Funding Follows the Child and the National Standard for Early Learning and Childcare Providers: operating guidance

Section 5: Frequently Asked Questions

Funding Follows The Child

1. How many funded hours are children entitled to?

All 3 and 4 year olds and eligible 2 year olds are entitled to up to 1140 hours of early learning and childcare, from the relevant start date. These funded hours are free to parents at the point of access and their child’s entitlement can be used in any funded provider who meets the National Standard, has a space available and is willing to enter into a contract with the local authority. Legislation states when children are eligible for their funded entitlement based on their birth dates. More information about start dates and admissions can be sought from local authorities.

2. What choice do parents have over where their child can access their funded hours within a local authority?

Local authorities will be able to tell parents and carers about the range of options available in each local area. There should be a range of delivery models available to children across a local authority area although this needs to be within a defined framework. In order to ensure that the Funding Follows the Child approach is sustainable, realistic and in line with local ELC delivery plans, different session times and models will be available in different settings.

If a parent or carer wants their child to access their funded entitlement in their chosen setting, they should find out from the setting whether they are a funded provider. If they are, then the child should be able to access their funded hours with them, if they have a space available, can meet their child’s needs and the setting is willing to enter into a contract with the local authority. It may be that the specific pattern of attendance the parent or carer wants is not available and we would ask that they work with the funded provider and the local authority to identify the best place for their child and to meet their family’s needs.

3. Can a parent choose a blended model using more than one setting for their child’s statutory entitlement?

Yes. There are a number of models available for children, and some parents and carers may choose, for example, to access a nursery for some of their child’s entitlement and use a childminder for the rest. The local authority will be able to tell parents and carers what options for blended models are currently available and how this can be managed. It is important to be aware that, in order to ensure that the Funding Follows the Child approach is sustainable and realistic, it may be that particular session times and models are in place in some settings but not in others. If a parent or carer wishes to use a blended model of funded hours, communication between the local authority, funded providers and families is key in ensuring the child’s ELC experience is of a high quality.

4. Does a child have to access all of the funded hours they are entitled to?

No. Parents and carers may choose to only take some of their child’s funded hours. There is no requirement for children to take any or all of their funded entitlement and we would encourage parents and carers to explore the options available to their child.

5. What are the minimum and maximum number of hours my child can take in a session?

At the heart of our ambitions is a high quality ELC experience for children. The Children and Young People (Scotland) Act 2014 sets out that education authorities must ensure that funded early learning and childcare sessions are 10 hours or less.

While flexibility for families is a welcome element of the expansion of hours, the key purpose of the approach is to ensure children have the best start in life. Therefore, the Scottish Government will reserve the right to amend this in legislation again if we are concerned that evidence is showing a detrimental impact on children’s wellbeing and outcomes.

6. A parent wants to access their funded hours outwith the local authority. How will this arrangement be managed?

One of the key principles of the Funding Follows the Child approach is to allow parents and carers to make their own choices about where their child accesses their funded hours. The operating guidance states that “the choice of setting available to families is not restricted to their own local authority boundary” and it is expected that local authorities and funded providers do their best to grant this request if there are spaces available. If a setting is already a funded provider with another local authority then this should constitute enough evidence to fund the child in their chosen funded provider. Local authorities should work together to share information about funded providers and provide clarity and reassurance that funding can be given to this provider. It is unlikely that the setting would need to apply to become a funded provider in more than one local authority area. Good practice would be for local authorities to keep details of these arrangements and evidence of checks for suitability to be a funded provider centrally alongside evidence of funded providers in their own area. This will ensure a clear audit trail of compliance and funding outputs for children resident in the area.

7. How will local authorities set the affordable and sustainable funding rate for funded providers in the private, third and childminding sectors?

The Scottish Government and COSLA have issued joint guidance for local authorities to support them to set sustainable rates for private, third sector and childminding providers to deliver funded ELC. The latest version of the sustainable rates guidance, which replaced previous versions of the guidance, sets out the process for local authorities to set sustainable rates in 2025-26.

