Sustainable Rates Review Implementation Working Group Minutes: January 2025

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) (Chair)
Convention of Scottish Local Authorities (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 sustainable rates review implementation working group (SRRIWG) meeting in September 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 no outstanding actions. 

 

2025 to 2026 Sustainable Rate Setting Guidance

Members received the draft 2025 to 2026 sustainable rate setting guidance in advance of the meeting (paper SRRIWG 1.03). 

It was noted that the draft reflected the constructive feedback received from the SRRIWG meeting in September regarding the potential to use this guidance to progress the recommendations from the Sustainable Rates Review. 

The 2025 to 2026 Sustainable Rate Setting Guidance will replace all previous iterations and will set out the approach for how an additional £9.7m will be passed onto providers to support the payment of the real Living Wage to workers delivering funded Early Learning and Childcare (ELC) in private, and third sector services. The approach to passing this additional funding to providers is subject to agreement at the Convention of Scottish Local Authorities (COSLA) leaders on 31 January 2025. 

It was noted that Scottish Government and COSLA recognise that the changes to Employer National Insurance contributions, which will take effect from April 2025, are a pressing concern across the sector, and that this was reflected in the letter that was issued by the First Minister and COSLA president to the UK Chancellor in early January 2025. The Scottish Government has asked the UK Government to provide reimbursements for the impact of these increases on vital public services like ELC that are delivered in the private and third sectors. At the time of the meeting no funding had yet been confirmed by the UK Government.

The guidance also reflects the sustainable rates review recommendations and provides a framework for a more standardised approach to rate setting. It was noted that full implementation of some of these changes requires more robust and reliable data to improve the sustainable rate setting process. To support this a new national cost collection exercise will be undertaken in Spring 2025, with the outputs of this exercise information rate setting from 2026 to 2027. Local authorities are expected to make progress towards reflecting the changes outlined in this guidance during 2025 to 2026, ahead of fully embedding within the rate setting process from 2026 to 2027 onwards. 

To support this a further update to the Sustainable Rates setting guidance will be published in early 2026 to reflect the outputs of the cost collection exercise.

The guidance is expected to be published in February but this is subject to the completion of financial and governance processes within Scottish Government and COSLA. The Scottish Government will write to local authorities with allocations alongside publication of the guidance. The guidance will highlight that where sustainable rates for 2025 to 2026 are set after April 2025, any payments that reflect the increased real living wage should be backdated to 1 April 2025.

Points raised in the discussion that followed:

• Members were appreciative that the draft guidance recognises the different types of service (e.g. rural and island) and reflects previous input from the working group
• Members asked if a communication could be issued to the sector ahead of the guidance publication to provide more clarity to providers with regards to the expected timing of publication of the guidance (as representative organisations were receiving a number of requests in relation to this) 
• Members highlighted that providers would find it helpful to see what support packages are offered by other local authorities. It was highlighted that the 2024 to 2025 sustainable rates annual data collection report, which is also expected to be published in February, will include this information  

Action

• Members were invited to provide comments on the draft 2025 to 2026 sustainable rate setting guidance by 1pm on Monday 20 January 2025 
• Scottish Government and COSLA will seek to issue an update to the sector, ahead of the guidance publication to provide more clarity to providers regarding the timing of publication of the guidance

 

​​​​Provider Reference Groups

A series of provider reference groups took place over October and November 2024. These were delivered by Scottish Government, COSLA and the Improvement Service. The purpose of these sessions was to gather views on how the design of the upcoming cost collection exercise can ensure the evidence captured is representative of the sector. 

There were six sessions in total, including sessions specifically for private sector, third sector, outdoor sector, rural and island settings and childminders. 75 providers took part across the six sessions and a summary of the feedback they provided is in paper 3.02. 

The Diffley Partnership will use this feedback, as well as feedback acquired during their engagement with providers over the coming weeks, to refine their approach to the cost collection exercise.

Providers were invited to provide feedback through nine questions across five thematic areas. The interactive tool Menti was used to gather the majority of the feedback anonymously, however there were also opportunities for providers to share their views verbally or to use the chat function in microsoft teams.

 It was noted that the feedback on the session format had been largely positive. The Chair extended a special thanks to the representative bodies for their role in supporting this work.

Points raised in the discussion that followed:

• Members felt that it was encouraging to hear that providers felt that these sessions went well
• It was noted that 75 providers is a relatively small proportion of the total number of providers across Scotland and that consideration should be given as to where the views of more providers could be captured 
• Members asked if there are plans for further provider reference group sessions or further opportunities for the seldom heard voices to feed into these processes.
• It was noted that further provider engagement would be taken forward by the Diffley Partnership in developing the approach to the cost collection exercise

 

Cost Collection Exercise

The Diffley Partnership were invited to provide an overview of the proposed approach to the data collection for costs of delivering funded early learning and childcare (ELC) exercise. They delivered a presentation on the proposed sampling and engagement strategy, the tools and support that will be used for the data collection and how they plan to address anticipated challenges. 

Members were invited to provide views on the proposed approach, and the extent to which they would like to be involved. 

Points raised in the discussion that followed:

• Members found the introduction from Diffley Partnership helpful and noted their appreciation for the stakeholder feedback from the provider reference groups
• Members asked how providers will be supported to complete this exercise, noting challenges they encountered in previous exercises (for example, separating costs for funded v non funded provision).
• It was suggested that the Diffley Partnership could reach out to providers via webinars to set expectations and to cover any specific queries. 
• In discussion, Diffley Partnership colleagues advised that guidance and worked examples would be provided to support providers to support completion of the exercise.
• Providers will have the opportunity to discuss specific queries directly with the research team. Diffley Partnership colleagues would also be content to deliver and record an information webinar as suggested
• The importance of considering all variables from the outset, to inform potential analysis, was noted 
• The specific challenge encountered by childminders in separating household and business costs was also highlighted, and that worked examples could assist with this  
• Members asked if consideration will be given to whether a minimum response rate will be set for the data to be credible, Diffley Partnership colleagues advised that they would monitor response rates across a particular variables, to enable analysis across key metrics and different types of providers  
• Members asked if it would be possible for them to contact the research team directly over the course of the contract, and it was agreed that the scottish government would advise on how they could do this

Action

• Scottish Government to circulate presentation slides.
• Scottish Government to provide SRRIWG with advice on how they can contact Diffley Partnership directly.

 

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

The Chair thanked members for attending and participating.

The Scottish Government and COSLA will consider the schedule for upcoming meetings, based on project milestones, and this will be communicated to the group shortly.