Funding Follows the Child and the National Standard for Early Learning and Childcare Providers: interim guidance - update

2. Funding Follows the Child - requirements from August 2022

40. This section sets out the elements of Funding Follows the Child, with guidance regarding the expectations of the deliverability of each element. The majority of the Funding Follows the Child framework should be deliverable from August 2022 and will continue to underpin the delivery of funded ELC.

Elements of Funding Follows the Child:

A - Getting It Right for Every Child is at the centre of our approach to improving the experience of our children in their early years.

Deliverability from August 2022:

• Getting It Right for Every Child will continue to be reflected throughout Funding Follows the Child and the National Standard to ensure the focus on improving outcomes for children and young people is maintained

B - It is 'provider neutral' and is underpinned by a National Standard, which all providers who wish to deliver the funded entitlement will have to meet from the full statutory roll-out of 1,140 hours of funded ELC entitlement.

Deliverability from August 2022:

• All local authorities should be applying provider neutral arrangements
• Some flexibility may continue to be required in relation to certain aspects of the National Standard (as described in Section 3 of this document). However, the application of any flexibilities in aspects of the National Standard must be provider neutral and apply to all providers

C - Families will be able to access high quality funded ELC with the provider of their choice if that provider meets the criteria set out in the National Standard, wishes to deliver the funded entitlement, has a space available, is able to offer the funded hours in-line with local ELC delivery plans (subject to the setting's overall capacity) and is willing to enter into a contract with the local authority.

Deliverability from August 2022:

• Flexibility may be required on some aspects of the National Standard (as set out in Section 3), but the application by local authorities must be provider neutral
• Parents and carers should be able to apply to the setting of their choice, but access to ELC at that setting will remain dependent on a space being available and the provider being able to offer a family the pattern of provision they are seeking for their child

D - The choice of setting available to families is not restricted to their own local authority boundary.

Deliverability from August 2022:

• Choice must not be restricted by local authority boundaries. However, the overall level of choice available in each local authority may vary depending on local capacity

E - Information for parents and carers will be clear and accessible to make them aware of the options available to them, in particular the different types of settings that can be chosen, when accessing their funded entitlement.

Deliverability from August 2022:

• Parents and carers should expect to be well informed, through clear and concise communications, particularly as information may be subject to change

F - Settings must ensure that the funded hours are free at the point of access and parents and carers are not required to purchase additional hours beyond the funded entitlement in order to access their child's funded hours at a setting.

Deliverability from August 2022:

• This is a long-standing legal requirement. As set out under section 33(1) of the Standards in Scotland's Schools Act 2000, the entitlement to funded early learning and childcare must be provided without the payment of fees, including where this is delivered through a third party (i.e. providers in the private and third sectors, including childminders), under a section 35 arrangement

G - Local authorities will retain the statutory responsibility for ensuring that the funded entitlement is available to all eligible children in their area, and will be the primary guarantors of quality and key enablers of flexibility and choice – ensuring that there is a range of options for families in their area.

Deliverability from August 2022:

• These roles and responsibilities will continue.
• More information on the role of local authorities is provided in Section 3 (Role for local authorities in implementing Funding Follows the Child) of Funding follows the child and the national standard for early learning and childcare providers: operating guidance

H - Local authorities and providers should work together meaningfully and in genuine partnership in delivering flexible ELC provision, while continuing to ensure that a high quality experience for children is maintained and accessible to all.

Deliverability from August 2022:

• Meaningful and genuine partnership working between local authorities and funded providers is vital to ensuring the delivery of a high quality ELC experience to all children
• Effective local and national partnership working should continue to develop and is critically important to support the recovery process

I - Local authorities will set a rate locally that is paid to funded providers in the private and third sectors, including childminders, to deliver the funded entitlement, which is sustainable and reflects national policy priorities, including funding to enable payment of the real Living Wage to all childcare workers delivering the funded entitlement.

Deliverability from August 2022:

• The payment of sustainable rates by local authorities to funded providers will be vital to supporting financial sustainability.
• The Financial Sustainability Health Check, published in August 2021, sets out how the pandemic has impacted on the financial position of settings. Many of these services continue to face financial challenges as a result of the pandemic.
• Annex A contains updated interim guidance on the setting of sustainable rates. This update acts as a complement to the Sustainable Rates Guidance published in April 2019.
• The focus of the interim guidance in Annex A is on the key considerations for setting rates for August 2022 in light of the programme of actions, set out in the Financial Sustainability Health Check, to strengthen the process for setting sustainable rates, and the ongoing economy wide cost pressures.
• The principles in the guidance highlight the importance of the rate setting process being underpinned by an evidence-based approach; transparency; and partnership working between local authorities and funded providers in the private, third and childminding sectors.
• The Scottish Government will continue to monitor the financial sustainability of the childcare sector, including updating the evidence from the August 2021 Financial Sustainability Health Check.

J - Funded providers who agree to deliver the funded entitlement will commit to paying the real Living Wage to all childcare workers delivering the funded entitlement and commit to operating fair work practices.

Deliverability from August 2022:

• The promotion of fair work practices remains a vital way of supporting a high quality workforce, and it is expected that providers retain their commitment to these practices
• The funding agreement between the Scottish Government and COSLA ensures that providers will receive sustainable rates that are set at a level which enables all childcare workers delivering the funded entitlement to be paid at least the real Living Wage
• It remains the position that it is not for the Scottish Government and local authorities to provide the funding to cover the hours that staff spend delivering non-funded hours in their setting
• It is therefore a business decision for funded providers as to whether they provide the additional resource to uplift the salaries of all workers in their settings, including those not engaged in delivery of the funded entitlement, to the real Living Wage
• Local authorities should refer to Annex A of the Transition Options Guidance on Contracting for further guidance on implementing the real Living Wage commitment.

K - Every child receiving a funded ELC session will receive a free meal.

Deliverability from August 2022:

• Funding to deliver this commitment will be additional to the sustainable rate and local authorities must ensure that they are transparent as to the funding being provided to private and third sector providers for the delivery of the free meal commitment
• If public health guidance restrictions were to be reintroduced at any point, there may be some changes from normal practice and that there may be some restrictions as to how the meals are delivered.
• It is important to ensure that there is clear communication to families as to what meals will be available

L - A commitment to simplifying the process for, and reducing the burden on, providers to deliver the funded entitlement. All providers will face the same National Standard for becoming, and continuing to be, a funded provider.

Deliverability from August 2022:

• Local authorities should be drawing on the Transition Options Guidance on contracting and adopting the relevant supporting template Terms and Conditions produced by Scotland Excel in their tender documentation exercises
• Local authorities should continue to progress this commitment, but it is important to recognise that processes may have been disrupted and interim arrangements may continue to be required in some authorities as a result of the pandemic