Funding rates provided by the Scottish Government are designed to be sustainable, but many private, voluntary and independent (PVI) nurseries in Scotland say they are anything but.
Scottish families can access up to 1,140 hours of funded early learning and childcare (ELC) a year for three- and four-year-olds and eligible two-year-olds.
But according to National Day Nurseries Association (NDNA) Scotland, funding rates for three- and four-year-olds do not cover costs for 70 per cent of nurseries, while 74 per cent of nurseries are making a loss on eligible two-year-old places.
Partner providers
Funded places are delivered through council-run services, or ‘partner providers’, in the PVI sector. Any setting can become a partner provider if they meet various criteria, including the National Standard.
However, the set-up is not without issues. Funding is supposed to be administered on a ‘provider-neutral’ basis, but the 32 local authorities in charge of overseeing it are providers in their own rights, leading to conflicts of interest.
Across Scotland, councils source an average of 28.3 per cent of funded hours from partner providers, but NDNA Scotland found they only allocated 22.8 per cent of their ELC spending to this delivery.
Top-up trouble
Unlike in England, Scottish providers are not allowed to ‘top up’ their funding by charging for extras.
‘That really restricts people and makes it impossible to make up losses,’ says Susan McGhee, chief executive of Flexible Childcare Services Scotland.
Childminders can offer ‘blended’ placements, where they share the funded hours with another type of setting and make up income through private arrangements. But this can leave them with a small fraction of the hours, which is not enough to keep their businesses sustainable.
Similarly, simply opting out is not realistic. ‘Not being a partner provider isn’t an attractive option because there are too many that do offer the places,’ explains area manager and director of Kirktonholme Childcare, Karen Flynn. ‘You’d have to take under-threes only, which is silly.’
Workforce woes
Because of the challenges with funding, childminders and private nurseries are experiencing acute issues with recruitment and retention.
Graeme McAlister, chief executive of Scottish Childminding Association (SCMA), explains, ‘There’s a baked-in inequality in the funding formula. We have staff moving into local authority settings where they pay better.’
Flynn agrees. ‘Council nurseries are paying between 30 and 50 per cent more in salaries. It’s caused a huge divide.
‘It means there is very little quality workforce left.’
After the Scottish Government announced that private nurseries would need to pay practitioners at least £12 per hour from April, and this would be reflected in funding received, there were hopes that providers could become more competitive.
However, the Real Living Wage rose to £12 as well, so it became less of an incentive.
Meanwhile, although most local authorities reported giving providers at least a 7.6 per cent uplift, the Government’s calculation of the minimum requirement to pay staff the £12 rate, two councils – Edinburgh and Moray – paid just 4.8 per cent and 4.2 per cent more, respectively. Both have said they will look at increases later this year.
Creative solutions
At Kirktonholme, they are doing their best to retain staff.
‘We’re trying,’ says Flynn. ‘We do so much for our team. We have a staff member of the month award, an app with discounts, mental health support, help with managing money, and beautiful staff rooms. They are so valued. But there’s nothing we can do to give them more money, our hands are tied.’
SCMA projected that childminder numbers were set to decline by 64 per cent by 2026 without urgent intervention. As a result, the Scottish Government committed to increasing the workforce by 1,000 over three years, launching a national programme with SCMA aiming to increase the workforce through recruitment while also piloting retention measures such as funded time ‘off the floor’ for childminders. ‘Up to 82 per cent of our workforce are sole providers,’ McAlister explains. ‘That means paperwork, training, and communicating with parents all have to be done on evenings or weekends, unpaid, in their own time. We’re really trying to come up with some creative solutions.’
McGhee echoes feelings that providers are doing what they can.
‘It’s an innovative sector, and everybody’s doing everything possible to make things work in a cost-of-living crisis, helping families with wraparound support, food distribution and swapping winter coats. But there’s not a lot more in providers’ power.’
Putting on the pressure
With a high proportion of families in poverty, and around half with additional support needs, Flexible Childcare Services Scotland requires additional staff to attend meetings with social workers, therapists and external support agencies.
‘Sustainability is a huge issue for us,’ says McGhee. ‘But on the flip side, more than 80 per cent of our families are better off because they can go back to work and only pay for the hours of childcare they need.’
As a result, Flexible Childcare Services Scotland is not only lobbying Government for a universal funding rate increase, but also a targeted increase for families that need additional support.
Meanwhile, Flynn sits on a campaign group called 2020 Together, which aims to put the pressure on to raise funding rates. The group is made up of more than 180 PVI providers. One victory for providers is that the Scottish Government has backed down on referring to the funded hours as ‘free’, which providers think may have helped parents’ understanding of the situation.
Expansion
The Scottish Government has committed to piloting funded ELC in six early adopter areas to increase access for children from nine months old, but there is no timescale for wider roll-out.
McGhee would cautiously welcome expansion. ‘There is a need for more, definitely, but the concern is scaling on top of a model that’s flawed already. So get the model ready first, then scale.’
She says the Convention of Scottish Local Authorities (COSLA) needs to help the sector make ends meet.
‘The Government understands the issue, designed the policy, put the funding in, and is broadly supportive of the PVI sector,’ she explains. ‘It’s at the next level down that intervention needs to happen.’
A COSLA spokesperson says they continue to engage with PVI providers, and pay levels for local authority workers are negotiated nationally with unions. ‘Local government remains committed to working together with our partners to further strengthen ELC provision to support the best possible experiences and outcomes for children and their families.’
CASE STUDY: Fiona Duncan Kerr, childminder
Fiona Duncan Kerr is a childminder in the Scottish Borders offering funded hours to four of the six children on roll.
The funding rate is actually higher than her hourly rate, and she charges private clients an extra fee for lunch. All her funded children attend other settings.
‘My model is not to offer blended care within the same day,’ she says. ‘It makes no business sense for me to have a child before and after nursery, as when they’re at nursery they are still included in my ratio. I can’t charge parents for those hours, nor can I fill them with another child. However, I’m happy to offer a blended week with another setting.
‘We don’t spend money on craft supplies, I create menus with children to prevent food and financial waste, and our activities are free and nature-based.’
Becoming a partner provider involves a lot of paperwork, explains Fiona, who says they are often paid incorrectly. The childminder says the council does not pay in advance and can leave providers waiting up to seven weeks for payment, with only an estimated pay date given.
However, overall she is proud that her business is thriving at a difficult time for childminding, and says funding expansion would be welcome.
‘I’d be delighted, but expansion needs to be handled carefully or we will end up in a mess like England, without enough suitable providers for children needing places,’ she says.
