Edinburgh Council has been accused of paying its own nurseries considerably more for funded childcare places than the city's private early learning centres get — and of a "complete lack of transparency" over how the new hourly rate has been set.
Three and four year olds, and some two year-olds, are eligible for 1,140 hours of funded early learning and childcare (ELC) every year, which is provided through a mix of the local authority's own nurseries and private providers paid by the council.
Edinburgh City Council's education committee met on Tuesday (September 20) to agree a new hourly rate of £6.03 per child per hour for private nurseries, up from £5.42.
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However an organisation representing the majority of non-local authority-run centres in Edinburgh argued the new rate should be at least £6.47 and described the council's evidence of how the revised figure was worked out as "error-ridden".
Addressing councillors, Sandy Towers, chair of National Day Nursery Association Edinburgh (NDNA), said the current funding structure "doesn't represent fairness for each child or equality".
A freedom of information request (FOI) submitted by the organisation found that while the private sector provided 42 per cent of the funded places in Edinburgh in 2021/22, just 30 per cent of the budget was passed on through the hourly rate.
Mr Towers said: "Local authority nurseries are obviously receiving a much higher hourly rate.
"The consequence of this is that it enables Edinburgh Council to pay staff around 30 per cent more than the private sector can afford - and this is creating massive pressure on private nurseries in both recruiting and retaining staff.
"It appears to us that in terms of staffing, the City of Edinburgh Council is using public funds to create an anti-competition situation in their favour. We question if this is an appropriate use of public funds and whether it is in line with Government and local authority standards and policies."
He added a report to councillors on the matter "doesn't provide information showing how much of the budget is allocated to the private sector and how much to local authority nurseries".
"This highlights a complete lack of transparency and clarity in the report. We believe this information should be provided in the report to enable you to come to an informed judgement."
The report stated the hourly rate review takes into account a price survey with private nurseries providing 1,140 hours care, inflation and the real living wage and the findings of Scotland-wide research into costs for nurseries.
Mr Towers said the results of the price survey were reviewed with NDNA members - which is 75 per cent of the city's private sector settings - and were "found to be error-ridden".
He added correcting the figures in the survey "would produce a rate of £5.88 per hour."
"Adding inflation to that rate would produce an hourly rate of £6.47. Had the analysis been shared with NDNA prior to issuing this report these errors could have been avoided. The lack of transparency and engagement in our opinion is regrettable.
"We asked for the information, we weren't given it so we had to go round the FOI route - again, regrettable."
Former NDNA Edinburgh chair Anthony Duriez, who runs a nursery in the city, said: "I think there's already seven nurseries in Edinburgh that have closed down this year. If it carries on at the levels that it is where we're getting a rate which is fixed, which is not sustainable for the current year, which is then fixed for three years, it's inevitable that more centres will disappear."
Although the committee voted to proceed with the increase recommended in the report - and not the £6.47 backed by nurseries - they called for an annual review of the rate rather than every three years as suggested by officers.
In addition, councillors requested "full detailed reports" to show how the Gross Early Learning Total Budget is allocated to the Private, Voluntary, Independent Sectors and the Local Authorities and how these allocations are calculated.
Conservative councillor Tim Jones said: "I think there should be a yearly review of this budget because we are in very challenging times with the cost of living crisis."
Cllr Jones also voiced concerns about a lack of transparency, saying he experienced difficulties getting basic information from council officers.
He said: "[NDNA] asked for basic information regarding the budget and how this was allocated to the internal provision as opposed to the private and voluntary sector.
"I received the information from the principal officer - and I really regret having to use this word but I have to because there is no other word to describe it - I had to threaten the officer to get this information by saying if I do not have a response from you then I will put this question to full council.
"Low and behold, by return of email I got the information I requested."
But the councillor said he was told not to share the information "under any circumstances".
"I am still bound not to make that information public and that is why my colleague and I are asking for a report to show exactly what is happening," he added.
"I am concerned, as I have said, that there is a lack of transparency for early years funding."
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