Almost half (46 per cent) of private nurseries say they are unlikely to get involved in the scheme to provide 1,140 hours – equivalent to the primary school week – which has been pledged by ministers in the next two years.
Cash shortfalls and a lack of staff are at the heart of the concerns and there are now calls for the scheme to be “put on hold” until the problems are resolved.
The First Minister has hailed the scheme for three and four-year-olds, as well as some two-year-olds, as “transformative” with hopes it would allow a generation of mothers to return to the workplace.
The Scottish Government recently pledged an extra £150 million a year to fund the scheme after concerns raised by local councils, but nursery leaders fear this will not be enough. Private nurseries already face an annual shortfall of more than £1,000 a child under the current 600 “funded” hours and worry that may never see any extra cash going to local councils.
The concerns are set out in a damning report published by the National Daycare and Nursery Association (NDNA) today.
Chief executive Purnima Tanuku said: “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.”
Private nurseries are expected to be at the heart of the overhaul of childcare, alongside council-run facilities.
Fewer than a third (30 per cent) of private providers say they are likely to offer 1,140 hours of funded places, down from 51 per cent last year, the report finds.
Funding shortfalls have expanded dramatically, with more nursery businesses expecting to make a loss and many owners fearing they will be forced to close before the ambitious scheme begins in 2020.
Almost four-fifths (79 per cent) of nurseries say funding for three and four-year-olds does not cover their costs, with the shortfall increased to £1.98 per hour or £1,188 per year. This is the difference between the costs of providing the place and the cash they get to fund it.
The survey took views from more than 200 childcare providers across Scotland – a third of the sector.
The commitment to the “real living wage” – over above the legal minimum has also been branded “too much” for nurseries
Ministers have already admitted a further 8,000 nursery staff are needed across Scotland to deliver the policy. Ms Tanuku added: “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.”
Among the nurseries across Scotland going public with their concerns are Bonnington House Nursery in Edinburgh, Little Me Nursery in Glasgow, Les Enfants Nurseries in Inverness and Red Squirrel Nursery in Dundee.
A spokeswoman for the campaign group Fair Funding for our Kids said: “Parents struggle to access the 600 hours of free childcare they are already entitled to because so many councils will only offer a half-day nursery place – impossible for many working parents to use.
“We need a guarantee that the shift to 1,140 hours will end these half-day places, and if that’s not possible then the increase should be put on hold until logistical problems are sorted out.”
Scotland’s Auditor General has previously raised concerns over delivery of the flagship scheme over both staffing and funding levels.
Tory education spokeswoman Liz Smith said: “This is another example of the SNP making a grandstanding promise, only for delivery to fall flat on its face.
“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.”
Labour education spokesman Iain Gray said: “We are seeing huge problems with the implementation of this flagship childcare policy.
“The policy cannot be delivered without the independent nursery sector, and here they are saying it is not going to happen This is what happens when childcare policy is written to fit on an election leaflet, rather than to fit around the lives of Scottish families.
“There is not enough money, there are not enough staff, and there are not enough nurseries to deliver it.”