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12/01/14 11:13

Childcare transformation can ‘mobilise’ Scotland’s talent

New analysis demonstrates why independence necessary to transform childcare.

A new economic analysis from the Scottish Government shows improving access to affordable early learning and childcare has the potential to substantially boost the labour market in Scotland by reducing a key barrier to participation faced by some parents with young children.

It shows that increasing participation will have positive impacts for the Scottish economy and tax revenues. An increase in female labour market activity rates of 6 percentage points is estimated to increase output by an estimated 1.7 per cent (£2.2 billion) and tax revenues by 1.5 per cent (£700 million).

And, in a new illustration of the importance of independence to Scotland's ability to re-invest the dynamic effects of any future expansion in economic activity, a rise in revenues of 1 per cent from the four main taxes collected in Scotland coupled with a fall in core welfare spending of 1 per cent, would even under the powers of the new Scotland Act, see around 88 per cent of such an improvement flowing to Westminster with just 12 per cent coming direct to the Scottish Government.

Its publication follows this week’s announcement to extend childcare provision to 600 hours for more of Scotland’s two-year-olds, targeting the most vulnerable, in addition to the extra provision for all three- and four-year olds that will come into force in August this year.

The Scottish Government has made its wider ambitions for childcare clear in Scotland’s Future to ultimately deliver a universal system of early learning and childcare for children from the age of one to when they start school, benefiting around some 212,000 families.

Cabinet Secretary for Finance John Swinney said:

“This paper lays bare the need for control of the major tax revenues if Scotland is to have the transformation in childcare we need. Without it, we can do everything possible and stretch every financial sinew, but the reality is that a wholesale transformation to match the best in Europe only comes with independence.

“Increasing the number of people in work moves people out of welfare and into paying tax. That generates the extra government revenues we need to pay for the transformation of childcare.

“The paper reveals, however, the stark reality of devolution. Even with the new powers coming to Holyrood under the Scotland Act, the vast bulk of any increased revenues goes directly to Westminster.

“And, given the Chancellor is boasting of £25 billion of cuts to come, no one believes that he plans to make such revenues available to Scotland. The only way to access them is with independence.

“We are taking action now to make the greatest impact within the constrained powers and resources available to us, to support families in the face of Westminster austerity cuts. In eight months we will be delivering even more free childcare for all three and four year olds and the most vulnerable two year olds – accelerating our expansion of entitlement to reach more than a quarter of all two year olds by 2015.

“These commitments are well-planned for delivery, backed up by our investment in the early years workforce, including £3.5 million announced this week to support an additional 2,000 childcare workers. This government has a strong record of delivering, strong and sustainable investment in services – in spite of, rather than thanks to, Westminster’s cuts.

“Our ambition is to do much more. We want to see a universal system of early learning and childcare for children from the age of one to when they start school, benefiting around some 212,000 families. That ambition starts in the first Parliament of independence with a move to more than 1,100 hours of childcare vulnerable two year olds, and three and four year olds – the same number of hours as children spend in primary school.

“But, access to both sides of the balance sheet is essential. Only then can we re-invest higher revenues from improved economic activity back into expanding childcare provision, and deliver a truly transformational change to childcare policy in Scotland.

Notes to editors

A copy of the report can be found at:

Since 2007 all three and four year olds are entitled to at least 475 hours per year of childcare. The Scottish Government committed to increase entitlement further in August this year to a minimum of 600 hours per year of more flexible provision for all three and four year olds and initially the most vulnerable (looked-after) two year olds (three per cent of two year olds).

On Tuesday the First Minister announced a £59 million package to further extend this provision, with a larger number of two-year-olds gaining entitlement to 600 hours this August (now including all those from workless households), representing around 8,400 children or 15 per cent of all two year-olds). In August next year childcare provision will be extended further, reaching 15,400 (or 27 per cent of) two year olds, by widening entitlement to families that received certain welfare benefits such as Jobseeker’s Allowance.

‘Scotland’s Future’ outlines how, in the first budget after independence, the Scottish Government would further extend eligibility to 600 hours of childcare to nearly half of Scotland’s two year olds as part of the longer-term plan to deliver a transformational expansion in childcare and 1,140 hours a year to all children from age one until they start school. Once fully operational, the Scottish Government estimates that around 240,000 children and 212,000 families will benefit.