The guidance highlights that the rate paid to funded providers should be sustainable and should meet the following:

• the rate will support delivery of a high quality ELC experience for all children;
• it will be a rate that reflects the cost of delivery, including the delivery of national policy objectives;
• the rate will allow for investment in the setting – staff, resources and physical environment;
• it will enable payment of the real Living Wage for those childcare workers delivering the funded entitlement.

The guidance also highlights that from a local authority perspective the rate must be sustainable for authorities in terms of the budgets available, and that the following points are also important to consider when setting a sustainable rate:

• the rate does not have a detrimental effect on the local authority’s ability to continue to pay for the service in the long-term;
• the wider package of ‘in-kind benefits’, which are separate to the sustainable rate, available to the funded provider as part of their contract with the local authority;
• the rate does not need to be cross-subsidised by parents and carers through charges for non-funded hours.

A key principle of the sustainable rates setting process is that it should be evidence-based, taking account of the cost of providing ELC in a local area based on parameters which are clear and transparent. To support this a new national cost collection exercise will be undertaken in Spring 2025. This will ensure that our long-term investment to support the setting of sustainable rates is informed by a robust and reliable evidence base.

New sustainable rates guidance will be published in early 2026 to reflect arrangements for 2026-27, informed by the findings of the cost collection exercise.

8. Can local authorities add their own additional criteria to complement the National Standard?

No. All settings wishing to become a funded provider in Scotland will be assessed against the same National Standard criteria and no additional criteria will be applied.

With the exception of scrutiny quality evaluations from the Care Inspectorate and HMIE, local authorities are responsible for assessing and monitoring compliance with the National Standard in all funded providers, including local authority settings, as part of their contract management arrangements and in their role as guarantors of quality.

9. What is meant by the phrase ‘in-line with local ELC delivery plans’?

Local parental demand is the primary driver of local flexibility, but within a system which safeguards high quality provision. The Children and Young People (Scotland) Act 2014 places a duty on local authorities under Section 50 to consult and plan on delivery of ELC. Statutory guidance states that this consultation should include models, flexibility and systems of choice so that parents can inform options on offer and local authorities can develop systems to allocate options. The aim is to develop a high quality system of ELC that meets a range of needs.

This local demand should be reflected in local ELC delivery plans. Delivery plans set out the comprehensive strategic direction for the delivery of ELC in a local area, respond to local need and reflect the diversity of the communities that local authorities cover. All funded providers are expected to deliver ELC in line with the programme set out in the delivery plans.

The National Standard for Early Learning and Childcare Providers

1. Who does the National Standard apply to?

The National Standard applies to all settings offering the funded early learning and childcare entitlement. This covers settings in the public, private and third sectors, including childminders.

2. Does the National Standard apply to ELC paid for directly by parents as well as to the funded hours?

The National Standard applies to the setting offering the funded entitlement. For example, the Care Inspectorate looks at the registered service as a whole, including children who are not receiving the funded entitlement. Therefore, if the setting has been accepted as a funded provider, the quality of ELC in the whole service will need to meet the required quality standard. This should provide some reassurance that the non-funded element of the setting is also of a high quality.

The real Living Wage commitment applies to childcare workers in the setting delivering the funded entitlement. Whilst it is our ambition for all childcare workers to be paid at least the real Living Wage, it is not for the Scottish Government or local authorities to provide funding to cover the hours that staff spend delivering non-funded hours in these settings. It is therefore a business decision for funded providers as to whether they provide the additional resource to uplift the salaries for all workers in their settings, including those not engaged in delivery of the funded entitlement, to the real Living Wage.

3. Does the National Standard apply to funded providers who deliver the funded entitlement in an outdoor setting or through Gaelic medium?

Yes. The National Standard criteria apply regardless of setting characteristics such as whether the provision is being delivering through English or Gaelic medium, in a faith-based or non-denominational setting or through indoor or outdoor provision.

