Funding Follows The Child and The National Standard for Early Learning and Childcare Providers: Operating Guidance

Section 1: Funding Follows the Child

The Funding Follows the Child approach places choice in parents’ and carers’ hands allowing them to access their child’s funded entitlement from any setting – in the public, private or third sector, including from a childminder – who meets the National Standard, has a place available, and has or is willing to enter into a contract with their local authority.

The National Standard, which underpins the approach, provides parents and carers with the certainty that those settings delivering funded hours are offering high quality ELC provision.

The key aspects of the Funding Follows the Child approach are:

• Getting It Right for Every Child is at the centre of our approach to improving the experience of our children in their early years;
• It is ‘provider neutral’ and is underpinned by a National Standard, which all providers who wish to deliver the funded entitlement will have to meet;
• ‘Provider neutral’ means that families will be able to access high quality funded ELC with the provider of their choice if that provider meets the criteria set out in the National Standard, wishes to deliver the funded entitlement, has a space available, is able to offer the funded hours in-line with local ELC delivery plans (subject to the setting’s overall capacity) and has or is willing to enter into a contract with the local authority;
• The choice of setting available to families is not restricted to their own local authority boundary;
• Information for parents and carers will be clear and accessible to make them aware of the options available to them, in particular the different types of settings that can be chosen, when accessing their funded entitlement;
• Settings must ensure that the funded hours are free at the point of access and parents and carers are not required to purchase additional hours beyond the funded entitlement in order to access the child’s funded entitlement at a setting;
• Local authorities have the statutory responsibility for ensuring that the funded entitlement is available to all eligible children in their area, and will be the primary guarantors of quality and key enablers of flexibility and choice – ensuring that there is a range of options for families in their area;
• Local authorities and providers should work together meaningfully and in genuine partnership in delivering flexible ELC provision, while continuing to ensure that a high quality experience for children is maintained and accessible to all;
• Funding to deliver the funded entitlement will continue to be channelled through local authorities;
• Local authorities will set a rate locally that is paid to funded providers in the private and third sectors, including childminders, to deliver the funded entitlement, which is sustainable and reflects national policy priorities, including funding to enable payment of the real Living Wage to all childcare workers delivering the funded entitlement;
• Funded providers who agree to deliver the funded ELC entitlement will commit to paying the real Living Wage to all childcare workers delivering the funded entitlement and commit to operating Fair Work Practices;
• Every child receiving a funded ELC session will receive a free meal; and
• A commitment to simplifying the process for, and reducing the burden on, providers to deliver the funded entitlement. All providers will be expected to meet the same National Standard for becoming, and continuing to be, a funded provider.

Quality is at the heart of the delivery of funded Early Learning and Childcare (ELC) entitlement.

We will continue to ensure that the funded ELC entitlement is delivered in high quality settings across Scotland.

A key focus of the quality criteria are scrutiny evaluations, including those which are awarded through Care Inspectorate inspections. This will strengthen the use of externally assessed measures of quality in the assessment decisions made by local authorities and ensure that these evaluations are used in a consistent way.

The National Standard reflects the current scrutiny and inspection frameworks of the Care Inspectorate and Education Scotland. The Care Inspectorate and Education Scotland are currently developing a shared inspection framework which will strengthen an integrated approach to inspection, enabling the Care Inspectorate and the education inspectorate to work in partnership. When this new framework is implemented, criteria relating to quality evaluations will be updated to reflect this.

A Financially Sustainable Sector

Many parts of the childcare sector in Scotland operate under a mixed economy model, including a range of providers from the public, private and third sectors. Some of those services delivering funded ELC will receive income from both public and private sources.

Under a ‘provider neutral’ approach, it is essential that provision is financially sustainable in order to ensure that providers across all sectors are willing and able to deliver 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 is not for local authorities or the Scottish Government to seek to comment on or intervene in the aspects of a funded provider’s business that are outwith the funded entitlement.

In order to determine sustainable rates, it is important to have a shared understanding, built on a robust evidence base, of the cost of delivering the funded entitlement. This will support local authorities to establish an affordable and sustainable rate for delivery of funded hours across all settings.

A Commitment to Paying the Real Living Wage

Guided by the evidence, the Scottish Government believes that employers whose staff are treated fairly, who are well-rewarded, well-motivated, well-led, have access to appropriate opportunities for professional learning and skills development, and who are a diverse workforce are likely to deliver a higher quality of service. This can be supported by the adoption of fair work practices across the sector, which includes ensuring that staff are fairly remunerated.

The Scottish Government’s aspiration is for all workers in settings delivering early learning and childcare to be paid the real Living Wage as a minimum.

To support this, funded providers receive sustainable funding rates that are set at a level that enables them to pay the real Living Wage to childcare workers delivering the funded entitlement.

Meaningful and Genuine Partnership Working

It is expected that local authorities and funded providers work together meaningfully and in genuine partnership to deliver flexible ELC provision. This will be done while ensuring a high quality ELC experience is maintained and accessible to all children.

The National Standard sets out the requirements for all funded providers, regardless of whether they are in the public, private or third sectors, including childminders. However, whilst there is, rightly, a high expectation on providers delivering the funded entitlement, settings should also have high expectations of the support that they can expect to receive as part of their agreement with the local authority.

Under a ‘provider neutral’ approach there should be a clear and consistent level of support that funded providers across all settings can expect from local authorities. The approach is built on partnership, and by entering into agreements with providers to deliver the funded entitlement, local authorities will be accepting the expectations on them to support providers through – in particular, but not limited to:

• a sustainable funding rate that reflects the cost of delivery and allows for delivery of national priorities including payment of the real Living Wage to all workers delivering the funded entitlement;
• additional funding to providers to ensure every child attending a funded ELC session is provided with a free meal;
• giving appropriate consideration to the potential impacts of their policy and investment decisions on the competitiveness and business sustainability of providers;
• fair and transparent payment practices for both parents and carers and funded providers;
• working closely with, and supporting, funded providers to make reasonable changes to the care and learning environment in order to meet any additional support needs that a child may have (in accordance with duties under the Education (Additional Support for Learning) (Scotland) Act 2004 and the Equality Act 2010);
• providing clarity on the overall support available to funded providers and how this support is reflected in the rate, including support for staff;
• supporting parents and carers to make informed choices; and
• monitoring compliance of all funded providers against the National Standard.

Equally, under a ‘provider neutral’ approach, there should also be a clear and consistent level of service delivery that all funded providers should be expected to maintain, including continuing to meet the criteria set out in the National Standard. This will not only ensure the proper use of public funds, but will also guarantee consistency of high quality provision across all provider types.

By entering into an agreement with local authorities to deliver the funded entitlement, funded providers will be accepting the expectations on them to comply with certain requirements. The detailed requirements will be agreed with the local authority when entering into the agreement and should include:

• a guaranteed standard of high quality ELC for children, including continued compliance with the National Standard criteria;
• ensuring that all funded hours are free at the point of access;
• a commitment to pay the real Living Wage to staff delivering the funded entitlement;
• a commitment to work within the parameters of the local authority’s model of delivery;
• attending local authority development and consultation sessions or equivalent;
• a commitment to ongoing and constructive communication with the local authority, including compliance with local authority quality monitoring arrangements; and
• open and regular communication with parents and carers.