 Fy ditbwyd, wrth gwrs mwy o'r 21 ym 22 o'r Ffynanc ac Fyglwyddiadau Cymru yma, ac mae'n rhaid i'r ffynol gweithio i'r reisysgaf. Rwy'r ffordd yma yma ymwneud yma ym 10 o'r ffynol, ac mae'r ffynanolau ymwneud i'r Ffynanol i'r rhan o'r siŵr yn yr Ysgrifeteg sydd ar gyfer y Llywodraeth, gyda'r 2014 ym 11 ym 14 ym 19 o'r lleiol a'r Llywodraeth a'r Llywodraeth ym 10. We had asked for the minister after our meeting last week, but due to the short notice she was unable to attend. However, I'm delighted this morning to welcome to the meeting Alison Cumming, director of early learning and childcare at the Scottish Government. I understand, Ms Cumming, we'd like to make a short opening statement. Thank you, convener. I welcome this opportunity to provide evidence today on behalf of the Scottish Government. I hope that this will assist the committee in its post-legislative scrutiny of the financial memorandum for the Children and Young People Scotland Bill in relation to the expansion of early learning and childcare. I became programme director for the 1140 hours expansion in November 2016 and then senior responsible owner for the programme in March 2020. My evidence this morning will highlight the learning that the Scottish Government took from the 2014 act, how we reflected on that learning, took lessons from it and sought to make improvements for the expansion to 1140 hours. I would highlight three particular points of learning. I'm sure the committee will wish to touch on these and others this morning. My first point relates to the steps that we took so that the Scottish Government and local government could reach a shared understanding of the estimated costs of the expansion to 1140 hours. In 2017, we established the early learning and childcare finance working group, which is jointly chaired by the Scottish Government and COSLA, and includes representatives of Scottish and local government. This group led the development and assurance of the analysis of estimated costs that underpinned the multi-year financial agreement. That meant that funding discussions between Scottish ministers and COSLA leaders were based on jointly agreed cost estimates. The second point relates to transparency. Recognising that the expansion to 1140 hours was underpinned by secondary legislation and so no financial memorandum was required. Scottish ministers and COSLA leaders reached agreement on a multi-year revenue and capital funding package for the expansion in April 2018. That joint agreement set out clearly how estimates had been revised as a result of dialogue between Scottish Government and local government colleagues and the basis for agreement. That agreement was then lodged in Spice to support full parliamentary transparency and accountability. My third point relates to clarity of outcomes. The Audit Scotland report in 2018 on early learning and childcare highlighted that there wasn't sufficient clarity over what outcomes we were looking for local authorities to deliver within the 600 hours funding. For the 1140 expansion programme, we have established a clear set of outcomes and benefits which focus on outcomes for children's development, improving family wellbeing and increasing opportunities for parents to work, train or study. Those outcomes underpin our monitoring and evaluation strategy, which includes significant investment in the Scottish study of early learning and childcare and other forms of analysis. That has helped us to shape the design of the expansion programme and also provides a sound basis for evaluating its impact in the years ahead. I am happy to answer the committee's questions. Thank you very much for that opening statement and I'll start with some questions. Most of my questions will be based, obviously, as you would expect, on the evidence that we received last week. One of the issues that I raised was the absence of a single standard funding formula, which apparently is going to be brought in this financial year. I'm wondering why it's taken so long to actually develop that. One of the issues that was raised is the fact that there seems to be a whole different source of funding budget lines. You talked about transparency and clearly there's a real assuria about that. It seems to have developed more since the 1140 came forward rather than the 600. I'm just wondering if you can touch on that first of all, please. We reached the multi-year agreement for the 1140 funding in 2018. The recommendations that went to COSLA leaders for consideration included recommendations on the quantum and also on the means of distributing the funding. The as-is-normal process for agreeing the distribution of local government funding, a set of options have been considered by the settlement and distribution group, which is an officer and official-led group between the Scottish Government and COSLA. It recommended the use of a needs-based formula to distribute the funding between local authorities. When that recommendation reached the COSLA leaders meeting, COSLA leaders, as is their prerogative, took a decision that instead of allocating the funding on the basis of the formula, they wished to distribute the funding on the basis of estimates that individual local authorities had submitted to the finance working group as part of its consideration, with some adjustments made for items such as inflation and population. That's a very different means of allocating revenue funding than would normally be the case and has then meant that there's been challenges that it's not as responsive to changes in things like population movements, changes in deprivation characteristics in different areas, but COSLA leaders also agreed in April 2018 when they reached that decision that that distribution basis would hold up to and including the 21-22 financial year and that they would consider a change in methodology thereafter. The settlement and distribution group with advice from the finance working group reconsidered the issues and options and the SDG made that recommendation to move to a formula-based approach, which was then agreed by COSLA leaders. Effectively, it was a political decision not to go with the officers and officials' recommendation about using a formula in the initial three years. Okay, because one of the issues about ensuring that this funding is easy to audit and is transparent is the fact that some of it is actually in education, some of it is in social work, so there's an issue there about how it's traced and I realise there's a local