Highland Council early years childcasre service in 'significant debt' over unpaid fees

Over £300,000 worth of childcare fees were not collected by the council – putting the service in “significant” debt.

An audit report examining Highland Council’s early years childcare service found income from flexible childcare was not always collected on time or in full.

It stated: “According to the database, total debt stood at £358,756 as of March 2026, including a significant amount of historic debt.

“At least £102,823 of the above total was over five years old, relating to payees no longer using the service.”

Flexible childcare is when a child attends a council-owned nursery over the 1140 hours of free childcare per year funded by the Scottish Government.

Parents and carers are required to pay for the additional hours.

In some cases, very low payment plans were agreed, but childcare places were rarely withdrawn for non-payments, the auditor found.

And debt was not the only issue identified.

The report states that although there were programmed visits in place to assess the quality of education at the various childcare providers, it added: “There was no systematic inspection regime in place to verify that providers remained compliant with all key policies and procedures, for example fire evacuation.”

The auditor deemed the service gave them limited assurance over its financial handling, but they did find several strengths, including established commissioning arrangements and timely submission of statutory census returns.

They added: “Staff demonstrated a strong commitment to maintaining service delivery and had implemented compensating controls and manual processes where system limitations existed.”