Expansion of Early Learning and Childcare – Reinstatement of 1140 statutory duty - Business and Regulatory Impact Assessment (BRIA)

4. Scottish Firms Impact Test

4.1 The consultation section above describes the range of engagement activity undertaken with business through the policy development for the ELC expansion. This includes formal written responses and views gathered from supporting consultation events. Feedback from these consultations has shaped the development of the policy and the support put in place for providers in the private and third sectors, including childminders.

4.2 For each consultation, an analysis report of the responses to the questions has been produced and the individual responses (including from providers, where permission was given) have also been published. Table 2 provides links to the Analysis Reports and full consultation responses for each of the consultation exercises. The reports also reflect the key messages emerging from supporting programmes of consultation engagement events.

Table 2 - Public Consultation; links to published responses

Consultation : Early Learning and Childcare 1140 Hours Expansion - Programme of Trials Consultation

Analysis Report and Responses

Consultation Hub: Discussion Paper - Early Learning and Childcare 1140 hours expansion

Analysis Report link

Consultation : A Blueprint for 2020: The Expansion of Early Learning and Childcare in Scotland Consultation

Analysis Report and Responses

Consultation Hub: A Blueprint for 2020: The Expansion of Early Learning and Childcare in Scotland

Analysis Report link

Consultation : Early Learning and Childcare Service Model for 2020 Consultation

Analysis Report and Responses

Consultation Hub: Early Learning and Childcare Service Model for 2020: Consultation Paper

Analysis Report link

How has the feedback from providers informed the development of the policy?

4.3 The feedback gained from providers through written responses to the consultations and surveys, particularly post-Covid, has informed the development of the policy framework that will support delivery of the expanded entitlement.

4.4 The June 2019 Business and Regulatory Impact Assessment,^[15] which was produced to support the introduction of the Children and Young People (Scotland) Act 2014 (Modification) (No.1) Order 2019 and the Children and Young People (Scotland) Act 2014 (Modification) (No.2) Order 2019, sets out details on how the potential impacts on providers from the expansion to 1140 hours were being addressed. This focused on: (1) the need for payment of a sustainable rate for delivering the funded entitlement (and the real Living Wage Commitment); (2) workforce retention challenges; and (3) strengthening meaningful and genuine partnership working.

4.5 Since March 2020 a key focus has been on understanding the impact of the pandemic on providers. Childcare providers, like many sectors of the economy, have experienced considerable financial pressures since March 2020 due to the reductions in private income flows in this period. The pandemic also hit at a time when the sector was in the final stages of preparing for the statutory roll-out of the expanded ELC entitlement of 1140 hours in August 2020. As part of this preparation a number of providers offering funded ELC will have undertaken additional investment to expand their settings in order to deliver the increased entitlement.

4.6 To better understand these impacts for the sector, and in particular the specific impacts of the reopening public health guidance, the Scottish Government undertook a survey of providers between 19 and 24 June 2020. The survey included questions regarding changes in costs, capacity and private income generation. More details on this survey are highlighted in paragraphs 1.24 to 1.27.

4.7 Formal childcare providers, as with organisations in other sectors of the economy, will have been able to access support through a range of measures introduced by the Scottish and UK Governments. The Coronavirus Job Retention Scheme has been a key support measure for the sector. 90% of private and 66% of third sector day care of children respondents to the Scottish Government survey of providers in June 2020 indicated that they had drawn on support from the Coronavirus Job Retention Scheme.

4.8 Childminders have been able to draw on support from the Self-Employed Income Support Scheme (SEISS) or the Scottish Government's newly self-employed hardship grant. We do not have figures for the number of childminders who have been able to draw on support through these schemes, however the Scottish Childminding Association (SCMA) have indicated that some childminders struggled to access support or received relatively low levels of support through the SEISS.

4.9 In order to support the childcare sector, additional specific support has been made available:

• The Scottish Government and local authorities guaranteed that payments for the statutory ELC entitlement continued for the duration of the closures period, regardless of whether providers were open or closed (up until 10 August 2020).
• To support day care of children providers in the private, voluntary/not for profit sectors with additional costs associated with meeting the public health guidance, the Scottish Government introduced a Transitional Support Fund to provide one-off grants (ranging from £1,500 to £8,000 depending on the size of the service) to eligible services.
• Support has also been provided to childminders through the Childminding Workforce Support Fund (CWSF), which has provided grants up to a maximum of £350 to help support childminders who have struggled to access support through other routes. The Scottish Government has provided £420,000 to the Scottish Childminding Association to support delivery of this fund.
• The share of providers' income accounted for by the funded entitlement is expected to increase with the roll-out of 1140 hours as settings allocate more of their capacity towards delivering the funded hours.

4.10 The payment of sustainable rates to providers who are delivering funded ELC is vital to supporting financial sustainability, and is a key aspect of Funding Follows the Child. The Interim Guidance on Funding Follows the Child,^[16] published in July 2020, included updated guidance on the setting of sustainable rates in light of COVID-19. This highlights that when setting sustainable rates local authorities are expected to continue to use Funding Follows the Child and the National Standard for ELC providers (guidance for setting sustainable rates from August 2020 is the main source of guidance for this). However, it is expected that local authorities, in line with the principles for setting sustainable rates, will work with their funded providers to understand the extent to which the costs of delivering funded ELC have changed due to COVID-19.

4.11 From Boxing Day 2020 day care of children providers and childminders delivering to 12 or more children should only open to key worker and vulnerable children. At the time of writing these restrictions are in place until at least the middle of February.

4.12 In order to support providers over this period it was announced that:

• Up to £3.8 million will be made available for every 4 week period for grants to be paid to private and third sector day care of children providers and childminders currently providing to 12 or more children, to support them to remain open for key worker and vulnerable children during the period of the temporary restrictions.
• Whilst the majority of childminding services are not subject to the same temporary restrictions as day care of children providers and are currently able to remain open to all children, targeted financial support will be made available to those childminding services experiencing challenges.
• Providers will continue to receive payments for funded ELC, even if children are unable to attend, for the period of the restrictions.