SCOTLAND’S childcare sector remains “fragile” despite coping with a dramatic expansion in free hours during the pandemic and receiving around £1billion a year from Holyrood.

In a new report, spending watchdogs commend the Scottish Government and councils for delivering a near doubling in free hours to 1,140 per child from August 2021.

Audit Scotland found take-up for three and four-year-olds is extremely high, and most parents are happy with what is provided, although take-up for vulnerable two-year-olds was too low, despite progress on data-sharing to identify those eligible.

Audit Scotland found 14 per cent of two-year-olds were registered for funded early learning and childcare in 2022, up from 11% in 2019, but 25% were eligible.

The study found councils also completed most of the 900 infrastructure projects needed to accommodate the expanded provision of free hours on time, although they spent more than £100m over their planned capital budgets.

However the childcare sector as a whole, including state and private nurseries and childminders, remains “fragile” because of budget pressures and staff shortages.

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This could limit the “flexibility and choice for families”, and impact on the Government’s aim of using childcare as a way of helping parents work more to boost the economy.

Ministers were also in the dark about how much of the £1bn a year they gave councils towards early learning and childcare actually ended up in the service.

Other data gaps mean it is unclear how many childcare providers pay the living wage.

Plans to evaluate whether the flagship policy of raising free hours from 600 to 1,140 has been value for money might be affected by the lack of data from councils.

The report said: “The Scottish Government and councils did well to put in place 1,140 hours of funded early learning and childcare by August 2021, during the Covid‑19 pandemic.

“This is a flagship policy which underpins broader ambitions to reduce child poverty and to support economic transformation. Around £1 billion is invested in it annually. But the sector is fragile.”

The report also highlighted a sharp decline in childminding, limiting parental choice.

Scottish Childminding Association Graeme McAllister said greater provision by councils had created “a series of unintended consequences”, and a 34% drop in the childminding workforce had led to the loss of 11,000 places, which could double by 2026.

Sophie Flemig, of the Accounts Commission, added: “Councils have done well to complete most of the early learning and childcare building projects, despite the significant challenges of the Covid-19 pandemic.  

“Councils now need to work with the Scottish Government and other stakeholders across the private and voluntary sectors to agree a long-term workforce plan that makes sure future demand for ELC can be met and that all children can thrive in their settings.”  

Auditor General for Scotland Stephen Boyle added: “The Scottish Government has worked well with its partners to expand early learning and childcare hours. But the sector is fragile, which could affect flexibility and choice for families if funding and workforce risks are not addressed.  

“An important next step for ministers is to effectively evaluate whether the policy has improved the lives of children and parents and delivered value for money. But that task has been made tougher by the effects of the pandemic.”

Scottish Tory deputy leader Meghan Gallacher said: “This timely report emphasises how fragile Scotland’s early learning and childcare sector is under the SNP.

“Clear concerns around budget pressures, staffing issues and uncertainty over the sustainability of funding providers risk limiting future childcare options for families.

“The lack of available data – so important for monitoring the service and improving the system – is also deeply concerning and must be resolved.

“SNP ministers must heed the warnings in this report and stop short-changing Scotland’s early learning and childcare system.”

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Labour MSP Pam Duncan-Glancy said the report showed how work the Scottish Government still needed to do to meet its child care targets.

She said: “Vacancies across the sector have risen, many parents of children with additional support needs feel unsupported and some parents in poorer areas are unable to use the time to look for work.

“The intention to expand childcare is to be welcomed, but warm words and good intentions only take you so far. The fact is that SNP cuts to local government threaten the whole basis of this scheme.

“The minister needs to seriously look at how staffing issues across the sector can be addressed and how the concerns raised by parents can be dealt with.”

Scottish Liberal Democrat MSP Willie Rennie said the findings should act as a “kick up the behind for the government”. 

SNP children’s minister Natalie Don said: “Despite the significant challenges of the pandemic, this report by Audit Scotland shows what we can achieve when we work closely with our partners to deliver for Scotland’s children and families.

“It builds on recent independent polling showing 97% of parents with a three to five-year-old have accessed funded ELC places since August 2021 and that, of those, 97% are satisfied with the quality of provision.  

“The Scottish Government will consider the findings carefully and work closely with every part of the childcare sector to understand and address the challenges currently facing providers as a result of the cost-of-living crisis and workforce pressures.”