Item 08 - Increase Sustainable Rate Paid to Funded Early Learning and Childcare Providers
West Dunbartonshire Council · 24 June 2026
Back to Educational Services Committee — 24 June 2026 and its agenda
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Education Officer Education Services Committee: Wednesday 24 June 2026 _______________________________________________________________ Subject: Increase Sustainable Rate paid to Funded Early Learning and Childcare Providers 1. Purpose 1.1 This report proposes an increase in the hourly rate paid by West Dunbartonshire Council to contracted private providers for funded Early Learning and Childcare (ELC). 2. Recommendations 2.1 It is recommended that Committee: (a) Refer to the guidance for setting sustainable rates contained in the ‘Funding Follows the Child and the National Standard for Early Learning and Childcare Providers – Guidance for setting sustainable rates for the delivery of funded early learning and childcare (ELC) in 2026-27’, published in March 2026, which recommends a minimal increase of 5.2%. (b) Agree an increase of 5.2% in the hourly rate paid to Early Learning and Childcare private providers, including childminders, for the provision of funded ELC, with 5.2% in line with the minimal increase outlined in the guidance. Age Current Rate 5.2% Increase 2-3 £6.74 £7.09 3-5 £6.59 £6.93 (c) Note the external factors influencing the sustainability of the hourly rates paid to contracted providers of funded ELC in West Dunbartonshire, including rising costs and to enable payment of the real Living Wage to those childcare workers delivering the funded entitlement. ITEM 8
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3. Background 3.1 Approximately one quarter of children eligible for a funded Early Learning and Childcare place, access their place in the private sector in West Dunbartonshire Council. The Council is dependent on these places to fulfil its statutory duty. Therefore, settings in this sector need to remain financially viable and the Scottish Government requires Councils to establish and pay a rate that ensures this sustainability. 3.2 If a sustainable rate is not paid, there is a risk of services in the private sector closing which would incur capital and revenue costs for the Council and, would reduce choice and local provision for parents. The closure of services who also provide childcare which is paid for by the parents would have a negative impact on the local economy, with parents not being able to access work or training. 3.3 As a result of continuing concerns regarding financial sustainability by funded providers, the Scottish Government issued the Sustainable Rates Guidance, published in April 2019. The report highlighted that the rate should support delivery of a high quality ELC experience and should allow for investment in the setting in terms of staff, resources and the physical environment. It should also enable the payment of the real Living Wage for those childcare workers delivering the funded entitlement. 3.4 The updated guidance issued in March 2026, advises that councils should, ‘apply a minimum 5.2% uplift to 2025-26 rates to reflect the estimated increase in the average staff cost element of the sustainable rate required to meet the £13.45 per hour (real Living Wage) pay commitment in 2026-27’. This uplift reflects the estimated increase in the average staff cost element of the sustainable rate required to meet the real Living Wage uplift from April 2026. This reflects staffing costs accounting for, on average, 77% of the sustainable rate. It also noted that, ‘if sustainable rates for 2026-27 are set after April 2026, any payments that reflect the increased real Living Wage should be backdated to 1 April 2026’. 3.5 The guidance also stated that the ‘overall rates set must also be affordable for local authorities in terms of the budgets available. Given the challenging financial position for local authorities, it is recognised that not all will be able to provide an uplift beyond the 5.2%.’ 3.6 The paper, ‘Costs of Delivering Funded Early Learning and Childcare (ELC) in Private, Third Sector and Childminding Settings’ provided information on a national data collection exercise which was commissioned by Scottish Government and carried out by the Diffley Partnership between May to August 2025. This stated, ‘the mean cost per hour of delivering funded ELC across all day care of children services was estimated at £6.42, with a median of £6.00. Costs varied by provider type, with third sector settings reporting the highest mean cost at £6.72, followed and private providers at £6.16. Meanwhile, an estimated mean cost of £6.39 was calculated for childminders. These figures reflect core operational costs but do not account for capital investment or enhancements to quality that providers might pursue if funding allowed.’
