According to the study, over the first three years of the programme the government handed out £329m in extra funding to local authorities to cover additional revenue costs of offering the promised levels of childcare. But the latest figures from the councils suggested that they were likely to end up spending just £189m.
It comes ahead of an expected review of funding and implementation for the government’s undertaking, in force since 2014, to offer 600 hours a year of free childcare for all three and four-year-olds, and vulnerable two-year-olds. Ministers aim to expand provision to 1,140 hours by 2021.
Childcare minister Mark McDonald said he would now “explore” the funding models and levels needed to bring about the increased provision, in the light of the report.
But the Convention of Scottish Local Authorities, which represents most of Scotland’s 32 councils, dismissed the study as “very misleading” and “a crude assessment,” and said it should not detract from the successful delivery of the 600 hours commitment.
Some campaigners have complained that childcare is often offered in half-day blocks, which can be impractical for parents in full-time jobs.
The report, Financial Review of Early Learning and Childcare in Scotland: the Current Landscape, attributes the underspend in large measure to unit costs at private providers falling well below those in council-run facilities, where wages are significantly higher than in the private or third sectors.
Childcare for three and four-year olds costs an average of £5.45 an hour in local authority facilities, and £4.48 an hour at private sector providers. For younger children, the equivalent costs are £7.74 and £5.72 per hour respectively.
“If partner providers were to pay public sector wages, they would have to charge at least at the cost level of public provision,” the report stated. “By any standard, pay in private and not-for-profit partner providers is low, even at senior and management grades.”
