Early Learning and Childcare Expansion to 1140 hours: Interim Evaluation Report

2. Changes in the ELC sector and workforce

Key points

• While the number of daycare of children services steadily decreased between 2016 and 2022, the overall capacity of services increased during this period – this was driven by an increase in the number and average size of nurseries.
• The proportion of services providing funded ELC increased for all daycare of children service types between 2016 and 2022.
• There was, however, a substantial decrease in the number and capacity of childminding services in this period. There was a corresponding decrease in the number of childminding services approved to deliver and delivering funded ELC.
• The total daycare of children workforce increased since 2017. The public sector's share of the workforce also steadily increased to just over half.
• The ELC workforce is overwhelmingly female. The average age of childminders is higher than daycare of children staff and has increased by five years since 2016 to 50 in 2022. The average age of staff is lowest in private sector services and highest in the public sector.
• In 2021-22, the public sector had the lowest turnover of staff and highest retention, while retention was lowest in the private sector.
• Analysis of staff movement during 2021-22 highlights that, while there was movement of ELC staff from the private and voluntary sectors to the public sector, there was almost no movement the other way. Of those moving from the private sector, the majority (almost 60%) moved to another private sector service. Private and voluntary sector employers are, therefore, more dependent on new entrants to fill vacancies.
• The 2023 Health Check provider survey found that private and voluntary sector providers' confidence in their financial sustainability had declined since 2021. Responses highlight concerns about increased costs of delivery, increases in income not keeping pace with rising costs, reduced demand for some services, and loss of staff from private and voluntary services and challenges recruiting suitably qualified staff.

2.1. The ELC sector

The Programme Logic Model underlines that the delivery of 1140 hours of funded ELC is dependent on having sufficient workforce in place. A skilled ELC workforce is fundamental to achieving the intermediate outcomes – in particular providing high quality ELC – and subsequently achieving the policy's aims. This section provides further detail on changes in the ELC sector and workforce between 2016 and 2022. It should be kept in mind, as highlighted in the Evaluation Strategy, that the ELC sector experienced an extremely challenging period during and after the onset of the Covid-19 pandemic in 2020.

Changes in the number of ELC services

All daycare of children and childminding services which make up ELC must be registered with the Care Inspectorate to operate in Scotland. 'Daycare of children services' includes nurseries, children and family centres, crèches, out of school care and playgroups.^[3]

As shown in Table 1, the overall number of daycare of children services in Scotland steadily decreased from 3,733 to 3,514 between 2016 and 2022. The decrease has largely been in the number of children and family centres (161 to 108) and playgroups (248 to 120). On the other hand, the number of nurseries increased from 2,468 in 2016 to 2,538 in 2022, with a large increase between 2020 and 2021.

Source: Care Inspectorate, Early learning and childcare statistics 2022, Supporting Tables, Table 2; and Early learning and childcare statistics 2020, Supporting Tables, Table 10a

Note: The 'Daycare of children services' and 'All Service Types' totals do not equal the sum of individual categories, as 3 Daycare of children service subtypes that do not provide funded ELC places (Crèche, Holiday playscheme, and Out of school care) have been excluded from this table.

Between 2016 and 2022, the number of childminders declined by 38%, from 5,669 to 3,530 childminders (a reduction of 2,139 childminders over the seven-year period). Analysis of Care Inspectorate data by the Scottish Childminding Association (SCMA) highlights that the decline in the childminding workforce is accelerating. The SCMA report also noted that, while the number of childminders has declined in all local authorities, the size of the reduction varies substantially between local authorities: for example, from 17% in Argyll and Bute and 22% in Aberdeen City, to 50% in Clackmannanshire and 67% in Shetland.

Changes in the capacity of childcare services

The overall capacity of daycare of children services, however, increased from 165,010 to 179,920 between 2016 and 2022, with larger increases between 2018 and 2021 as phasing for the expansion took place. As can be seen in Table 2 below, this increase in capacity has been wholly in nurseries, while capacity in other service types decreased. In line with the decrease in the number of childminders, the capacity of childminding services also decreased from 35,180 in 2016 to 22,040 in 2022.

The average number of places per service in daycare of children services also gradually increased during this period from 44.2 to 51.2. While for childminders, the average number of places per service remained consistent at 6.2.

Source: Care Inspectorate, Early learning and childcare statistics 2022, Supporting Tables, Table 2; and Early learning and childcare statistics 2020, Supporting Tables, Table 22

Note: The 'Daycare of children services' and 'Total capacity' totals do not equal the sum of individual categories, as 3 Daycare of children service subtypes that do not provide funded ELC places (Crèche, Holiday playscheme, and Out of school care) have been excluded from this table.