financial return where the direct costs are accounted for, but that's not always specific easy easy easy to follow, given the fact that different councils are doing a different methodology. So what improvement do you think will be made in terms of that? Just on that particular issue while we're talking about that, is there space within local authority budgets for some key areas to be worked on? Because what they've said is that the current allocation of funding is not flexible enough. For example, what we were advised by COSLA last week was that on speech and language there's a lot of children requiring that support, but they feel that the money is not able to be used for that. The ELC grants are not flexible enough to take into account the number of children in specific areas with some of those issues. Okay, thank you. On the issues around data collection, the 2016 financial review that we undertook on the spend against the 2014 act financial memorandum allocations for 600 hours illustrated that point very well about the challenges in presentation in the LFR. What the finance working group has sought to do since then is to see how we can improve initially through a bespoke data collection, so agreeing a different method of reporting which captures all of those costs, but with the long-term view, certainly my preference that we would need to go through agreement with the finance working group is that we would take the learning once we have the presentation correct and build that into the LFR return so that we have that clear line of sight in one place as to the total costs of delivering early learning and childcare. I'm aware that my colleagues in COSLA raised the concerns, as they see it last week, that there isn't, I think, the objective to the use of the term headroom, but for ease I'll continue to use the term headroom in the settlement to deliver on other priorities. That is just not borne out by the analysis that was undertaken and agreed by the finance working group is very clear that there is sufficient funding there to deliver, not only to deliver the 1140 hours offer, but also to commit to different priorities. The committee is aware that we reduced the money that goes into the specific grant by £15 million in 2022-23. That was in relation to changes in the eligible population. The eligible population had fallen by 7.5 per cent or 8,500 children compared to when the projections were made and the agreement was reached and the latest figures from NRS. We did not, through the negotiations, take the full amount of headroom out of the funding as a sort of pure calculation would lead you to on the basis of that 7.5 per cent reduction for a whole range of reasons, including that we recognise with the way that staffing ratios work, et cetera. It's not always a direct reduction, but also very much in mind to make sure that local authorities still have that flexibility in place to respond to some changes in needs as a result of the impact of the Covid pandemic, speech and language, as the clearest example of that, but also to continue investment in sustainable rates. I am very clear that the analysis that has been undertaken in some detail is sufficient, whether we call it headroom, whether we call it flexibility, within the overall local government allocation for authorities to be pursuing those priorities. I would also flag that, because it is very early stages of the expansion and we recognise that there were potentially some differences in uptake of the offer as a result of the Covid pandemic, we didn't make any adjustments to funding in relation to the most recent figures on uptake. We are also funding local authorities at present for a higher rate of uptake than was evident in 2021-22. I mean, I will look at all the figures. It seems that there has been some considerable overfunding, but, obviously, because I pointed out that if you have 98 per cent of the anticipated number of children in an area, then you cannot reduce staffing for obvious reasons, so there is still only the same staff ratios, et cetera. But there has been, from the start, an overestimate in the number of children who would require 1140 hours. I understand that only 85 per cent of the 98 per cent who take this 1140 hours do so exclusively, so that is possibly part of the reason. When one is looking at nursery provision, you can see some years ahead when the children are going to require that, because predominantly, with the exception of vulnerable two-year-olds, there are going to be three, so you have two or three years to really plan ahead. It seems to be a significant overestimate in the number of children that have been requiring that. Why is that the case? Specifically, in relation to the 1140 hours expansion, the population figures that we used and underpinned the agreement were based on the latest available estimates produced by NRS, so they are the official population estimates for Scotland. At the time that local authorities were preparing their plans, what was described as the 2014 estimates was the dataset that was available broken down to local authority level. NRS had produced refreshed updates at Scotland level based on 2016 data, so we did take and this is set out in the multi-year agreement. Ministers and cosle leaders agreed that the reasonable dataset that we could expect local authorities to have based their plans on was the NRS figures, rather than the most recent NRS figures by local authority. My recollection is that at the time the local authority estimates that were in their original plans were about 6,000 children higher than the NRS 2014 estimates, so we did make an adjustment in 2014 to take account of the local authority estimates being considerably higher than the official population estimates that are used to inform public policy and planning. Although there has been further decrease in the eligible population since then, that has been driven by demographic factors, the lower birth rate and changes to net migration. Excuse me, I accept the point that the eligible population is lower than we had anticipated. We have, at all times, used the most robust set of population estimates that are available to us. Obviously, you are aware of the evidence that we took from organisations such as the Scottish Child Mining Association. Child mining has had a significant reduction over the last few years since the policy has started to come in, some 26 per cent fewer child miners are now in Scotland. Some have decided that