Financial Sustainability Health Check of the Childcare Sector in Scotland: Analysis and Evidence

Introduction

1. The Scottish Government is committed to maintaining a robust but proportionate means of monitoring the financial sustainability of the childcare sector to ensure that both national and local policy is informed by up to date evidence about the health of the sector.

2. To support this in January 2023 the Scottish Government began work to update the previous Financial Sustainability Health Check of the Childcare Sector in Scotland (published in August 2021).

3. The previous Financial Sustainability Health Check has been a vital source of evidence and has helped the Scottish Government to tailor support for childcare providers. However, since Summer 2021 there has been substantial economic impacts as the result of the costs crisis, labour market pressures, and potential continuing impacts from the pandemic.

4. The update was undertaken to help provide detailed information as to how these events are impacting on the childcare sector, as well as allowing for analysis of any changes in underlying trends in the sector. This includes understanding where there may be disproportionate impacts across different types of providers.

5. As with the previous Health Check the findings from this analysis will also be used to inform future policy development.

6. The Health Check has been informed by evidence and analysis from:

• Detailed surveys of childcare providers, with separate surveys for day care of children and childminding services. Surveys were open from 20 January 2023 to 27 February 2023.
• Analysis of trends in Care Inspectorate registration and cancellations data.

7. The Health Check has enabled a wide range of rich data and information to be captured, which is set out in this document. Whilst the key findings have been summarised in the Financial Sustainability Health Check of the Childcare Sector in Scotland, this paper is intended to provide a resource for readers who wish to explore the underlying evidence and analysis in more detail.

8. Given the range of analysis that is available across different types of services, this has meant that the majority of the information is presented in reference tables.