Financial sustainability health check
The Financial Sustainability Health Check is a way of understanding the impact of recent economic developments on childcare providers to ensure policy is informed by evidence.
We published an updated Financial Sustainability Health Check in July 2023.
Evidence was collected on the sustainability of the childcare sector, in light of the costs crisis, workforce pressures and the lasting impacts of the pandemic.
A supporting Analysis and Evidence paper was published.
The update has been informed by detailed surveys of childcare providers and analysis of trends in Care Inspectorate registration data. The Health Check reports set out a programme of actions to support the long-term sustainability of the sector.
It builds on the evidence and findings from the first Financial Sustainability Health Check (first edition) published in Summer 2021.
Support for childcare providers
A range of business support is available through Business Gateway. Business Gateway have local offices all over Scotland and you can contact your local office for more information.
The Scottish Government has previously funded pilot programmes of targeted support, delivered through Business Gateway, for registered childcare providers in Scotland, including self-employed childminders. We will build on the learning from these pilot programmes to identify the parts of the sector where there is a need for support.
Day Nursery Relief
Premises in Scotland that are used wholly or mainly as a day nursery can apply for 100% relief from Non-Domestic Rates (NDR). Non-Domestic Rates are paid by business, public sector and third sector organisations unless exempt.
To get this relief your premises must be used only as a nursery school or mainly as a nursery school. You can check with your local council to see if you're eligible or to apply. More information can be found at Day Nursery Relief.
Sustainable rates for providers delivering funded early learning and childcare
The payment of sustainable rates to funded providers in the private, third and childminding sectors is vital to supporting financial sustainability, and is a key aspect of Funding Follows the Child.
In April 2019, guidance was published to support local authorities to set sustainable rates.
In 2024 to 2025 we are providing additional funding to local authorities to enable childcare workers delivering funded early learning and childcare (ELC) in private and third sector services to be paid at least £12 per hour from April 2024. The commitment will also be applied in a fair and sustainable way for childminders who deliver funded ELC.
We published Early learning and childcare: guidance on setting sustainable rates for 2024-25, jointly with Cosla in March 2024, which sets out how the additional funding for the commitment will be passed onto providers through the 2024-25 sustainable rates setting process. This update acts as a complement to the Sustainable Rates Guidance published in April 2019.
We are committed to collecting and publishing data each year on the sustainable rates paid by local authorities to childcare providers in the private, third and childminding sectors for the delivery of funded ELC.
The latest report - Early learning and childcare - sustainable rates for funded providers: overview 2023 to 2024. The report sets out information provided by local authorities on the sustainable rates they have set for providers in the private, third and childminding sectors to deliver funded ELC in line with guidance published for setting these sustainable rates.
In addition to the sustainable rates in each local authority, the report sets out the payments to funded providers for delivery of the free meal commitment.
Sustainable Rates Review
The Scottish Government and COSLA published the Early Learning and Childcare: Review of Sustainable Rates in December 2023, which examined the approach to setting sustainable rates for providers of funded ELC in the private, third and childminding sectors during 2022 to 2023.
The review recommends a wide-ranging set of actions to improve the existing sustainable rates process.
To support this a Sustainable Rates Review Implementation Working Group has been created which brings together sector and local government representatives, alongside Scottish Government ELC policy representatives and COSLA. Its main role is to inform the approach taken to collecting robust and reliable data on the costs of delivering funded ELC in private, third, and childminding sector providers.
It is also vital that childcare providers can input directly to this process. To support this we will run a number of Provider Reference Groups during Autumn 2024. These Groups will likely operate on a virtual basis to maximise participation.
Childcare Sector Representation and Sustainability Fund
The Childcare Sector Representation and Sustainability Fund provided the opportunity for childcare sector representative organisations in Scotland, who met the eligibility criteria, to apply for funding for the two-year period 2023-24 to 2024-25 to support the delivery of their representative functions and to enable them to strengthen their long-term sustainability.
This followed the commitment in the Financial Sustainability Health Check, published in August 2021, to review how the impact of the core funding that childcare sector representative organisations currently receive can be maximised to support outcomes for children, childcare services, and the long-term sustainability of the representative bodies.