Investing in Scotland’s childcare workforce

High quality, accessible and affordable childcare is a key part of driving equality in the workplace and tackling the gender pay gap, First Minister Humza Yousaf has said.

On a visit to mark International Women’s Day 2024, the First Minister announced £16 million of additional investment to enable people delivering funded early learning and childcare in the private, voluntary and independent (PVI) childcare sectors, to be paid at least £12 per hour from April 2024.

Guidance published today confirms how this funding will be allocated. This is part of efforts to deliver the Scottish Government’s Fair Work agenda and to support sustainability in the childcare sector.

The First Minister confirmed the funding on a visit to TASK Childcare in Glasgow yesterday with the Minister for Children, Young People and Keeping the Promise, Natalie Don.

The announcement reflects the United Nations’ designated theme for International Women’s Day 2024: ‘Invest in Women: Accelerate Progress’ with a focus on addressing economic disempowerment.

First Minister Humza Yousaf said: “This International Women’s Day, I’m proud the Scottish Government’s cabinet has a majority of women and to have appointed Kaukab Stewart as the first woman of colour to hold a ministerial role in Scotland. In 2024, it is vital the Scottish Government represents modern Scotland. 

“We have made great progress to prioritise and accelerate gender equality across our country. We rightly no longer question what women can accomplish but we should always question whether we are doing enough to remove barriers that too many women in our society continue to face. 

“Evidence shows that a lack of affordable and accessible childcare for many women with children will result in too many women leaving the workforce, working part time or taking up work in inflexible employment which pays less and doesn’t make best use of their skills. That is why my government is prioritising additional investment of £16 million in Scotland’s childcare workforce.

“The Scottish Government has already delivered the most generous early learning and childcare offer on these islands and high quality, accessible and affordable childcare is a key part of our goal to drive equality in Scotland’s workforce and tackle the gender pay gap.

“Supporting families is not only fundamentally the right thing to do, it is critical to our national missions – affordable and accessible childcare supports female employment and enables secure, sustainable employment.”

Children’s Minister Natalie Don said: “This International Women’s Day, I am proud we are delivering on a key pledge to ensure £12 per hour for those working in the private, voluntary and independent childcare sector to deliver funded ELC. We are already delivering the most generous funded childcare offer in the UK today but we recognise we need to do more to tackle poverty and support gender equality.

“High quality, accessible and affordable childcare is a critical part of the national infrastructure we need to drive greater equality in Scotland’s workforce and tackle the gender pay gap. The innovative work we are leading through our six early adopter communities will enable us to better understand what a future all-age childcare system could look like for Scotland, to support more families out of poverty.”

COSLA Children and Young People Spokesperson Councillor Tony Buchanan said: “Scotland’s councils, working closely with their partners in the private, third and childminding sectors, are committed to supporting families through delivering 1140 hours of high quality funded early learning and childcare (ELC) across our communities. 

“Providing the youngest in our communities with positive opportunities for play, learning and development, funded ELC provision is enabling parents – including mothers, who we know can often face particular barriers – to access work, training or study.

“The guidance being published today to support delivery of the £12 per hour pay commitment during 2024-25 has been developed and agreed through positive partnership working between Scottish and Local Government. We look forward to continuing to work in partnership as we take forward the range of actions identified in the joint Sustainable Rates Review.”

Chancellor doubles-down on biggest childcare reform

• Chancellor commits a further £500 million for childcare providers over the next two years. 
• New funding will give the sector the certainty to invest in staff and space for the future 
• The Chancellor also confirmed new rules which will require local authorities to pass through more government money and confirm final hourly rates faster.  

Chancellor of the Exchequer Jeremy Hunt added £500 million in funding for the rollout of free childcare, helping tens of thousands of parents back to work and growing the economy.    

The new money means childcare providers will be protected from rising costs by increasing the national average hourly rate with inflation, average earnings and the National Living Wage. This comes on top of more than £4 billion of investment per year announced at Spring Budget last year and will benefit around 60,000 childcare providers in England, giving them more confidence to invest and expand.  

Chancellor of the Exchequer Jeremy Hunt said: “Last year I announced the single biggest investment in childcare in England’s history, saving parents up to £6,900 a year in fees and helping tens of thousands into work.

“We’re now going a step further by protecting nurseries and preschools from rising costs and getting funding to them quicker, helping parents back to work and the economy to turn a corner.”  

New funding rules will mean providers are given more financial certainty and receive more government money. Planned reforms to local funding rules will mean local authorities will be required to confirm final hourly rates to providers within eight weeks of local authority rates being published and pass through at least 97 percent of funding. Currently local authorities need to pass through 95 percent of funding and confirm final rates by the end of the financial year.   

To ensure that nurseries and early years providers can get the workers they need to offer more childcare places, the government recently launched a national recruitment campaign to encourage people to start a career in childcare.  

There are currently 1.5 million childcare places available across England and around 330,000 staff working in the sector. The new investment will help deliver thousands more places and staff to ensure the sector is ready.  

Tens of thousands of parents have already received childcare eligibility codes so they can access free childcare from April, when the first stage of the offer is rolled out. Working parents using the full 30-hour entitlement next year will save up to £6,900, helping tens of thousands back into work.  

This significant expansion of childcare provision is part of the government’s plan to reward work and grow the economy. Inflation has fallen from 11.1% to 4%, borrowing costs are starting to come down and debt is on track to fall as a share of the economy. Because of this progress, the government announced tax cuts for working people Spring Budget 2024, which will bring thousands more people into work. 

Building on the 2 percentage point cut to Employee National Insurance at Autumn Statement, the Chancellor announced a second 2p cut from 10% to 8% from April. Taken together with the cut to Employee National Insurance at Autumn Statement, this slashes the main rate of Employee NICs by a third and means the average worker earning £35,400 a year will be over £900 better off this year.  

The Chancellor also went further with tax cuts for the self-employed, having reduced Class 4 NICs from 9% to 8% and abolished the requirement to pay Class 2 NICs at Autumn Statement. Today he announced a further 2p cut to Class 4 NICs for the self-employed to 6%, meaning the average worker earning £28,000 will be £650 better off compared with last year.  

This support for working parents comes on top of plans for the High Income Child Benefit Charge to be assessed on a household basis by April 2026, with a consultation to come on achieving this.    

To ensure working families benefit from increasing their earnings before this change is made, the threshold to start paying back Child Benefit will increase in April from £50,000 to £60,000 – a 20% increase which will take 170,000 families out of paying the charge this year – while Child Benefit will no longer need to be repaid in full until earnings exceed £80,000.

This represents a £1,260 boost on average for around half a million working families, rising to nearly £5,000 for some families when combined with tax cuts since Autumn Statement. This will put an end to the current unfairness, where two parents earning £49,000 a year receive the full Child Benefit while a household with a single earner on over £50,000 does not.  

The OBR says the immediate changes to the HICBC will lead to an increase in hours worked equivalent to around 10,000 more people entering the workforce on a full-time basis.