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Review of ELC Sustainable Rates for Funded Providers

North Ayrshire Council · 3 June 2025
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NORTH AYRSHIRE COUNCIL 
3 June 2025 
Cabinet 
Title:    Review of ELC Sustainable Rates for Funded Providers 
Purpose:  To seek approval from Cabinet to increase the sustainable rate
of payment to funded providers of early learning and childcare
(ELC) in North Ayrshire who are contracted by the Council to
deliver funded ELC to eligible 2–5-year-olds.
Recommendation:  It is recommended Cabinet:
a) Agrees an increase of 4% in the current hourly rate paid by
the Council to funded providers from 1 April 2025.
b) Agrees to an increase to all funded providers (including
childminders) in the amount paid per meal to £3.09, and for
this to be backdated to 1 April 2025.
c) Agrees to receive a further report at the time of the next
annual review of the sustainable rate for funded providers.   
1. Executive Summary 
1.1 Cabinet approved in April 2024 an increase in the hourly rate paid to funded providers
in the financial year 2024-25. This increased the rate from £5.76 in 2023-24 for all
eligible 2-5 year olds to £6.51 for eligible 3–5-year-olds and £6.81 for eligible 2-year-
olds, and included a commitment to enable funded providers to pay at least the Real
Living Wage of £12 per hour in 2024-25. 
1.2 The Real Living Wage for 2025 has been set at £12.60. National Guidance requires
local authorities to uplift sustainable rates by a minimum of 3.75%. It is proposed that
North Ayrshire Council applies a slightly greater uplift of 4% to the sustainable rate, in
recognition of the above and the variations in cost circumstances across our partner
funded providers. This will lead to rates of £6.77 per hour for 3-5-year-olds and £7.08
for eligible 2-year-olds. 
1.3 North Ayrshire Council will receive an additional £256k from Scottish Government to
fund this uplift. It is proposed that this is fully allocated to the partner providers budget
to ensure the revised uplift is funded for children registered to access their ELC
entitlement via a funded provider. 
1.4 In addition to the hourly rate, it is proposed that the payments for meal costs are also
increased. Taking account of food inflation and to consolidate payments for meals into
a single figure across all providers in North Ayrshire, it is proposed that payments per
meal should increase by 3% from £3.00 to £3.09 and that this rate should apply to all
funded providers, including childminders from 1 April 2025 onwards.

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1.5 It is proposed that all rate increases be backdated to 1 April 2025. 
2. Background 
2.1   Since August 2021, all 3 and 4-year-old children and eligible 2-year-old children have
been entitled to 1140 hours of funded early learning and childcare per annum. To deliver
this across Scotland, Councils work with both Council-run services and local partner
providers in the private and not-for-profit sectors, including childminders, to ensure there
is sufficient capacity to deliver 1140 hours to all eligible families in their local areas. In
addition to the 44 Council establishments, North Ayrshire Council currently contracts
with 15 funded provider nurseries and 74 childminders to deliver ELC entitlement to
families across the authority. Funded providers enter a contract with North Ayrshire
Council which requires them to meet the National Standard for Early Learning and
Childcare Providers and in return NAC pay an hourly (sustainable) rate for up to a
maximum of 1140 hours per annum for each child in their care. 
2.2 In February 2025, Scottish Government published updated Guidance for setting
sustainable rates for the delivery of funded early learning and childcare (ELC) in 2025-
26 which outlines key principles for setting sustainable rates. In addition to the key
principles, the document sets out the characteristics of a sustainable rate, which
include: 
• The rate will support delivery of a high quality ELC experience for all children.
• It will be a rate that reflects the cost of delivery, including the delivery of national
policy objectives.
• The rate will allow for investment in the setting – staff, resources and physical
environment; and
• It will enable payment of the real Living Wage for those childcare workers
delivering the funded entitlement. 
2.3 The guidance also highlights that, from a local authority perspective, the following points
should also be considered: 
• The rate should not have a detrimental effect on the local authority’s ability to
continue to pay for the service in the long-term.
• The wider package of ‘in-kind benefits,’ which are separate to the sustainable rate,
available to the funded provider as part of their contract with the local authority; and 
• The rate does not need to be cross subsidised by parents and carers through
charges for non-funded hours. 
2.4 Cabinet approved an increase in the sustainable rate in April 2024. An increase was
agreed for the financial year 2024-25 from £5.76 per hour to £6.51 per hour for all
eligible 3–5-year-olds. Similarly, the rate for eligible 2-year-olds was increased from
£5.76 per hour to £6.81 per hour. The increased rates in North Ayrshire represented an
overall uplift in 2024-25 of 13% for 3-5-year-olds and 18% for eligible 2-year-olds
compared to the 2023-24 rate. On a national level, the average increase was 8.4% for
3-5 years-olds and 8.5% for eligible 2-year-olds. 
2.5 National guidance for the setting of sustainable rates in 2025-26 contains a commitment
that will enable funded providers to pay at least the new Real Living Wage rate of £12.60
per hour from April 2025. Local authorities are asked to apply a minimum uplift of 3.75%
to 2024-25 sustainable rates to enable this to be achieved. North Ayrshire Council will

