Setting the Sustainable Rates - Review
North Lanarkshire Council · 8 June 2023
Back to Policy and Strategy Committee — 8 June 2023 and its agenda
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North Lanarkshire Council Report Policy and Strategy Committee Does this report require to be approved? ☒ Yes ☐ No Ref: GMcL Date 08/06/23 Setting the Sustainable Rates - Review From Gerard McLaughlin, Chief Officer (Education - North) E-mail mclaughling@northlan.gov.uk Telephone 01236 812269 Executive Summary Under section 47(1) of the Children and Young People (Scotland) Act 2014, education authorities must ensure that the statutory amount of funded early learning and childcare entitlement of 1140 hours is made available for each eligible child. Councils across Scotland work with both Council-run services and local ‘partner providers’ in the private and not-for-profit sectors, including childminders, to ensure that there is sufficient capacity to deliver 1140 hours to all eligible families in their areas. The Scottish Government and COSLA published national guidance regarding Funding Follows the Child and the National Standard for Funded Early Learning and Childcare Providers in May 2022. Annex A: Payment of sustainable rates for the delivery of funded early learning and childcare from August 2022 - Funding Follows the Child and the National Standard for Early Learning and Childcare Providers: interim guidance - update - gov.scot (www.gov.scot) Under Funding Follows the Child, local authorities are required to set an hourly rate that is paid to funded providers in the private and voluntary sectors, including childminders, to deliver the funded entitlement. This rate should be sustainable and reflect national policy priorities, including funding to enable payment of the Scottish Living Wage (SLW) to all childcare workers delivering the funded entitlement. Recommendations It is recommended that Committee: (1) Endorse the recommendation to increase the hourly rate that is paid to partner providers to deliver the funded entitlement of ELC. The Plan for North Lanarkshire Priority All priorities Ambition statement (7) Enhance collaborative working to maximise support and ensure all our children and young people are included, supported, and safe
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1. Background 1.1 In September 2022 the SLW was increased from £9.90 to £10.90 per hour and there was an expectation from Scottish Government that all partner providers are committed to paying the SLW from May 2023. 1.2 In response North Lanarkshire made the decision to voluntarily increase the hourly rate in November 2022, which was back dated to August 2022. This was out with the framework agreement (an hourly rate of £5.55 for the lifetime of the framework, August 2022-July 2023). Table 1 provides an overview of the hourly rates for funded entitlement in partner providers since the inception of 1140 hours. Table 1 3–5-year-olds (hourly rate) 2-3-year-olds (hourly rate) 2019-2020 £5.55 £5.80 2020-2021 £5.55 £5.80 2021-2022 £5.55 £5.80 2022-2023 £5.77 £6.03 1.3 The Council worked closely with the Scottish Government in seeking to determine a sustainable commissioning rate which worked for both funded providers and to deliver best value to the Council. The Scottish Government undertook a nationwide analysis through an independent cost collection exercise, conducted by Ipsos Mori. This data was used to determine the uplift that was applied to the sustainable rate for August 2022. 1.4 The data identified that the average unit cost to provide an hour of ELC provision within North Lanarkshire was £4.88. Table 2 provides a breakdown of the cost per hour of staff costs and non-staff costs. Table 2 North Lanarkshire Staff Costs per Hour 3.88 Non-Staff Costs 1.00 Totals 4.88 1.5 Table 3 provides an overview of the marketplace elements, which were required to be considered as part of the review. Table 3 Consideration Information Inflation Local authorities should consider how to account for the effects of inflation while reviewing and setting rates. Scottish Living Wage (SLW) Settings delivering the funded entitlement should be supported to implement the SLW. Reinvestment The sustainable rate should consider re-investment in the setting to ensure continuity of service.