Services providing funded ELC

The proportion of services providing funded ELC places increased for all daycare of children service types between 2016 and 2022. In 2022, 98% of nurseries, 90% of children and family centres and 77% of playgroups were providing funded ELC.

Source: Care Inspectorate, ELC statistics 2022, Supporting Tables, Table 3a

Delivery of funded ELC by childminders

The proportion of childminding services approved to deliver and delivering funded ELC places has increased between 2020 and 2022. However, as shown in Table 4 overleaf, in line with the overall trend, the number of childminding services approved to deliver and delivering funded ELC places has decreased over this period.

Analysis by the SCMA shows that there was progress in the number of new childminders being approved to deliver funded ELC – with additional childminders delivering funded ELC between 2021 and 2022 (29 to eligible two year olds and 75 to three and four year olds). However, this was offset by the number of childminders who stopped delivering funded ELC in the same period (44 for eligible two year olds and 93 for three and four year olds). Again, SCMA reported substantial variation between local authorities, with increases in the number of childminders delivering funded ELC in some local authorities, such as East Lothian and Aberdeenshire, and decreases in others.

Source: Care Inspectorate, Early learning and childcare statistics 2022 report, p24

The decrease in the number of childminding services delivering funded ELC, alongside the substantial – and accelerating – decline in the overall number of childminding services is an issue, both in terms of the diversity of the ELC sector and the potential implications for parental choice and accessibility. Scottish Government's Commitment to Childminding Report sets out some of the reasons childminding services are an important and unique element of the childcare sector. Research on Perceptions of the impact of childminding services highlighted benefits of childminding provision for children, parents and families. Scottish Government has also published research on Childminding Workforce Trends that explored the range of factors that may be contributing to the decline in the childminding workforce in order to identify ways to better recruit, support and retain them.

2.2. The ELC workforce

The SSSC publish data on the social care workforce. Their reports combine administrative data from the Care Inspectorate with data collected directly from local authorities by the SSSC. The data cover a range of sub-sectors including staff working in daycare of children and childminding services. They also do analysis of ELC services, which are a subset of daycare of children services and provide publicly funded services to pre-school children. The next section presents analysis of the ELC workforce that specifically delivers publicly funded childcare, by age and gender, looking at whether there have been any changes in the composition of the workforce between 2016 and 2022.

Demographic characteristics of the ELC workforce

The age profile of the workforce varies between service type – see Table 5 overleaf. In 2022 the median age of childminding staff was 50, compared with 35 for daycare of children staff. The median age for childminding staff gradually increased from 45 in 2016, while it decreased slightly for daycare of children staff from 36.

Source: Early learning and childcare statistics: equalities data for 2014-2020; SSSC Children's Services Workforce Tables, 2022 and 2021

Table 6 below shows that the age profile of the workforce also varies between the three types of employers. The median ages of staff in the public, private and voluntary sector workforces in 2022 were 40, 28 and 36 years, respectively.

Source: Early learning and childcare statistics: equalities data for 2014-2020; SSSC Children's Services Workforce Tables, 2022 and 2021

The median age of General Teaching Council of Scotland (GTCS) registered teachers employed or working peripatetically in ELC centres was higher at 46 in 2022 and 2023. It increased slightly from a median of 45 between 2016 and 2021.

The ELC workforce is overwhelmingly female: 97% in 2022. The proportion who are male increased slightly from 2% in 2016 to 3% in 2022. Two percent of childminding staff and 4% of daycare of children staff were male in 2022.

Change in the size of the daycare of children workforce

In The Distribution of the Social Service Workforce report published in February 2024, the Scottish Social Services Council (SSSC) analysed how the workforce in the social service sector is distributed across employers of different size and types. SSSC looked at daycare of children services in particular, with data mainly presented as at December 2012, 2017, and 2022. While in a Report on the Movement of Day Care of Children Staff in June 2023, SSSC undertook analysis of data from the SSSC register to examine the movement of registrants in day care of children services.

SSSC's analysis of the distribution of the workforce shows that, overall, the daycare of children workforce increased in recent years to meet the demands of the ELC expansion. The overall daycare of children workforce grew by 24% between 2017 and 2022, rising from 34,020 to 42,190. As shown in Figure 1, while the total workforce has grown, the public sector's share steadily increased to 52% in 2022, compared with 42% in 2017. In contrast, the voluntary sector experienced a marked decline, both in proportion and absolute staff numbers, falling from 19% in 2017 to 14% in 2022. There was also a decline in the proportion of the private sector workforce, from 40% in 2017 to 35% in 2022.