4. How will local authorities assess whether funded providers are meeting the National Standard?

At the heart of the National Standard is a clear and consistent set of quality criteria, to ensure that all settings which are offering the funded entitlement are delivering the highest quality ELC experience. The criteria in the National Standard focus on what children and their families should expect from their ELC experience, regardless of where they access their child’s funded hours.

The Funding Follows the Child policy framework outlines the role of local authorities as the primary guarantors of quality, responsible for ensuring that funded ELC providers meet the requirements set out in their contracts with local authorities, including meeting the criteria within the National Standard.

Local authorities are responsible for assessing and monitoring compliance with the National Standard for all funded providers, including those provided by local authorities. Local authorities adopt various practices to fulfil this role including, in some cases, initiating their own quality assurance visits.

5. What if a funded provider receives a quality evaluation below ‘good’ in any of the required Care Inspectorate quality indicators following scrutiny activities?

As guarantors of quality for the National Standard, the local authority will play a key role in ensuring each child receives a high quality experience during their funded hours. If a funded provider fails to meet the quality evaluation criteria included in the shared Quality improvement framework, they will be subject to a ‘service improvement period’. The local authority will need to be clear about which criteria are not being met and how the funded provider can improve the quality of provision to ensure children receive high quality ELC.

The local authority will be expected to offer ‘enhanced improvement support’ to improve the quality of provision in order to promote consistency and continuity of care for children and their families, where possible. This may include nominating the setting for targeted support via the Care Inspectorate ELC improvement programme

6. What if a funded provider falls below a quality evaluation of ‘good’ in any of the quality indicators evaluated by HMIE?

The local authority as the primary guarantors of quality should support the funded provider to improve by agreeing a clear improvement plan that identifies any areas for development through the scrutiny activity. Local authorities should also explore the findings from HMIE inspections to ascertain compliance with the National Standard. If this information highlights that a funded provider is not meeting one or more of the criteria, the local authority should use this information to begin relevant procedures to improve the quality of the service by instigating a ‘service improvement period’.

Where necessary, HMIE may be able to provide follow up support to funded providers where inspectors evaluate the quality of learning and education provision to be less than good. This will ensure that identified areas for improvement are addressed within the setting’s improvement plan and the funded provider is supported to implement the actions required to improve children’s ELC experience.

7. What is a ‘service improvement period’ and how long is this?

A ‘service improvement period’ will apply when a provider is not meeting one or more of the National Standard criteria. This may be in relation to the quality evaluations from Care Inspectorate scrutiny activities or based on other intelligence such as HMIE inspections findings or feedback from parents and carers.

The ‘service improvement period’ allows local authorities to give providers in the public, private and third sectors whose Care Inspectorate evaluations fall below the level required in the National Standard time to access improvement support, undertake improvement activity and achieve sustained improvement in the quality of their provision. The local authority can instigate a ‘service improvement period’ when one or more of the National Standard criteria are not being met.

If this is in relation to Care Inspectorate or HMIE scrutiny activities, the ‘service improvement period’ will begin upon publication of the inspection or scrutiny report.

If the local authority has other evidence of non-compliance against the National Standard criteria, the ‘service improvement period’ will begin when communication is sent from the local authority to the provider detailing the National Standard criteria which are not being met.

In both circumstances, the local authority must detail to the provider:

• which National Standard criteria and sub-criteria are not being met;
• what evidence they have that the criteria is not being met;
• how the service can improve their practice to meet the criteria;
• what enhanced improvement support will be available to ensure the quality of provision improves; and
• the specific review dates for monitoring during and at the end of the ‘service improvement period’.

The length of the ‘service improvement period’ will be determined by the local authority, recognising their role as primary guarantors of quality or, if the criteria not met are related to Care Inspectorate quality evaluations, the ‘service improvement period’ will end upon publication of the next inspection report. At this time, the local authority will make a decision about whether the setting will remain a funded provider, based on the evidence of progress over the ‘service improvement period.’