they want to work in nurseries, but others have left for other reasons. In fact, what we were advised was that the main reason that wild child miners were leaving or were planning to leave the workforce in the next five years was the significant increase in bureaucracy in paperwork and the duplicative quality assurance in national and local levels, which has quite simply become unsustainable, being a quote from last week. Mr McAllister, who gave that evidence, goes on to say, in my submission, I atomise 10 or 12 different frameworks and standards, each of which comes with different outcomes. Reporting in wild quality assurance is obviously important, it has to be proportionate, joined up and like touch. Clearly, that seems to many, certainly, to be a bit of a sledgehammer to cracker, if there is duplication and so on. I want to talk about additional twice yearly inspections that have not come in in local authorities, twice yearly inspections and twice yearly self-evaluations. That has obviously put off a lot of child miners. Obviously, there are policy implications there, but, from a financial perspective, it must cost a huge amount of resource, all this kind of bureaucracy being imposed on child miners. Is there any plans to try and have a one-stop shop with that whereby there is not this overlap and duplication of effort? We are working with the Scottish Child Minding Association and others, including local Government, the care inspectorate and so forth, to look at how we can reduce the level of administrative burden that childminders face. I have to say that we have no evidence that there is a direct causal effect in the trend in childminding numbers and the period of the expansion. There have also been some changes in how the care inspectorate records and reports the number of childminders over that period. There is undoubtedly a net reduction overall, and we are being very mindful throughout how we ensure that we have a sustainable childminding sector so that there is that option available to parents in how they use their child's 1140-hours entitlement that they can have access to a childminder. We have, on the basis of an SCMA recommendation from 2019, commissioned an undertook research to understand the reasons for the declining workforce, that the process of becoming a childminder, administrative demands, inspections all came out through there. On the back of that, we are working in a commitment to childminding monitor group with the stakeholders in a very specific task and focus way to see where are the places that we can bring improvements for childminders, and in particular how local authorities recognise that childminders are obviously very different than nurseries in terms of what they might ask them for in relation to both the commissioning contracting process and also on-going assurance and ensure that their processes and their requirements recognise that. We are also looking at the issues of inspection through the recommendations of a review by Professor Muir on the implementation of a report by the OECD last year and the Cabinet Secretary for Education and Skills in a statement to Parliament. I think that it was two weeks ago on 14 June that we will shortly be consulting on a shared inspection framework for the early learning and childcare sector as a whole, but in that consultation we will also look at issues around recognising that it is not only the burdens that are seen coming from the inspection bodies but also what the role is of local authorities in that and how we can ensure that there is streamlining in the system and that we are not imposing duplicative and overly burdensome requirements on childcare providers, including childminders. Is there any idea about what this kind of bureaucracy costs and what the impact is across Scotland? Is there any measure of that? It is not something that we have measured, but we do recognise that there is scope to streamline those processes both at local government level and at national level in terms of the agencies that are involved and Scottish Government. We should also say that there is a distinction as well that not all childminders wish to be involved in delivering the funded entitlement and we are looking at what are the different arrangements and systems for delivering the funded entitlement but also the burden that is associated with the work and the role of being a childminder regardless of whether they are involved in delivering the 1140-hours expansion or not. When you say streamlining, what does that mean, a 50 per cent reduction bureaucracy on trying to get a fuel for this and the impact not just on the childminders but obviously there's been a finance and public administration committee the impact on finance and public administration over that? It isn't something that we have quantified or set a target for. We are looking at the work that the childminding monitor group is doing is working on how we can reduce that administrative burden and it's certainly something that we can look into working with local authorities in particular to understand what the reduction may be in costs for public services as a result of making those changes but we're not at that stage of the work at this point that I can bring you a figure or a target. Okay, I haven't mentioned things like standard rates etc and they need to look at not just the setting but where the child is in additional reads, rurality etc but I think I've asked enough questions for just now. I want my colleagues to have an opportunity to ask some of these questions so I shall move on now with Daniel to ask questions next to be followed by Liz. Thank you very much. I'd like to just follow on from the point that the community just hinted at in terms of how the methodology was arrived at and its impact and then lastly about the impact that that's had on the sector more generally. The 1140 has been implemented on the basis of 2014 legislation. We had a survey work in 2016 which was part of a technical assessment. We then had methodology in 2020 but just given that the expansion to 1140 hours is going to cost around £1 billion a year and what's the reflection in the Government about how we've arrived at that over a four-year period bit by bit rather than having it all clearly set out in a financial memorandum and indeed would it not have been better to do that 2016 exercise which gives a relatively clear cost stack. There's a very neat pie chart in there at the beginning so we'd have had a clearer site