Chamber and committees

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.

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.

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.

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.

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.

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 national funded ELC cost survey that is currently being carried out by the Diffley Partnership on behalf of the Scottish Government and COSLA will help to ensure that our long-term investment to support the setting of sustainable rates is informed by a robust and reliable evidence base. The findings will be shared with local authorities and the sector later in 2025.

The Care Inspectorate collects and publishes data on service cancellations and registrations (available here: Statistics and analysis).

Figure 8 of the Care Inspectorate’s 2023_Early_learning_and_Childcare_Statistics.pdf shows service cancellations for childminding services and day care of children services for the period 2014 to 2023.

The Scottish Government drew on Care Inspectorate data to inform the most recent Financial Sustainability Health Check, published in July 2023. This included an analysis of annual cancellations across the whole childcare sector for the period March 2019 to March 2023, and provided a more detailed breakdown of cancellations by type of provider for this period. This information is set out in Table 1.10 of the Section 1: Recent Trends in the Childcare Sector - Financial Sustainability Health Check of the Childcare Sector in Scotland: Analysis and Evidence - gov.scot.

A breakdown of cancellations by local authority area can be produced using data available from the Datastore.

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

The information requested is not held centrally. The Scottish Government does not collect or hold data about the condition of early learning and childcare (ELC) settings. Owners and managers are responsible for building management and for ensuring the safety of their premises. Statutory requirements for the fitness of premises to be used for the provision of ELC are set out in Section 10 of The Social Care and Social Work Improvement Scotland (Requirements for Care Services) Regulations 2011.