Where a setting is on a service improvement period and does not receive evaluations of ‘good’ or better at their next quality evaluation but is demonstrating capacity for continuing sustained improvement, the local authority may agree to extend the service improvement period until the following quality evaluation.

8. What happens if the service does not meet the National Standard criteria within the ‘service improvement period’?

The priority when making this decision is to ensure that the continuity and consistency of care for children is well managed and that the impact on families is reduced, where possible.

A service improvement period should be provided where the local authority, taking account of any information available from the Care Inspectorate and evidence from the provider, is comfortable that the service:

• is fit to continue;
• is engaging or willing to engage in work that leads to improvement;
• with support, has the ability to improve and sustain improvement by the next Care Inspectorate quality evaluation; and
• meets other aspects of the National Standard as set out in this Guidance.

If the local authority finds that the funded provider is not meeting the National Standard criteria after a ‘service improvement period’ or an extension to a ‘service improvement period’, and they are not content that the service meets the criteria above, they will communicate with the funded provider the reasons for their decision and detail the criteria which are not being met. At this time, a transition phase to remove funded provider status will begin. We would expect that, in order to ensure a smooth transition for children and their families, that this transition phase would last around 3 months. A confirmed date for the removal of funded provider status will be given by the local authority when confirming their decision. Communication with parents and carers about the process for removing funded provider status will be essential from both the local authority and the setting. Parents and carers must understand the various options available to them, including other funded providers who may be able to offer their child their funded hours or options to remain in the setting on a non-funded basis. They should also be told the date when their funded entitlement in the setting will be withdrawn.

9. How does the National Standard take account of the changes to the inspection frameworks made by the Care Inspectorate and HMIE when introducing the shared Quality improvement framework.?

The National Standard reflects the current scrutiny and inspection frameworks of the Care Inspectorate and HMIE. The Care Inspectorate and HMIE have developed a shared Quality improvement framework for ELC and childminding settings. The criteria relating to quality evaluations is based upon the new Care Inspectorate quality indicators contained within the Quality improvement framework. This version of the National Standard also includes the previous key questions within the Care Inspectorate’s quality framework for daycare of children, childminding and school-aged childcare, which can be used when a setting has not yet been inspected under the new framework. This is to reflect the phasing in of the new quality evaluations, and local authorities should use the criteria applicable to the latest inspection available for a setting.

10. Why is further information being requested from local authorities about service improvement periods?

The Improvement Service’s regular data return will collate details of which settings are on service improvement periods, how long each setting has been on a service improvement period and the service’s inspection history so that we can, working with COSLA and the Association of Directors of Education in Scotland (ADES), consider the information that is provided and develop an understanding at national level of issues and challenges and where the national improvement agencies may be able to target their support.

11. Is a service improvement period the same as a Care Inspectorate enforcement action?

No. Service improvement periods are separate from any enforcement actions including Improvement Notices undertaken by the Care Inspectorate.

12. If a funded provider has been asked to provide funded hours for a child with additional support needs, what can local authorities do to support the setting and the child best through this process?

Most settings will be well equipped to manage children’s varying needs. If a setting has any concerns about being able to meet a child’s additional support needs, then we expect all parties to be able to come together to have meaningful, respectful conversations to support good decision-making that has the child’s best interests at the centre.

Taking a ‘Getting it right for every child’ (GIRFEC) approach means that the local authority, funded provider and other services should work together to provide children and their families with the right support at the right time so that every child can reach their full potential. We would expect that the current approaches in local authorities to supporting children with additional support needs are used to ascertain the best place for each child to access their funded hours.

Where extra support needs to be planned, delivered and co-ordinated, multi-agency meetings can be used to discuss the variety of options available, gather the views of children and families and hear from the proposed funded provider on how they plan to meet the child’s individual needs.