as to cut off what the cost implications would have been. I think in terms of the 2014 act and the work that went into the preparations there that was for as he referred to for 600 hours the expansion from 475 to 600. I think undoubtedly we understand the cost base of providers in the private and voluntary sector much better now than we did at that time and that has allowed us to reflect those costs in the multi-year agreement which I suppose is what we see as what we've put in place and laid it before Parliament in the absence of a financial memorandum because it was secondary legislation that brought through the 600 hours to 1140 that we invested very significantly for 1140 in analysing and challenging the costs both the local authority costs and their estimates of rates that would be payable to private providers and the work that we commissioned in 2016 from Ipsos Moray to do that survey work that you referred to has informed that the considerations of the 1140 hours overall cost and informed provided support to local authorities in how they set rates and we do have that position for private and voluntary sector funding rates that they are set at local authority level and not at national level and I suspect that's an issue we might also want to get into this morning but local authorities have then been commissioning and undertaking different forms of work in line with the guidance that we commissioned from Scotland Excel that was co-produced between local government and the sector about the that came up with the four different methodologies for estimating or informing the setting of rates so I do think we have significantly improved, we have invested in that shared understanding with local government of their cost drivers, we've got much more granular understanding of the drivers of cost and we have continued to evolve our understanding of the financial health and the underlying financial drivers cost drivers included for the private and voluntary providers so I think we've absolutely taken that learning on board and we haven't stopped, we are continuing to refine our approach and to ensure that we are as we agree funding for future years it has that very robust evidence base behind it and I'm going to come on to the the 2020 framework and the four methodologies I think you neatly prefigured what I was going to come on to but just sort of just clarifying the point there I mean it does sound very much as though you're saying that that granular view only was arrived at after the decision to move to 1140 hours in terms of the sequencing would that be a fair reflection I think it's yes it would be a fair reflection that we significantly refined and developed cost estimates after the decision was taken to expand to 1140 hours and we recognise that it's a significant investment of public money and that we needed to dedicate a significant amount of Scottish Government resource and local government resource to working together to ensure that we really understood the level of resource that was required and what was driving those costs so last week we heard from the pvi sector who really felt that there was a lack of transparency as to how local authorities were arriving at their rates and if we look at the methodology set out in the 2020 paper I'm left wondering why and I just wondered if you I think there's two points of clarification I would like I mean first of all the four methodologies I mean my reading of that paper really was that there wasn't necessarily that any local authority should exclusively be using one methodology or another you know I think a combination of them would would appear to my reading of the paper be the best way for it but that doesn't seem to be what's happening I mean firstly is that a fair assessment of how the framework was intended to be used then secondly what how is it being I mean I look at some you know how the the paper summarising the approach is taken by local authorities there are a number of local authorities who are doing a survey based approach but they seem to have done that on a one-off basis whereas the guidance itself says that should be repeated regularly in fact I think the survey of cost saying it should be done multiple times a year I look at certain local authorities and they've done it kind of once a year or two years ago I mean what work is the Scottish Government undertaking to ensure that these methodologies are being pursued as they ought to be yeah thank you the in terms of the the rate setting guidance that you referred to first yes there is that basket of methodologies that scotland excel have developed that would all be in line with local government good practice and procurement that could be followed to help inform the rates you are absolutely correct that the vast majority of authorities are using that survey based methodology and if it's maybe their judgment that that is sufficient as we were not saying that all authorities have to go through all four every time they set a rate but we would expect local authorities to keep developing their understanding of the provider the provider cost based drivers of setting rates and they can determine how to do that within the guidance that's there what we certainly wouldn't think was in the spirit of the guidance was maybe a one-off survey every three four five years and that there's not being any activity in the intermediate period to refresh and check that those assumptions are still correct the local government collectively recognised a lot of these issues and also I think we saw some particular issues with the publication that was made that we produced alongside the financial sustainability health check last august I think we published it that showed that the rates for authorities and showed that a considerable number of authorities hadn't uplifted their rates between 2021 and 2021-22 so local government came to us and said that they believe there was merit in them collectively commissioning a cost collection exercise that was we've Scottish Government funded it the improvement service contracted for that on behalf of all local authorities and it was Ipsos Moray who undertook the financial review in 2016 that were the successful candidate there so we do have recently completed this a consistently collected data set across all local authority areas that authorities will now be using to inform their rate setting for 2022 a couple of points on that I would say that the the work that the analysis that Ipsos Moray undertook