Many parts of the childcare sector operate under a mixed economy model where they receive income from different sources, including directly from their local authority to support the delivery of funded early learning and childcare (ELC). For example, the 2023 Financial Sustainability Health Check reported that public funding accounted for, on average, around 46% of overall income for private childcare services who delivered funded ELC.

The payment of sustainable rates to providers delivering funded ELC is vital to the financial sustainability of these providers.

This is why the Scottish Government and COSLA undertook a joint Sustainable Rates Review in 2023. Through evidence from providers and local authorities, it identified a risk that some providers were not being as effectively supported as others by rates at the time of the review.

To address this, work is underway to improve the data available to inform funded ELC rates-setting by local authorities. The Scottish Government has contracted the Diffley Partnership to undertake a new funded ELC cost survey. The findings will inform future sustainable rates-setting and the Scottish Government and COSLA’s future financial planning.

While work is underway to improve rates-setting processes, the childcare sector in Scotland has been impacted significantly by the UK Government’s unilateral changes to employer National Insurance Contributions. We estimate that these changes will add £5 million per year to funded providers’ costs for the delivery of funded ELC (with higher additional costs expected for the whole of the childcare sector).

The Scottish Government called on the Chancellor to fund these costs in full, including the costs for commissioned services such as ELC, but she has failed to do so. The additional funding of £339 million being provided by the UK Government falls far short of the estimated additional costs and means that public services in Scotland still face a £400 million shortfall.

I refer the member to the answer to question S6W-38244 on 17 June 2025. All answers to written Parliamentary Questions are available on the Parliament's website, the search facility for which can be found at https://www.parliament.scot/chamber-and-committees/questions-and-answers.

Youth work falls within the scope of The Requirements for Community Learning and Development (Scotland) Regulations 2013. This regulation, in effect, requires local authorities to identify need and plan provision of Community Learning and Development in their areas.

As the regulatory requirements for Community Learning and Development are placed with education authorities, the Scottish Government does not collate information on youth workers.

The Scottish Government monitors trends across the whole childcare sector, drawing on data published by the Care Inspectorate. In recent years the Scottish Government has published financial sustainability health checks and the Sustainable Rates Review, which considered issues relating to financial sustainability.

As part of the evidence gathering phase of the joint Scottish Government and COSLA Sustainable Rates Review, local authorities reported that “they had seen very little evidence of funded services in the private, third or childminding sectors reporting to them that they had been under financial duress or of services closing due to financial sustainability pressures”.

Under the Business Sustainability criteria in the National Standard for funded ELC, providers are required to demonstrate to the local authority that they are financially viable. If a service delivering funded ELC was at risk of closure due to financial difficulties, they would therefore be obliged to make their local authority aware.

The Scottish Government continues to work closely with the sector representative organisations and as part of this engagement we regularly receive updates from these organisations regarding pressures faced by their members. The representative organisations will often highlight any concerns in reports which draw on the responses from members to surveys (and these reports are usually available on the organisations’ website). For example, Early Years Scotland recently published a report highlighting the potential impact on providers as a result of the UK Government’s changes to Employer National Insurance Contributions.

The Scottish Government does not hold information on how many providers have withdrawn from offering funded early learning and childcare (ELC), or their reasons for doing so.

Information on the number of private, and third sector childcare services delivering funded ELC in each local authority in September each year is captured through the ELC census. This information is published as part of the Summary Statistics for Schools and is available in Table 1 of the Additional early learning and childcare statistics spreadsheet. It is important to note that there may currently be additional services delivering funded ELC that were not doing so at the time of the Census. Table 1 also includes information on the share of ELC registrations that were in private and third sector services (Partnership Centres) in each year.

Table: Number of Partnership Centres (private and third sector services) providing funded ELC

An independent review of the Community Learning and Development (CLD) landscape was commissioned in December 2023.

Following the review, the Learning: For All. For Life. report was published in July 2024 which set out 20 recommendations varying in complexity and scope. The report can be accessed at: https://www.gov.scot/publications/learning-life-report-independent-review-community-learning-development-cld/.

In December 2024, the Scottish Government and CoSLA accepted the first recommendation of the report to set up a CLD Strategic Leadership Group (SLG). The SLG are collectively considering the remaining recommendations of the report, including those relating to youth work.

I refer the member to the answer to question S6W-38244 on 17 June 2025 All answers to written Parliamentary Questions are available on the Parliament's website, the search facility for which can be found at https://www.parliament.scot/chamber-and-committees/questions-and-answers.

The Scottish Government monitors trends across the whole childcare sector, drawing on data published by the Care Inspectorate. In recent years the Scottish Government has published financial sustainability health checks and the Sustainable Rates Review, which have considered issues relating to the financial sustainability of the sector.

Local authorities are responsible for assessing and monitoring compliance with the National Standard in all funded providers, as part of their contract management arrangements and in their role as guarantors of quality. This includes monitoring the financial viability of these services.

Concerns regarding rising staffing costs have been raised by childcare sector representative organisations, in particular providers’ ability to meet the additional costs resulting from the UK Government’s changes to employer National Insurance Contributions. These changes are estimated to add £5 million per year to funded providers’ costs for the delivery of funded ELC (with higher additional costs expected for the whole of the childcare sector).

To strengthen the evidence base on the costs for private, third sector and childminding providers to deliver funded ELC, and to deliver a key action from the Sustainable Rates Review, a national funded ELC cost survey is currently underway. The findings will inform future rates-setting and Scottish Government and COSLA’s future financial planning.

I refer the member to the answer provided in S6W-38036 on 13 June 2025. The reporting information provided by Local Authorities is collated and held centrally and provided on request.

All answers to written Parliamentary Questions are available on the Parliament’s website, the search facility for which can be found at https://www.parliament.scot/chamber-and-committees/written-questions-and-answers

I refer the member to the answer provided in S6W-38036 on 13 June 2025. All answers to written Parliamentary Questions are available on the Parliament’s website, the search facility for which can be found at https://www.parliament.scot/chamber-and-committees/written-questions-and-answers