Decisions about where the child should access their funded hours should be made in line with the Additional Support for Learning Act 2004. This will ensure that there is clarity and consistency in the approaches to placing children with additional support needs in a local authority area. Key to the success of this will be the inclusion of the funded provider the parent has chosen in informing the decisions made.

If it is decided that reasonable changes to the care and learning environment can be made within the funded provider to ensure that children’s additional support needs can be met, clear timescales should be set for the child starting in the service. The funded provider must agree to attend all multi-agency meetings for the child to promote consistency and continuity of care and ensure that their additional support needs do not provide a barrier to them accessing a full range of experiences.

Should a decision be taken that the child will not attend a particular setting, clear reasoning and evaluation of the case should be communicated to the funded provider by the local authority about why this decision has been taken and why it is felt that this will be of more benefit to the child’s development.

Should a decision be taken against the wishes of the parent, clear reasoning and evaluation of the case should be communicated to the parent to help them understand why this decision has been taken and why it is felt that this will be of more benefit to their child’s development.

13. Can settings seek financial support from Local Authorities to meet the costs of meeting the additional support needs of children?

Although the setting must be willing to provide appropriate support, including making any reasonable changes required to the setting, it will not necessarily be expected to meet the costs associated with this.

Education authorities have a duty under the Education (Additional Support for Learning) (Scotland) Act 2004 (as amended) to identify, provide for and review the additional support needs of their children. The Scottish Government provides funding to education authorities for additional support for learning as part of their block grant. It is for individual education authorities to manage their own budget and to allocate the total financial resources available to them, on the basis of local needs and priorities, having first fulfilled their statutory obligations and the jointly agreed set of national and local priorities. The responsibility for ensuring the provision of appropriate additional support falls on education authorities and therefore the costs of providing such support should be discussed and agreed with the relevant local authority.

14. If a provider doesn’t have a clear and comprehensive policy for the provision of healthy meals and snacks for children how can they be supported to develop this?

Under Section 5: Putting Guidance into Practice in Setting the Table (Nutritional Standards and Practical Guidance for ELC Providers in Scotland) advice on what to consider when creating a food policy for different types of settings is provided. Menu checklists, sample menus and recipes have also been provided to help support settings. It may be beneficial for local authorities to arrange professional learning and development opportunities for funded providers to support the development of these practices across their local area.

15. Do I need to provide a hot meal as part of the child’s funded hours?

No. We understand that settings may want to operate different models for providing meals and snacks which best meet the needs of the children and families experiencing the service. Some settings may not have the facilities to offer hot meals and parents and carers may choose for their child to opt out of the free meal entitlement. As long as the child receives a meal which is healthy, nutritious and in line with best practice guidance (Setting the Table), the setting will meet the criteria. The meal does not have to be a lunch and we would recommend talking to parents, carers and children about what would suit them best when planning the provision of meals. This will ensure that what is offered is meeting the needs of those using the setting.

Local authorities are expected to work in partnership with funded providers to support them in identifying solutions to deliver the free meals commitment, particularly where funded providers do not have onsite catering facilities.

16. If a child takes their funded hours using a blended model, who provides the child’s meal?

Where the child’s funded hours are being delivered using a blended model, involving more than one provider across the day, it will be for the individual funded providers to agree with parents and carers as well as the local authority who will provide the meal.

17. How will the local authority assess the business sustainability of funded providers in the private, third and childminding sectors?

Guidance to support providers in the private, third and childminding sector to meet the criteria on Business Sustainability in the National Standard (criteria 7), and for local authorities to assess the criteria, was published in April 2019.

18. I am a childminder who wants to become a funded provider but I don’t have a qualification yet. Where can I get support to get my qualification in the next 5 years?

Childminders who want to become a funded provider should be able to demonstrate that they have applied and have been accepted onto a relevant qualification. We have worked with training providers and colleges to develop a recognition of prior learning (RPL) tool to demonstrate how relevant prior experience, training and qualifications can be recognised and accredited towards a mandatory qualification.