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4. Current Position 4.1 The hourly rate paid by West Dunbartonshire Council to our funded private ELC providers, including childminders, to deliver an hour of funded ELC to eligible 2 year olds is currently £6.74 per hour and for all children aged from 3 years old to pre-school age it is currently £6.59 per hour. Last session the rate for children aged 3 and above was increased by 5% from £6.28 to £6.59 and the rate for eligible 2 year olds was increased by 5% from £6.42 to £6.74. 4.2 Across the West Partnership, from 1st April 2025 – 31st March 2026, the rates are as undermentioned: Local Authority 2 year old hourly rate 1st April 2025 – 31st March 2026 3 - 5 year old hourly rate 1st April 2025 – 31st March 2026 East Dunbartonshire £7.92 £6.58 East Renfrewshire £7.46 £6.59 Glasgow £7.94 £6.70 Inverclyde £6.56 £6.56 North Lanarkshire £7.01 £6.78 Renfrewshire £8.88 £6.74 South Lanarkshire £7.29 £6.57 West Dunbartonshire £6.74 £6.59 4.3 The guidance for setting sustainable rates for session 2025-2026 recommended a minimum uplift of 3.75% and council made the decision to increase the rate by 5%, 1.25% above the minimum recommendation. This was at a cost of an additional £170,000 to the council. 4.3 The current hourly rate that West Dunbartonshire Council pay does not represent all of the other benefits of the partnership arrangement which we have with funded providers. These benefits include free access to all professional learning, involvement in working groups and annual mandatory training, leaders’ meetings, partner provider meetings, early stages teacher support, inclusion in the related educational psychology support meetings, guidance from the central Early Years team, including pre inspection support, and access to workforce development funding. 4.4 Improving outcomes for children and reducing the attainment gap is at the heart of ELC provision. Therefore, as well as meeting the requirements of the National Standard to pay staff the real Living Wage, settings in the private sector need to be able to recruit and retain staff, support staff training and invest in their services. Commitment to an increase would provide reassurance to providers, protect jobs and enable providers to invest in their services and to put effective business plans into place. The Scottish Government requires Councils to establish and pay a rate that ensures this sustainability.
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5. People Implications 5.1 A significant number of families in West Dunbartonshire Council access ELC at private providers. At the moment, this equates to approximately one quarter of children accessing ELC across West Dunbartonshire Council. Parents and carers rely on funded providers of their choice; to provide flexible childcare at funded provision to enable them to access work and training. If providers cease to be sustainable, there would be significant work and resource required to increase the number of local authority places to ensure that the Council meets its statutory duty. 6. Financial Implications 6.1 The hourly rate paid has increased over time to achieve the current rate of £6.74 for all eligible 2 year olds and £6.59 for all other eligible children. 6.2 The increase in the hourly rate paid to childcare providers can be increased by 5.2% met from existing budgets and the funding issued from Scottish Government. 6.3 The hourly increase does not include the £3.00 allocated per day, per child, for food and the £0.58 paid for each child, per session, as part of the Scottish Milk and Healthy Snack Scheme. 6.4 This hourly rate proposal captures an increase in the Scottish Living Wage. 7. Risk Analysis 7.1 The Key Risks: If the Council does not increase the hourly rate to a level that enables providers in the private and voluntary sectors to be sustainable, there is the risk that: • There will be insufficient places in West Dunbartonshire Council to enable parents to access their children’s funded ELC entitlement which will incur additional cost for the Council as it will need to expand existing services and/or open new services; • There will be a risk to the policy of Funding Follows the Child which is part of the National Standard and fulfilling the statutory duty; • There may be reputational damage to the Council if services close due to not being sustainable, leading to loss of local provision, choice and flexibility for families, loss of employment and community based services; • Providers in the private and voluntary sector may not be able to recruit and retain staff or meet the National Standard, if they are not able to pay the Real Living Wage; • Potential reduction in the quality of service provided if qualified and experienced staff cannot be recruited.
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8. Equalities Impact Assessment (EIA) 8.1 An Equalities Impact Assessment has not been undertaken for this report. The proposal to increase the hourly rates for funded ELC has no negative impact on people with protected characteristics but has the potential to impact positively on the ELC workforce, which is predominantly female. 9. Consultation 9.1 Regular consultation with funded providers. 9.2 Legal Services and the Section 95 Officer have been consulted in relation to the content of this report. 10. Strategic Assessment 10.1 This report reflects the Council’s aspiration that all West Dunbartonshire children have the best start in life and are ready to succeed. Families are supported in accessing education, learning and attainment opportunities and improved life chances for all children, young people and families. Gillian Hamilton Chief Education Officer 8 June 2026 ___________________________________________________________________ Person to Contact: Alison Bowers, Senior Education Officer, Education, Learning and Attainment Email: Alison.bowers@west-dunbarton.gov.uk Background Papers: Sustainable Rates Guidance Financial Sustainability Health Check Funding Follows the Child and the National Standard for ELC Providers: Interim Guidance Ipsos National Cost Collection Report Costs of Delivering Funded Early Learning and Childcare (ELC) in Private, Third Sector and Childminding Settings Wards Affected: All
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