Source: SSSC report on Distribution of the Social Service Workforce, 2024

Changes in the size of the local authority workforce

Data reported by local authorities to the Improvement Service as part of delivery progress reporting show a similar trend in the local authority (e.g. public sector) workforce. In September 2023, the ELC workforce in local authorities comprised of 18,647 full time equivalent across Scotland. Figure 2 shows the change in the total full time equivalent local authority workforce in place since 2016-17. It shows a steep increase in the local authority workforce between 2016-17 and 2020-21, with the numbers becoming more stable from 2022.

Source: Improvement Service, ELC Expansion Delivery Progress Report, February 2022

Movement in the daycare of children workforce

In terms of staff movement, SSSC analysis for the 2021-22 financial year found that the public sector had the lowest turnover of staff and the highest retention rates at almost 90%. Of those staff who did move from a public sector role to another service, over 90% moved to another public sector service.

Retention was lowest in the private sector during 2021-22, with around 75% of staff remaining in the same service one year on. The voluntary sector retained just over 80% of staff in the same service. Of those moving from the private sector, the majority (almost 60%) moved to another private sector service. Of those who moved to a different sector, over 80% moved to a post in the public sector.

Given the expansion in the public sector workforce described above, the number of opportunities arising from new posts has been greatest in the public sector. The report notes that "the issue therefore appears to be less about a disproportionate flow of staff from the private and voluntary to the public, than the almost complete absence of a flow from the public to the private or voluntary." Further analysis suggested that private and voluntary sector employers are more dependent on new entrants to the sector to fill posts that were vacant.

The analysis also looked at movement within and between local authorities in 2021-22. The average retention rate varied from 78% to 92%. Much of the movement between authorities was, unsurprisingly, between neighbouring authorities.

Sustainability of private and voluntary ELC services

The 2023 Financial Sustainability Health Check Update highlighted that the childcare sector, like many other parts of Scotland's economy, is facing real challenges due to the ongoing costs crisis, workforce pressures and the lasting impacts of the pandemic. Some types of services have been disproportionately impacted due to their business models and changes in demand for different types of childcare provision. In addition, the Health Check Update emphasises that financial and workforce issues within the sector are closely linked.

Provider surveys were undertaken as part of the Health Check during January and February 2023. It should be noted that the response rate to the surveys was low.^[4] The survey found that providers' confidence in their financial sustainability declined across all types of childcare services since the previous Health Check (2021). The largest declines in the assessment of sustainability were for funded ELC services and for private services. Reported average delivery costs had increased for all types of day care of children and childminding services over the previous year.

Key concerns highlighted by survey respondents were around increased delivery costs, increases in income not keeping pace with rising costs, reduced demand for some services, and continued concerns about staffing. In particular loss of staff from private and voluntary sector services (including some who have left the sector altogether) and challenges in recruiting suitably experienced staff.

In the survey, over half (56%) of services delivering funded ELC reported that they currently pay all of their staff at least the real Living Wage. The majority (81%) of funded ELC providers reported that they paid the real Living Wage to either all staff or staff delivering funded ELC. However, 72% of childminders said that they did not currently pay themselves the real Living Wage. Just under three quarters (73%) of services delivering funded ELC indicated that they planned to pay all staff in their setting the real Living Wage by August 2023. Analysis in the Financial Review of the ELC Sector highlighted that in 2016, prior to the ELC expansion, around 80% of practitioners and 50% of supervisors in private and voluntary sector settings delivering funded ELC were paid an hourly rate below the real Living Wage.

The Early learning and childcare: sustainable rates review reported that between 2017-18 and 2022-23:

• The average rate paid has increased by 58% for the delivery of funded ELC to three to five year olds, from £3.68 per hour to £5.80 per hour
• The gap narrowed between the highest and lowest sustainable rate paid for the delivery of funded hours to three to five year olds, from 41% in 2017-18 to 22% in 2022-23 (a decline from £1.32 to £1.17). The gap was initially higher in 2018-19 and 2019-20 reflecting variations in local phasing plans

While rates have increased, this is against a background of headline CPI inflation peaking at 11% in the year to October 2022, whilst the Real Living Wage increased by 10% from April 2023.

Capacity – local authority infrastructure

Scottish Futures Trust collect ELC infrastructure data on a quarterly basis from local authorities. They reported that in August 2021, there were 912 projects in the capital programme. Of these, 81% (741) were complete, delivering 73% of the total planned additional space.^[5] Eight percent (75 projects) were in construction while the remaining 11% (96) were in development. The most recent Delivery Progress Report stated that the total number of 'New Build, Extension, Outdoor or Refurbishment' projects in the capital programme was 895. When all of these are complete, it is estimated that they will deliver around 22,000 additional ELC spaces. As of September 2023, 96% of these (854) were complete – delivering 91% of the total planned additional space – 2% (21) were in construction and 2% (20) were still in development.