Date lodged: 26 June 2017
To ask the Scottish Government what assessment it has made of the current extent of cross-subsidising by early education providers between the provision of free government-funded places and the rates charged to parents of other children, and what it anticipates the value of this cross-subsidy will be in each of the next three years.
Answered by: Mark McDonald 19 July 2017
The Scottish Government has not produced an estimate of the overall value of any cross-subsidy.
The value of any cross-subsidy is jointly determined by the costs faced by providers in the private and third sector delivering the funded entitlement and by the funding rate that they receive from the local authority to deliver this entitlement. Research for the Scottish Government by Ipsos MORI in 2016 estimated that the average rate paid by local authorities would be insufficient to cover the costs of around 40% of private and voluntary setting currently delivering the funded ELC entitlement. This implies that for these providers some element of cross subsidy may be necessary.
The Scottish Government values the key role that providers in the private and third sectors play in delivering the funded early learning and childcare entitlement, and we have provided the resources to ensure that the current entitlement of 600 hours per year is delivered in a way which is financially sustainable.