Many childminders choose to undertake a Scottish Vocational Qualification (SVQ) due to the flexibility it offers professionals progressing a qualification whilst working. The SSSC offers advice on how to get started via their careers in care website. This includes a childcare qualifications pathway tool which sets out the full range of training options, supporting professionals throughout their career.”

There are a range of funding sources available to support individuals looking to undertake a qualification. Currently, provided the applicant’s individual income does not exceed £25,000 per annum, fee grants for part-time courses are available from the Student Awards Agency Scotland (SAAS). We will explore whether other dedicated funding needs to be made available to help childminders to fund their qualifications.

Some local authorities are already offering funding to childminders to support them in gaining a qualification. This is based on certain criteria and is locally managed. Local authorities may wish to explore if this option would benefit their ability to offer the funded entitlement across their area.

In addition, there is the Care Inspectorate’s “My Childminding Experience”, which is an improvement resource exploring and sharing good practice examples from across Scotland. My Childminding Experience was co-produced by the Care Inspectorate and Scottish Childminding Association (SCMA) and contains a list of additional resources within the library section.

19. Do I need to register with the Scottish Social Services Council (SSSC) if I am a childminder?

No. There is no legal requirement for childminders to register with SSSC and they are already registered with the Care Inspectorate. The National Standard (sub-criteria 1.2 and 1.4) asks childminders to meet the requirements and Codes of Practice that SSSC require from registered practitioners and this is sufficient evidence to show they are meeting this aspect of the National Standard. It is recommended that childminders have a good understanding of the SSSC Codes of Practice as this will support them to understand the expectations of the workforce as a whole. It may also support them to show how they are meeting the National Standard in their application to become a funded provider.

20. I’m planning to open a new setting and I want to become a funded provider. What do I need to do?

Your first step is to complete the registration process for your service with the Care Inspectorate. Going through the process of registration should support new settings to understand the expectations of the sector and will support their development to meet the National Standard. Part of the process of registration requires each setting to collate evidence which may also be helpful when applying to become a funded provider with a probationary status. There will be other requirements the Care Inspectorate will expect in order for the setting to become a registered care service but, in order to become a funded provider, settings will also need to meet the criteria set out in the National Standard.

New settings may also want to discuss their aspirations with their local authority directly before making an application. The local authority will be able to communicate what can be expected when they apply and may be able to point new settings in the direction of funded providers who are currently high performing.

In addition, organisations such as Early Years Scotland, SCMA, Business Gateway, the Enterprise Networks, Just Enterprise and Social Investment Scotland may be able to support the new setting in developing aspects of their business model.

The Real Living Wage Commitment

1. What is the real Living Wage?

The real Living Wage is an independently calculated rate based on the cost of living and is paid voluntarily by employers. The rate is calculated annually by The Resolution Foundation on an analysis of the wage that employees need to earn in order to afford the basket of goods required for a decent standard of living. This basket of goods includes housing, childcare, transport and heating costs.

For further information on the calculation of the Living Wage see The Resolution Foundation.

2. What is the difference between the real Living Wage and the National Living Wage?

The National Living Wage is an enhanced legal minimum wage for workers that are aged 21 and over.

The National Minimum Wage is the legal minimum wage for workers aged under 21 year olds (and at least of school leaving age). Different rates apply for those aged 18-20; under 18; and for apprentices.

The National Minimum Wage rates are set by the UK Government. More information can be found on the UK Government website.

3. Do providers have to become Living Wage accredited to become a funded provider?

No. Whilst the Scottish Government encourages more providers to become Living Wage accredited, it is not required to meet the criteria.

Further information on Living Wage accreditation can be found on the Living Wage Scotland website.

4. Are any ELC providers Living Wage accredited?

There are already a number of Living Wage accredited private and third sector employers operating in the sector. More information on Living Wage accredited employers in the sector can be found in the Living Wage Scotland Employer Directory.

