Early education and care

Financial sustainability health check

Financial sustainability health check of the childcare sector

The period since March 2020 and the onset of the impacts of COVID-19 has been challenging for the childcare sector, as it has been for many other sectors of the economy.

The Scottish Government has undertaken a financial sustainability health check to collect evidence on the sustainability of the childcare sector in Scotland, in particular in light of the impacts of COVID-19. The exercise have also captured information on the impact of the range of financial support that has been made available.

The Health Check has been informed by evidence and analysis from:

• detailed surveys of childcare providers;
• in-depth case study interviews with a range of providers;
• discussions with childcare provider representative bodies; and
• analysis of trends in Care Inspectorate registration data.

The findings were published on 31 August 2021 and set out in Financial Sustainability Health Check of the Childcare Sector in Scotland.

Alongside this a supporting Analysis and Evidence paper has also been published.

We are working with the sector and delivery partners to progress the series of actions set out in the Health Check to enable recovery and to support the long-term sustainability of the sector.

Overview of Local Authority Funding and Support for ELC Providers

As part of the Financial Sustainability Health Check exercise the Scottish Government collected updated information from all local authorities on:

• the sustainable rates that they have set for providers in the private, third and childminding sectors to deliver funded early learning and childcare;
• rates paid for the delivery of the commitment that every child attending a funded ELC session – which is any session that includes funded hours, regardless of whether they are mixed with 'paid for' hours – is provided with a free meal.
• their approach, in-line with guidance published in April 2019, for setting sustainable rates; and
• any additional support that has been offered to their providers who deliver funded early learning and childcare during the pandemic.

The information provided by local authorities is set out in Overview of local authority funding and support for early learning and childcare providers.

The sustainable rates data collection exercise will be updated annually with the revised information published by the end of August each year.