Financial Sustainability Health Check of the Childcare Sector in Scotland

Supporting Sustainability in the Sector

56. The analysis has highlighted that the childcare sector is currently facing real challenges due to the ongoing costs crisis, workforce pressures and the lasting impacts of the pandemic.

57. While all parts of the sector reported less confidence in their financial sustainability since the last Health Check, some types of services have been disproportionately impacted due to their business models and changes in demand for different types of childcare provision.

58. In addition, this update has emphasised that financial and workforce issues within the sector are closely linked. These factors will constitute key considerations as we develop and implement policy actions.

59. The previous Financial Sustainability Health Check (FSHC) set out a programme of actions, across a number of areas, to support the long-term sustainability of the sector. We have worked with the sector and delivery partners to progress these actions. The main focus of our next steps will be to build on this programme of actions, within available financial resource, to maximise their impact to ensure a sustainable childcare sector in Scotland. To support this, we will:

• Build on the learning from our pilot programmes of targeted business support to identify the parts of the sector where there is a need for support. This will include continuing to link with the childminder recruitment pilot by providing an offer of an initial 1-to-1 session with a business adviser as part of induction process. Alongside this we will raise awareness amongst childcare providers of the general Business Gateway offer that is available, and to encourage higher levels of engagement amongst providers, where required, in accessing existing services. We will explore what more can be done in this area with Business Gateway and through engagement with the sector in order to inform any further targeted support.
• Continue to fund the Care Inspectorate to deliver the ELC Improvement Programme to support funded providers to meet the quality criteria included in Funding Follows the Child and the National Standard. The programme aims to improve the quality of ELC services by providing targeted support to funded ELC providers who are not meeting Care Inspectorate gradings of ‘good’ or better across the four quality themes, or who have previously achieved grades of ‘good’ but are at risk of falling below that at their next inspection. In addition to this, the programme provides universal resources to support all settings with improving quality.
• Deliver a series of actions to support the childcare workforce, including a commitment by the Scottish Government to cover the costs of the Protecting Vulnerable Groups (PVG) membership fees for new entrants to the sector for the remainder of the 2023-24 financial year, publishing a resource setting out sources of funding to undertake qualifications and Continuous Professional Learning, and consolidating wellbeing resources for practitioners.
• Continue funding the Scottish Childminding Association (SCMA) to offer a package of support to new entrants in remote and rural areas to register and establish their businesses, and look at opportunities to expand the scheme further, as undertaken recently by expanding the recruitment model into urban areas.
• Publish the Strategic Framework for Scotland’s Early Learning and School Age Childcare Profession. Working with partners, we have considered a range of issues under key themes and will take action to ensure that our workforce is supported to deliver high quality childcare to Scotland’s children and families. The Framework will set out priorities for action now and over the coming months and years to ensure the qualifications, training, recruitment, and retention needs of all parts of the sector are met.
• Finalise the joint Scottish Government and COSLA Review of the approach to setting sustainable rates in 2022-23. The findings of the evidence-based review, which has included input from both funded ELC providers and local authorities, will inform what further action may need to be taken to the wider approach to sustainable rate setting over the rest of this Parliament. The Review will be published later this year.
• The Scottish Government will also ensure that provider sustainability and workforce issues are addressed as a priority through the programmes of work that are in train on building a system of school age childcare and developing a new offer for one and two year olds, starting with those who will benefit most.
• Publishing our School Age Childcare Delivery Framework. Our delivery framework will outline our school age childcare commitments and our action areas for the next 3 years. In addition, the framework will describe our transformational approach and the principles that we will apply to designing and building a new system of school age childcare.