Nearly half of councils in Scotland (47%) have yet to make a decision on the hourly rates they will pay to early learning and childcare (ELC) providers from next week, according to information provided to National Day Nurseries Association (NDNA)

Responding to an FOI request, 15 councils said they had not made a decision about the rates that providers would receive from August, despite the academic year restarting next week.

Despite the significant increases in the cost of living, inflation and a new Real Living Wage rate, only one in five councils have plans in place to increase funding rates. Where increases are planned, only two areas have plans to keep pace with the current rate of inflation of 9.4% – Angus (9.6%) and Stirling (12.9%).

Four councils confirmed that the hourly rates will be the same this August as they were last year, meaning nurseries face real-term cuts for funded places.

NDNA Scotland put out a FOI request to all Scottish local authorities asking what their sustainable rates will be for 2 year olds and 3-5 year olds for Partner Provider nurseries, from August 2022. Responses were gathered from 27 of the 32 local authorities across Scotland.

Of the funding rates for Local Authorities:

• Only seven councils (22%) have given a rate that is higher than figures published for last year (Highland responded but NDNA have no previous data and Orkney responded but have no partner providers)
• Four councils (12.5%) responded with rates from August that were the same as last year
• The increases in funding rates range from 4.3% in Aberdeenshire to 17% in Stirling. The average increase for 2 year olds rates is 8.68% and 7.8% for 3-5s.

Purnima Tanuku OBE, chief executive of NDNA Scotland, said: “Every year we work to help providers understand what the sustainable rate will be in their area but we have never seen a picture with this much uncertainty. Early learning and childcare settings are facing a really challenging time supporting children with their post-pandemic recovery, workforce challenges, and the cost of delivery rising month on month.

“The responses from councils show that the majority of nurseries and other providers are being expected to deliver the government’s funded childcare offer without knowing how much they will be getting to do this.

“With new children joining from next week but many having to wait until next month to know how each child will be funded, makes it impossible to plan ahead.

“Local government officials cannot ignore that costs are spiralling for providers, so we need to see new rates that accurately reflect the financial strains settings are facing. In areas where rates have yet to be set we want to see councils reflect this.

“Some councils have announced rates that are identical to last year, despite these increases in operating costs. If the sector is to continue delivering the 1140 hours policy, these councils need to urgently review their hourly rate as this is a real-terms cut in funding for children’s places.

“With rising costs these rates are nowhere near sustainable and the sector cannot be expected to deliver places at a loss.”