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Seasonality Providers may experience some seasonal fluctuations in attendance, however the survey figures provided were based on attendance in Feb-Mar when attendance is higher than the average. Business Rate 100% business rate relief is in place until June 2023. 1.6 Working from this base average cost of £4.88 (£3.88 staff costs / £1.00 non staff costs) the following proposal was formulated in line with rationale and methodology utilised by Local Authorities across the West Partnership. 1.7 The agreed rate for 2022/23 below was based on a 10% increase to support the implementation of the SLW aligned to staff costs, an 8% inflation uplift and 1.5% reinvestment uplift aligned to both staff and non- staff costs. The reviewed hourly rate for session 2022/23 is £5.77 for 3-5-year-olds. 1.8 The hourly rate for 2-3-year-olds was increased by 4.5% from £5.80 to £6.03 (£5.77 plus 4.5% = £6.03). This calculation was based on the previous 4.5% applied to the 2020- 2022, 3-5-year-old rate to determine the 2–3-year-old rate (£5.55 plus 4.5% = £5.80). 2. Report 2.1 The service previously reported that an annual review of the hourly rate would take place as part of the revised ELC Framework agreement (August 2023 – July 2027), albeit this may not result in an increase. Any increase would take cognisance of the national context and the budget envelop. 2.2 A further review of the sustainable rate has taken place for August 2023 and consideration was given to the Consumer Prices Index (CPI). 2.3 The CPI rose by 10.1% in the 12 months to March 2023, down from 10.4% in February and from a recent peak of 11.1% in October 2022. The average monthly increase From March 2022 to March 2023 was 9.8%. 2.4 The agreed rate for 2022/23 was based on a 10% increase to support the implementation of the SLW aligned to staff costs, an 8% inflation uplift and 1.5% reinvestment uplift aligned to both staff and non- staff costs. 2.5 The recommendations in table 4 and 5 below applies an uplift of 1.8% (to staff costs and inflation), the difference between the rate of 8% applied in August 2022 and the average CIP from March 2022/23: 9.8% - 8% = 1.8%. No additional uplift for reinvestment has been applied. Table 4 – hourly rate of ELC for children 3-5-years-old % Staff £ Non-Staff £ NLC Total Cost per hour (2022/23) 4.68 1.09 4.88 Increase 1.8 4.76 1.11 5.87 Additional costs based on current numbers: £0.206m*
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Table 5 – hourly rate of ELC for children 2-3-years-old % Staff £ Non-Staff £ NLC Total Cost per hour (2022/23) 4.94 1.09 6.03 Increase 1.8 4.03 1.11 6.14 Additional costs based on current numbers: £0.064m 2.6 Based on the current admissions for academic session 2023/24 the cost to increase the rate is £0.265m. Committee are asked to note this does not include late applications. 2.7 The service has reviewed the numbers of late applications received over the last 2 years has used the average of 217 to estimate the additional potential cost of £0.025. 2.8 The total estimated cost is £0.290m. The service has reviewed ELC funding and the inflationary uplift will be covered from the ELC funding Model. 3. Measures of success 3.1 Children have access to funded entitlement of 1140 hours of ELC. 4. Supporting Documentation N/A Gerard McLaughlin Chief Officer (Education – North)
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5. Impacts ( http://connect/report-template-guidance ) 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality-and-fairer- scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts/procurement impacts been discussed and agreed with Financial Solutions/Asset & procurement As highlighted in section 2 the ELC service has reviewed funding steams and identified funds to support the proposal. The spend within the will be continually monitored. Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? 2023/2024 3-5s 1140 hrs @ £5.77 1140hrs @ £5.87 Increase Returners – 1257 £8.268m £8,411 New intake - 1045 £5.993 £6,097 Total - 2302 £14.261m £14,508m £0.247m 2023/2024 2-3s 1140 hrs @ £6.03 1140 hrs @ £6.14 Estimated - 145 £1m £0,018 £0.018m Total £0.265m 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People and Organisational Development? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☐ If Yes, have all relevant legal impacts have been discussed and agreed with Legal and Democratic Solutions? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐
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If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e-mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for technology, has an assessment been carried out (or scheduled) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☐ No ☒ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Service delivery will continue to be in line with and adhere to Scottish Government guidance. Contingency arrangements, should they be required, will continually be developed to best support the service. 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex-Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services.