Early Learning and Childcare Funding

General Question Time – in the Scottish Parliament at on 23 May 2024.

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Photo of Willie Rennie Willie Rennie Liberal Democrat

To ask the Scottish Government when it will close the gap in funding for 1,140 hours of early learning and childcare between private, voluntary and independent providers and council-run facilities. (S6O-03481)

Photo of Natalie Don Natalie Don Scottish National Party

The local government finance settlement provides local authorities with funding covering different service areas. The settlement for 2024-25 includes around £1 billion of funding for the delivery of ELC. Local authorities are responsible for designing their own ELC delivery models, and national guidance is clear that councils must set hourly rates that reflect the costs of delivery for private and third sector providers, as well as childminders.

Mr Rennie is aware that the childcare market is a mixed economy, and businesses in the private and third sectors are responsible for making their own decisions on fees for non-funded hours, as well as on overall staff terms and conditions. Local authorities face unique costs as statutory bodies. However, as I have made clear to both the member and Parliament previously, reducing variation in the rate-setting process is a key priority for me, and the Scottish Government is working with the Convention of Scottish Local Authorities to improve the rate-setting process across a number of areas following the joint sustainable rates review.

Photo of Willie Rennie Willie Rennie Liberal Democrat

I am afraid that none of that closes the gap. The promise that was made by the previous First Minister was that the gap would be closed, but that has been happening at a snail’s pace, and that is having a direct impact on retention, recruitment and capacity. All those areas are really important, because the private, voluntary and independent sectors provide the capacity and flexibility that parents need.

Has the minister just given up on closing the gap? What is she actually going to do to make a difference?

Photo of Natalie Don Natalie Don Scottish National Party

Mr Rennie raises an important point here, but I do not fully agree with his assessment. We need to set the scene a little. Rates have been steadily increasing since the implementation of the expansion. The average rate that is paid by local authorities to providers who are delivering funded ELC to three to five-year-olds increased by 64.1 per cent between 2007 and 2023. However, while the average rate has increased, there remains—as I said—variation across Scotland in the rates that are paid. That is why the Scottish Government and COSLA undertook the joint rates review.

We recognise the current period as being challenging for the childcare sector, and the review is clear that there is more to do to ensure that rates are set sustainably for all funded providers. The review recommends a wide-ranging set of actions, and the next steps include enhancing the guidance on the approach to rate setting; developing guidance around the rates for two-year-olds and meal rates; and setting clear guidance around engagement. I am positive that those will have the impact that Mr Rennie wishes to see, and I am happy to keep him updated on the matter

Photo of Roz McCall Roz McCall Conservative

As a result of funding pressures in local authorities, families across Scotland are faced with a postcode lottery when it comes to accessing the 1,140 hours of funded childcare. Some local authorities are offering funded childcare immediately following a child’s third birthday; some are offering childcare a month after the third birthday; and others are delaying access, in some cases for months, until the following school term. What will the minister do to rectify that disparity and support the right of all parents, in particular working parents, to accessible childcare?

Photo of Natalie Don Natalie Don Scottish National Party

I understand that that is an issue. As I said, there is a host of on-going work on both supporting providers and ensuring that our offer is good quality, accessible and affordable for parents. Nevertheless, I will certainly take that issue away and look into it for the member.