw on. 

The Chair invited the Diffley Partnership to provide an update on survey development and further feedback received from providers as part of the extended pilot phase. The Diffley Partnership thanked members for their continued engagement in the pilot exercise and provided an update on the refinements that have been made to the survey. 

The Diffley Partnership received feedback from a range of providers. The feedback suggested that the survey was too long and that further refinement of the survey questions was required. To achieve this, careful consideration was given to identifying the questions essential for the exercise, and removing some of the ‘nice to have’ questions.

Changes were made to the sections containing information on operations and capacity, fees, and meals. Feedback on the income and expenditure, and staffing sections indicated that providers felt that some questions were commercially sensitive and that some asked for information that not all providers would be comfortable giving. This related to questions on sources of income, staff pay differentials, and estimates of net surplus/rates of return. To mitigate these concerns, Diffley Partnership will make some questions, where the input is not critical to calculating cost estimates, optional for survey participants. 

There was also some feedback regarding the questions on anticipated future costs, and this would now be included in the survey as an open-ended question for providers to provide this information if they wish.

The Diffley Partnership are in the process of finalising the draft survey and will share a copy with members for final review before publication. They will also write to all pilot survey participants to thank them for their engagement in the pilot exercise. A webinar will be recorded to assist providers in accessing the survey, and supporting materials such as flyers will be provided.

It was noted that members expressed concerns regarding the low response rate in previous surveys. The Diffley Partnership provided reassurance to reiterate that should the initial provider response be low, they have an engagement strategy to try and boost response rates. This could include targeted local engagement.

Actions

• the Scottish Government will provide updated surveys and guidance, along with materials for members to review before survey launch
• the Scottish Government will circulate a copy of the comms materials for members consideration including a copy of the question and answer script and a draft letter from Diffley to providers 
• the Diffley Partnership will share a copy of the anonymised feedback received from childminders with the Scottish Childminding Association (SCMA) detailing key messages

Survey outputs

Paper 6.01 was circulated by secretariat in advance of the meeting which focused on the proposed outputs from the cost collection exercise survey. The paper summarised the lessons learnt from the previous Ipsos Mori exercise in 2022 and outlined areas that could be developed. 

Members were asked to consider and share any views on the types of outputs that they would expect to see from the results of this cost collection exercise. In particular, how the results from the data are presented in a manner that is both accessible and transparent.

It was noted that access to the data previously collected as part of the Ipsos Mori data collection was mainly limited to local authorities, which caused frustration among providers. The data was also not presented in an accessible format, which presented some challenges regarding interpretation of the data. Members highlighted that it would be beneficial if the results for this exercise were broken down into local authority areas. 

It was noted that there is a need for reassurance regarding providers commitment to paying the real living wage, and that a geographical areas analysis would be helpful. 

Members noted that it would be beneficial to include a user guide and to use case studies to demonstrate how to effectively utilise the data. 

It was suggested that the Scottish Government should engage with local authorities to review the draft results and outputs to ensure that they are able to support local sustainable rates-setting.

The Diffley Partnership outlined that they could provide a map and visual output if necessary.

2026 to 2027 Sustainable Rates Guidance

One of the key outputs from the cost collection exercise will be revised sustainable rates guidance for 2026 to 2027. The Chair invited members to take this opportunity to share any initial thoughts or suggestions regarding the potential shape and content of the guidance and to consider any areas that they would like to see incorporated moving forward.

Members noted that each local authority has a different starting point, reflecting the variation in rates across authorities. It was highlighted that this resulted in variations in the relative impact of each local authority from nationally agreed minimum percentage uplifts.

It was highlighted the additional funding provided by the Scottish Government in 2024 to 2025 and 2025 to 2026 is to cover the estimated costs of the increase in the real living wage (and accounting for around 75% of the sustainable rate). However, some members noted that there was an expectation that the additional funding extended beyond this and also covered non-staffing costs; and that providing increases for the non-staffing elements could be challenging given financial pressures on local authorities.  

It was noted that the results of the new cost collection exercise may show that the average percentage of total costs accounted for by staffing costs is now higher than the 75% estimate used in both the 2024 to 2025 and 2025 to 2026 sustainable rates guidance. 

Forward look to agenda for next meeting and any other business (AOB)

The Chair thanked members for attending and participating.

Action 

• secretariat will schedule the next working group meeting before the summer recess period to assess the response rate and will continue to provide ongoing engagement with members once the survey has gone live