Publication - Advice and guidance

Coronavirus (COVID-19): early learning and childcare services

Non-statutory guidance to support the continued safe operation of ELC settings.

Coronavirus (COVID-19): early learning and childcare services
Financial impact

Financial impact

We recognise that any restrictions on operating may affect the cost of delivery of services per child. If the number of children that can be accommodated in a setting, or within a given staffing model, is reduced, there may be an increase in the cost per hour of childcare. However, the extent of this impact will vary from setting to setting, and will be closely linked to capacity. There may also be additional costs, relating to implementation of public health measures for cleaning and hygiene requirements. These increases in cost base may apply throughout the period where these public health measures are in place.

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
  • 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.

Further details on the Financial Health Check Report and the Sustainable Rates Report is provided on the Scottish Government’s information pages on Early Education and Care.

These pages will continue to be updated as more information becomes available.

We recognise that funded ELC is an important source of revenue for many providers. The Scottish Government and Local Government have jointly committed in the strategic framework to designing a model which is financially sustainable for local authorities, and private and third sector providers.

Assessment of the impact on cost of childcare provision while these public health measures are in place must be based on an open, transparent approach. Providers should consider carefully what the impact of restrictions are on cost of delivery in their settings, and how this can be demonstrated.

Advice on the application of Funding Follows the Child and the National Standard for ELC Providers includes guidance on the payment of sustainable rates for the delivery of funded ELC. Interim guidance was published in March 2021 regarding the requirements on ELC settings and local authorities from August 2021 for delivery of Funding Follows the Child. This includes updated interim guidance on the setting of sustainable rates for the delivery of funded ELC in the context of the impacts of COVID-19.

As part of the Health Check exercise we have also collected updated information from all local authorities on: the sustainable rates that they have set for their funded providers in the private, third and childminding sectors; rates paid for the delivery of the free meal commitment; their approach, in-line with guidance published in April 2019, for setting sustainable rates; and any additional support that has been offered to their funded providers 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, which was also published on 31 August 2021.


First published: 11 Aug 2021 Last updated: 11 Oct 2021 -