Exclusive:'Collapsing' private nursery sector considers legal action over running of SNP's flagship free childcare policy

The move follows a series of recent nursery closures across Scotland

Struggling nurseries are considering taking national legal action over the running of the Scottish Government’s flagship free childcare policy.

The Scottish Private Nursery Association (SPNA) revealed to The Scotsman it was in talks with lawyers over the “legalities” of the £1billion-a-year scheme.

First Minister Humza Yousaf has pledged to expand the initiative to cover one and two-year-olds, as well as three and four-year-olds.

But industry leaders say they are “on their knees” and the government cannot consider any extension until a rescue plan is devised.

Their key concern is the way funding for the scheme is distributed via councils, many of which have been accused of failing to pay fair rates to private nurseries and childminders.

The sector issued a fresh plea for help following a series of nursery closures across Scotland in recent weeks.

Hundreds of parents were left scrambling for childcare after the Rising Stars chain shut its services across Glasgow, impacting Govan, Pollok, the Gorbals, Bridgeton and Easterhouse.

Further nursery closure plans have caused alarm in Aberdeen, Stornoway, Broughty Ferry, Ardersier, Methil, Kirkintilloch, Coatbridge and Cumbernauld.

Other nurseries, including in Edinburgh, have had to close rooms, while there was shock in East Lothian when council funding was withdrawn from four facilities.

In Duns, parents have recently had to step in keep a local nursery open after its closure was announced.

Many of the recent closures have been linked to rising costs, funding issues, staff shortages, and, in some cases, negative inspection reports.

Similar concerns have been raised in England, where the number of nurseries fell by 400 last year.

Sharon Fairley, chief executive of the SPNA and owner of four nurseries and seven school clubs in West Lothian and Edinburgh, told The Scotsman that over the next two weeks the SPNA nationally would be seeking legal guidance on “the next steps of questioning the legalities the policy”.

The move follows a recent legal challenge in West Lothian involving several private nurseries.

Describing the pressures faced by private nurseries, she said: "We’re on our knees. We don’t necessarily want to be in this sector any more, and that’s owners and managers, but because we’ve got such a passion for children, we keep going.

"There are two main issues – it’s councils and the care inspectors. They are causing the sector to collapse at the moment.

"We are collapsing. Audit Scotland says we’re ‘fragile’. No, we’re critical.

“If nurseries aren’t closing totally they are closing rooms down. We’re already seeing families having to stop work, or changing their working patterns.

"We can’t afford to keep going without the funding we should be getting from the government for our three to five-year-olds.

“Many councils are retaining that funding that they have received from government and they are not passing that on to the provider."

In August 2021, the number of hours of funded childcare that children were eligible for almost doubled, from 600 hours a year to 1,140 hours a year, or the equivalent of about 30 hours per week in school term-time.

Almost a third of the children benefitting from the scheme receive most of their hours from a funded provider, such as private nurseries, or with a childminder.

A report by Audit Scotland said last month that councils and the government had done well to implement the policy.

However, it also raised concerns about budget pressures, risks around workforce and the “sustainability” of private nurseries and childminders.

As well as rising costs, a key issue is that private nurseries now have fewer opportunities to increase their income through charges to parents, because councils fund a greater proportion of the hours of care they deliver.

It is also claimed that some councils are paying more to their own nurseries than to those private nurseries and childminders who also provide funded childcare.

Meanwhile, better pay and conditions in council-run nurseries have contributed to staff recruitment and retention problems in the private sector.

A key demand of private providers is for the government to stop distributing the funding through councils, who they say are their “bankers and direct competitors”.

Audit Scotland highlighted that the government does not even know how much money is being spent by councils specifically on the expansion of the free childcare policy.

In his SNP leadership campaign, Mr Yousaf promised to extend funded childcare so it covers one and two-year-olds.

But Mrs Fairley said: "We’re saying to government, ‘please do not introduce and implement any further policies until we’ve got this one right’.”

Councillor Tony Buchanan, children and young people spokesperson for local authority umbrella body Cosla, said councils continued to work closely with Scottish Government and early learning and childcare (ELC) providers in the private, voluntary and childminding sectors.

He added: “Councils set rates for partner ELC providers transparently, in line with the guidance agreed by the Scottish Government and Cosla, and within the funding envelope available to them.

"We acknowledge the challenges facing the sector and will continue to work closely with partner providers to address challenges and further strengthen ELC provision, including the ongoing Cosla/Scottish Government review of sustainable rates for ELC, to support the best possible experiences and outcomes for children and their families."

A Scottish Government spokesperson said: “High quality ELC that is flexible, accessible and affordable is critical to giving children the best possible start to their lives, while supporting parents’ ability to work or find employment.

“Private, third sector and childminding providers are a valued part of the delivery of the 1,140 hours ELC offer. Important progress has been made on increasing the payment of sustainable rates and improving conditions for staff working in this part of the sector. However, we know more needs to be done.

“The Scottish Government and Cosla are undertaking a joint review of the sustainable rates paid to providers to deliver funded ELC. Ministers will consider its findings carefully when it reports this summer.”