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receive additional funding of £256k in 2025-26 from Scottish Government to support
this. 
2.6 In line with national guidance, North Ayrshire Council has applied an assumption that
staff costs account for, on average, 75% of total costs. The change in the Real Living
Wage in 2025 from £12.00 to £12.60 represents a 5% increase. Uprating the total staff
cost element (75%) of the sustainable rate by 5% would result in an increase in the
overall rate of 3.75%. 
2.6 Following review, it is proposed that an uplift of 4% be applied to the sustainable rate in
North Ayrshire for financial year 2025-26, going beyond the minimum required increase.
This recognises individual variations in cost circumstances across our local partners
and continues our commitment to ensuring that funded providers are able to pay a
minimum of the Real Living Wage to their employees. Based on our current projections,
the funding received from Scottish Government will be sufficient to cover this increase.
The proposed rates for 2025-26 are set out in the table below: 
2024-25
(until March 2025)
2025-26
(from April 2025)
Uplift rate (%)
3-5-year-olds £6.51 £6.77 4%
Eligible 2-year-olds £6.81 £7.08 4% 
2.7 In addition to the hourly rate paid to providers, funded providers receive an additional
payment per meal (or the provision of a meal through the North Ayrshire Council
School Meals Service). In 2024-25, funded providers received £3.00 per meal and
childminders received £2.50 per meal. In addition to this, all registered childcare
providers have access to funding through the Scottish Milk and Healthy Snack
Scheme to provide milk and a portion of fruit or vegetables for every child each day at
the current national rate of 58.2p per day. 
2.8 Taking account of food inflation and to consolidate payments for meals into a single
figure across all providers in North Ayrshire, it is proposed that payments per meal
should increase by 3% from £3.00 to £3.09 and that this rate should apply to all
funded providers, including childminders from 1 April 2025 onwards. The existing
option to have meals provided by North Ayrshire Council Facilities Management Team
will continue to apply as at present to funded providers (excluding childminders). The
proposed rates are set out in the table below: 
Payments per meal 2024-25
(until March 2025)
2025-26
(from April 2025)
Uplift rate (%)
Funded providers
(nursery settings)
£3.00 £3.09 3%
Childminders £2.50 £3.09 24% 
2.9  In addition to the sustainable rate, North Ayrshire Council provides a range of non-
financial benefits and supports to funded providers, including professional
learning/training, targeted support, quality improvement support visits, advice from our
Early Years team, pre- and post-inspection support and workforce support.

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2.10 North Ayrshire Council is in the process of reviewing, refreshing and confirming all
contracts for funded providers. These reviews have included consideration of funding
requirements. Delivery on the commitment for funded providers to pay at least the Real
Living Wage is included as part of North Ayrshire Council’s ongoing engagement and
contract monitoring processes with funded providers.   
2.11 It is proposed that the proposed increase in rates be backdated to 1 April 2025. 
3. Proposals 
3.1   It is recommended Cabinet:
a) Agrees an increase of 4% in the current hourly rate paid by the Council to funded
providers from 1 April 2025.
b) Agrees to an increase to all funded providers (including childminders) in the amount
paid per meal to £3.09, and for this to be backdated to 1 April 2025.
c) Agrees to receive a further report at the time of the next annual review of the
sustainable rate for funded providers. 
4. Implications/Socio-economic Duty 
Financial 
4.1 North Ayrshire Council will receive £256k as part of the £9.7m allocated by Scottish
Government to add a minimum of 3.75% uplift to 2024-25 sustainable rates. It is
proposed this is fully allocated to the partner providers budget to ensure the revised
uplift is funded for children registered to access their ELC entitlement via a funded
provider. 
Human Resources 
4.2 None. 
Legal 
4.3 None. 
Equality/Socio-economic 
4.4 In supporting a sustainable ELC provision within the private, not for profit and
childminding sectors, we aim to reduce any inequalities of provision and quality of ELC
services. We aim to ensure all children experience the best start in life, and families are
supported into work, thus reducing poverty. 
Climate Change and Carbon 
4.5 Ensuring sustainable access to ELC provision within the private, voluntary and
independent sector ensures that parents / carers are able to access a range of ELC
services within their local community. Consequently, this encourages the use of active
travel to access provision and will encourage reduction in greenhouse gas emissions in
North Ayrshire.

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Key Priorities 
4.6 Proposals outlined in this report support the Council Plan 2023-28 strategic aim to
“transition to a wellbeing economy, delivering prosperity, wellbeing and resilience for
local people” and more specifically “improving educational attainment and achievement
and closing the attainment gap” activities. 
Community Wealth Building 
4.7   The proposals support the following pillars of community wealth building: 
• Advancing community enterprises
• Supporting local business activities and increasing the variety of ownership models. 
5. Consultation 
5.1 North Ayrshire Council’s ELC leadership team meet regularly with funded providers,
including private and partner nurseries as well as childminders, and have considered
views expressed in relation to the need for enhanced rates in light of the current financial
challenges faced by funded providers associated with the cost of living. 
Andrew McClelland
Chief Education Officer, Head of Service (Education) 
For further information please contact Andrew McClelland, Head of Service (Education),
on (01294) 324413. 
Background Papers
None