5. Who is covered by the ELC real Living Wage commitment?

The commitment covers all directly employed childcare workers in a setting who are providing direct care to children receiving the funded entitlement regardless of age or qualification and of the setting in which they are employed. This includes staff who are regularly employed by childminders to provide direct care to children.

6. Are Modern Apprentices included in the commitment?

In line with the requirements for Living Wage accreditation, apprentices do not have to receive the real Living Wage - in recognition that particularly in the earlier stages apprentices may spend more time training than working. However, it is good practice to ensure pay rises over the course of the apprenticeship.

7. Is there a timescale for providers to demonstrate that they are paying the real Living Wage to staff delivering the funded entitlement?

Providers who agree to deliver the funded entitlement will pay the real Living Wage to all childcare workers delivering the funded entitlement and commit to adopting and demonstrating Fair Work practices in their setting.

8. In the Fair Work criteria what is meant by “in accordance with the supporting guidance on Transition Options” with regards to payment of the real Living Wage to all childcare workers delivering the funded entitlement?

Transition Options Guidance on Contracting was published in April 2019. This includes guidance for local authorities on how to reflect the real Living Wage and Fair Work commitments as part of their contracting with funded providers in the private, third and childminding sector.

9. What funding will settings receive to enable delivery of the real Living Wage commitment?

The sustainable rate that services receive to deliver funded Early Learning and Childcare will be set at a level that enables payment of the real Living Wage for those childcare workers delivering the funded entitlement.

10. Why is the Scottish Government/local authorities not providing the funding for all workers – regardless of whether they are delivering the funded entitlement – to receive the real Living Wage?

It is the Scottish Government’s ambition that all staff in ELC settings are paid at least the real Living Wage.

However, the funding provided by the Scottish Government/local authorities is for the delivery of a service on behalf of the public sector. A contract will be agreed by the provider and the local authority for the delivery of these funded hours. If funding were provided for non-funded hours then this could be interpreted as a subsidy and therefore could be in breach of the Subsidy Control Act 2022.

To put this in context the Financial Sustainability Health Check, published in July 2023, reports that for providers delivering funded ELC the income for delivering the funded hours accounted for, on average, 46% of total income for private sector services and 84% for third sector services.

It is also important to note that not all registered day care for children services are delivering the funded entitlement. For example, Schools in Scotland 2022 reports that 985 private and third sector services were delivering funded ELC in September 2022. This accounted for around 56% of all registered private and third sector day care of children services.

It is at the discretion of providers as to how they operate the non-funded hours aspects of their business, reflecting their business model, cost structures and local market conditions.

It is not for local authorities or the Scottish Government to seek to comment on or intervene in the aspects of a funded providers business that are outwith of the funded entitlement.

11. Staff in my setting deliver a combination of funded and non-funded hours. Can I pay staff delivering non-funded hours less than the real Living Wage?

It is the Scottish Government’s ambition that all staff in settings delivering funded ELC are paid at least the real Living Wage.

The funding provided only covers the hours spent delivering the funded hours, and does not cover the hours that staff spend delivering non-funded ELC in these settings, either as ‘wraparound care’ or to children who are not eligible for the funded entitlement.

However, in line with the wider Fair Work criteria in the National Standard employers must demonstrate fair and equal pay policy within their settings.

Providers will receive a sustainable rate from their local authority to deliver funded ELC. The sustainable rate will be set at a level that enables payment of the real Living Wage for those childcare workers delivering the funded entitlement.

It is at the discretion of providers as to how they operate the non-funded hours aspects of their business, which will reflect their business model, cost structures and local market conditions.

It will therefore be a business decision for providers as to whether they provide the additional resource to uplift the salaries for all childcare workers, including those not engaged in delivery of the funded ELC provision, to the real Living Wage.

However, the purpose of this commitment is to recognise the contribution workers in ELC make to improving the quality of the experience for children. It is an opportunity to invest in ELC as a career of choice by helping to address one aspect of the recruitment and retention challenge in the sector.