Financial sustainability
Support for childcare providers
A range of business support is available through Business Gateway. Business Gateway have local offices all over Scotland and you can contact your local office for more information.
Support for third sector organisations
Just Enterprise is a Scottish Government-funded programme for the third sector in Scotland which provides a range of business support, training and information for third sector organisations and social enterprises. The majority of the services are entirely free to access.
Find more information on the Just Enterprise website.
Day Nursery Relief
Premises in Scotland that are used wholly or mainly as a day nursery can apply for 100% relief from non-domestic rates (NDR). Non-domestic rates are paid by business, public sector and third sector organisations unless exempt.
To access this relief your premises must be used only as a nursery school or mainly as a nursery school. You can check with your local council to see if you're eligible or to apply. More information can be found at Day Nursery Relief.
HMRC guidance on the Employment Allowance
The UK Government has published additional guidance on the Employment Allowance for childcare providers. This includes clarifications on eligibility and how the allowance applies to early years providers. For any further inquiries regarding the guidance, please contact HMRC directly.
Childcare Sector Representation and Sustainability Fund
The Childcare Sector Representation and Sustainability Fund provided the opportunity for childcare sector representative organisations in Scotland, who met the eligibility criteria, to apply for funding for the two-year period 2023-2024 to 2024-2025 to support the delivery of their representative functions and to enable them to strengthen their long-term sustainability.
Following a review of the Fund in 2024, we provided transitional funding to grant recipients at a reduced level in the 2025 to 2026 period before the Fund ends on 31 March 2026.
Financial sustainability health check
We previously carried out financial sustainability health checks to inform understanding of the impact of economic developments on childcare providers to ensure policy is informed by evidence. We published the last financial sustainability health check in July 2023.
Evidence was collected on the sustainability of the childcare sector, in light of the costs crisis, workforce pressures and the lasting impacts of the pandemic. A supporting analysis and evidence paper was published.
A previous financial sustainability health check (first edition) was published in August 2021. We will continue to monitor trends across the childcare sector.
Sustainable rates for providers delivering funded early learning and childcare
Private, third sector and childminding providers can enter into contract with their local authority to deliver funded early learning and childcare (ELC). Providers will be paid a sustainable rate for each hour of funded ELC that they deliver.
Joint Scottish Government and COSLA guidance for local authorities to set sustainable rates in 2025 to 2026 was published on 20 February 2025. The guidance confirms that in 2025-2026 local authorities will apply a minimum increase of 3.75% to all 2024-2025 sustainable rates. This minimum increase passes onto providers the additional funding from the Scottish Government to enable childcare workers delivering funded ELC in private and third sector services to be paid at least the Real Living Wage from April 2025.
The minimum increase will also apply to the sustainable rates paid to childminders who deliver funded ELC.
Sustainable rates data collection 2024 to 2025
Each year, we collect and publish data on the sustainable rates local authorities pay to private, third sector, and childminding providers for delivering funded early learning and childcare (ELC). The latest report – sustainable rates for funded providers: 2024 to 2025 – sets out information provided by local authorities on the sustainable rates they have set for 2024-2025.
Previous reports were published for 2023-2024, 2022-2023, and 2021-2022 (which includes data for 2020-2021).
Sustainable rates review
The Scottish Government and COSLA published the early learning and childcare: review of sustainable rates in December 2023. The Review examined the approach to setting sustainable rates for providers of funded ELC in the private, third and childminding sectors during 2022 to 2023.
The review recommended long-term reforms to improve the existing sustainable rates process. This includes a requirement to introduce greater standardisation in the rates setting process.
To support this a Sustainable Rates Review Implementation Working Group has been created which brings together sector and local government representatives, alongside Scottish Government ELC policy representatives and COSLA. Its main role is to inform the approach taken to collecting robust and reliable data on the costs of delivering funded ELC in private, third, and childminding sector providers.
Cost collection exercise
A key commitment from the 2023 joint Scottish Government and COSLA Sustainable Rates Review was to improve the data available to inform funded ELC rates-setting by local authorities. To support this a new national ELC cost collection exercise is being carried out by the Diffley Partnership. It is intended to be completed by all private, and third sector providers who deliver funded ELC. There is also a specific survey that has been developed for childminding services. The information from these surveys will ensure that local authorities are able to take local sustainable rate setting decisions based on as accurate and up to date information as possible. The surveys are open until Wednesday 2 July 2025.
Responses will be completely confidential and will not be seen by anyone outside of the Diffley Partnership. The information that local authorities, the Scottish Governement and COSLA receive will be aggregated results, which are anonymised and non-disclosive.