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11 June 2018, 07:12
A flagship Scottish Government policy to almost double paid-for nursery places for three and four-year-olds is "at risk", a childcare association has warned.
The National Day Nurseries Association (NDNA) Scotland's annual survey found confidence among private nursery providers has hit an "all-time low", with the number likely to offer the expanded hours having fallen from 51% last year to just 30%.
Ministers have pledged to increase paid-for nursery places from the current 600 hours to 1,140 for three and four-year-olds, and eligible two-year-olds, by August 2020, equivalent to about 30 hours a week in term time.
A deal struck with council umbrella body Cosla in April means £990 million will be spent on day-to-day funding for the scheme by 2021 - £150 million more than the government's previous estimate.
But the NDNA said more funding is needed now, warning in its report that the requirement to pay staff the real living wage will "cripple" nurseries, without extra cash.
More than three quarters of those surveyed (78%) said funding for three and four-year-olds does not cover their costs, with the average shortfall at £1.98 per hour, equivalent to £1,188 a year per child.
Respondents expecting to make a loss rose from 12% last year to 16%, and some fear closure.
Just under half (46%) said they would be unlikely or very unlikely to provide 30 hours' cover compared with 24% last year, with only 7% of respondents able to meet the full 1,140 hours on current funding rates.
The NDNA has made a series of recommendations, including increasing funding rates for the current 600 hours and that funding for the doubled provision rises in line with projected costs.
The report states "more support" is needed, adding: "If we do not make plans and take decisions now, the 1,140 hours scheme is at risk."
NDNA chief executive Purnima Tanuku added: "NDNA has uncovered the true predicament that nurseries in Scotland find themselves in and it has reached a crisis point.
"Private nurseries just don't feel confident that sufficient funding will be passed on to providers by local authorities to make it worthwhile for them to deliver the full 1,140 hours' provision.
"This would drastically reduce childcare choices for parents.
"These figures make grim reading, with the average nursery having to absorb £1,188 for each child during the course of a year. Many are small businesses which just can't continue with this level of debt.
"As the Scottish Government via local authorities is their biggest customer, it needs to guarantee it can pay a fair rate which would enable all providers to continue as sustainable businesses.
"We need action now, with an urgent injection of cash to improve current funding rates, otherwise many nurseries will not even be open by 2020."
A total of 226 nurseries took part in the survey in March and April, 30% of Scotland's private nurseries.
Labour education spokesman Iain Gray said: "To see 70% of independent childcare providers saying they will not participate in the childcare expansion is deeply troubling.
"Scratch beneath the surface of the SNP Government's spin and we are seeing huge problems with the implementation of this flagship childcare policy."
He called for urgent action, adding: "The policy cannot be delivered without the independent nursery sector, and here they are saying it is not going to happen."
Liz Smith, education spokeswoman for the Scottish Conservatives, said: "Nicola Sturgeon deliberately got the hopes up of working parents right across Scotland.
"But like so much involving the SNP government, words have not turned into action. This is yet another major failing on this First Minister's watch."
A Scottish Government spokesman said: "Since this survey was carried out, the Scottish Government has agreed a landmark near-£1 billion funding package with Cosla which provides for local authorities to offer fair and sustainable funding rates to private and third sector nurseries, which will significantly increase rates across Scotland and enable all childcare workers delivering the funded entitlement to be paid the Scottish living wage."
He said the Government is working hard with Cosla and councils to promote positive and effective partnerships with all childcare providers.