Scotland’s independent think tank
Scotland’s independent think tank

The Scottish Childcare Payment

Reform Scotland, a public policy institute which works to promote increased economic prosperity, opportunity for all, and more effective public services, has today released a detailed paper – The Scottish Childcare Payment  – written by Gordon Hector.

The paper welcomes the gradual expansion in state funding for childcare, but says the payment mechanism has created a number of unintended consequences including:

  • A collapse in flexible childcare because councils have offered the free hours mostly through their own nurseries 
  • Reductions in more flexible nurseries as a result
  • Poor provision for under-threes, and for school-age children
  • Confusing accountability and confusing benefit systems

Hector, Head of Policy and Strategy at Urban Foresight and a former senior adviser to Ruth Davidson, has analysed the pledges in the Programme for Government, and said that it represents both a “good start” and “an admission of failure”.

“Much of the PfG is a good start. There is a promise to raise the pay of private and voluntary childcare staff, which tackles an existential challenge for the private sector: since the expansion of childcare from 2016, they have seen hot competition for staff from the public sector. Private nurseries in particular matter because they tend to open all year round, when council nurseries are term time-only. They should now be more secure.

“However, childcare funding remains heavily skewed towards 3 and 4 year olds and there remains a conflict of interests in the system, with nothing to stop councils prioritising their own services.

“Economists talk about the ‘opportunity cost’ of policy for a reason: you have to think about what else you could have achieved for the same cash. In Scotland, we chose to expand care for all 3 and 4 year olds instead of more targeted support blended across different ages.

“Instead, we should look again at the idea of parents receiving vouchers. This would see them receive a cashable voucher for the same amount, but with total freedom to use it where they want. This would allow the Scottish Government to achieve many of the things it wanted to today – better support for childminders, more equal treatment for private nurseries, genuine choice for parents. But it would also clarify accountability. It would strip out complexity. It would make for a much more resilient sector. It would do so without spending any more money.

“And most importantly, it would cement the idea that parents – not councils, ministers or providers – call the shots.”

Gordon Hector

“In critiques of devolution, and the SNP’s tenure in government more specifically, the expansion of early years provision and childcare is often cited as an area of great success. However, there have always been some problems in the system.

“For example, Reform Scotland has previously highlighted the issue of birthday discrimination’, which means that children who start school at the age of 5 (normally born between March and August) receive more early years provision than their peers who start school at the age of 4 (normally born between September and February), creating an attainment gap before children even begin school.

“There is always a danger of legislating and forgetting. This paper from Gordon Hector is an important reminder of the need to review and adapt to ensure the continued success of early years expansion in Scotland.”

Chris Deerin, Director, Reform Scotland


The Scottish Childcare Payment