Nursery rates for private operators to provide 1140 funded hours in East Lothian are to rise by up to 50% after a pay review.
East Lothian Council's cabinet agreed to raise its rates in a move which will cost the local authority an additional £811,000 a year.
The new rates, which will be backdated to the start of the current academic term, will see the current £5.31 hourly payments for all pre-school children go up to £6.39 for children aged three to five and £7.90 for two year olds .
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Councillors were told the new 'sustainable hourly rate' would be paid to partner nurseries and childminders who work with the council to provide parents with their 1140 hours of free nursery care.
The new rates include a daily lunch payment which had previously been claimed separately at £3 a day by providers.
Exceptional additional support needs which have three levels of care under the council's payment structure will also see an increase of between 40% to 80% depending on the levels.
Alison Cameron from the council's early learning and childcare support team said that the hourly rate was higher than Scottish Borders and Edinburgh when it came to two years olds.
Councillors were told the current Scottish Borders payments were £6.55 an hour for two year olds and £6.21 for three to five year olds but also included a daily £2.50 lunch payment.
City of Edinburgh Council pays partners £6.48 an hour for two year olds and £6.03 for three to five year olds with a daily £3.10 lunch payment per child. When they were averaged out over a period of time they were £6.79 an hour.
A report on the proposed new rates also revealed the hourly rates charged by some private nurseries in the county ranged from £5 an hour to £7.
It revealed a survey of nurseries found of those that took part that Camperdown Nursery, Prestonpans, the lowest at £5 and Fenton Barns Nursery on the outskirts of North Berwick charging £7 an hour.
Mrs Cameron said the new rate aimed to ensure that all care workers were able to receive a living wage and while the council could not force employers to meet the standard there was "an expectation that the real living wage is paid by our 1140 hours providers".
Councillors were told that the 1140 hours funding from Scottish Government to East Lothian Council has been reduced by £1.2m and without an increase next year's bill will rise by £811,000 which will need to be found.
Council leader Norman Hampshire said: "I am supporting the increase but it is another significant burden on the council.
"It could become a real difficulty for us if the funding is not made available."
Cabinet unanimously agreed the new rates.
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