for us in 2016 we used that to help us in terms of reasonableness checking the financial estimates for 20 for 1140 to see what could a sustainable rate look like that allowed payment of the real living wage which resulted in the £5.31 figure which was very clear based on 2016 costs that was never intended I suppose to be a robust data set for others for individual local authorities to necessarily set rates on the basis of the expectation is that authorities would undertake that work collaboratively with their local partners and sorry a final point of a may is that I think underpinning a lot of this is trust in the relationships that we do need a level of transparency between local authorities and providers and an exchange of of information that will help build an understanding of how these rates are being set that and that's one of the ways we've been supporting improvement and the improvement service and the work that they're doing to support the expansion this year are undertaking workshops with the local authorities at the moment to help them make best use of the that local local cost collection data that they have received from Ipsos Moray so reflectable you just said given that we still see 531 being used by so many local authorities would seem to indicate based on what you're saying that perhaps there's not been as much updating or reflecting local circumstances as you might expect to have seen that that's a yes it's a yes and the other point I would make is that the 531 was based on 2016 prices indeed I heard that loud and clear just finally and again expanding on what the the convener was asking about childminders if you look at the overall numbers of providers that we have based on the care inspector we've actually seen an increase in the number of places we've actually seen a net decrease in the number of providers and that's not just childminders that's across all settings all all providers when you look at the fact that the the bulk of expansion has occurred within local authorities that means that the well in excess of there's been well in excess of a 5% reduction in providers across all types of well certainly non-local authority providers is that you know when the Scottish Government's reflecting the impacts that was not what was anticipated and and I was the reflection about what what lessons should be drawn about the impact of the rates and the information on this policy has had both in the diversity of providers but also the flexibility of provision given that most local authority settings don't provide beyond school hours provision the average size of an early learning and childcare provider has increased that's partly because of the the ways that local authorities have maybe developed their own services so we do have a trend towards larger centres than sort of perhaps where you may have seen a nursery class in a primary school so there are more children being accommodated in the same centre or setting which which is also driving some of those trends that you describe we do carefully look at the care inspectorate data on trends in different provider groups what we have seen to date is that the natural turnover in the private sector has not been out of line with with trends in previous years and we have we do not have any evidence through the financial sustainability health check we did last year or any of the other ways that we're engaging in the sector to say that there's been a direct relationship between the expansion and a reduction in the number of private providers that the two I suppose the three points I would say in mitigation the first is that we've actually seeing the pvi sector deliver a higher proportion of the funded hours than was originally envisaged and the original expansion plans from local authorities it was sitting about I think 22 percent we're now at around 30 percent so that shows that the parental choice is is leading the funded hours in many ways too as you say that the settings that that may offer more flexible provision or maybe settings that the children have been familiar with and have been in when they've been younger we have also seen that the sustainable rate the average rate across scotland has increased by 48 percent over the last over the last four years so while by my previous point around the £5.31 we have seen a very significant increase in the funding that's going to the private sector for the delivery of those funded hours and my final point is that the financial sustainability health check work that we did last summer showed that it's on average between 33 and 45 percent of private settings income that comes from delivering the funded hours so while the the government funding is a significant proportion it's not that for most settings it would not be the majority of the funding that they receive thank you very much i'll leave it there okay thank you a list to be followed by ross thank you good morning um you mentioned in your introduction about the review that audit scotland had some concerns about the lack of transparency particularly when it came to outcomes and that the Scottish government worked hard to try and address that issue could you just expand a little bit on what you did to try to address um how you measure these outcomes did you take evidence from international situations or what exactly did you do just to address the concerns of audit scotland yeah sure and effectively when audit scotland reported in 2018 they were reporting on the situation from the the 2014 act in the 600 hours expansion even before that report we had begun investing in a different type of approach for evaluating 1140 so we have benefited throughout from a mix of academic and sectoral expertise on a group an external group reference group to support the development of the monitoring and evaluation strategy and analysis undertaken by our our analysts in scotland and by colleagues now in public health scotland in the time at health scotland in collating the international literature and the international evidence on on outcomes what we also really sought to do for 1140 that was a bit different from 600 hours was to be very clear about what we were seeking to deliver with the investment the the financial memorandum that the policy memorandum for the 2014 act looks at children's outcomes and parental outcomes as alongside each other we recognised for 1140 that the stronger evidence led us to this being an investment in children's outcomes while it will also have important benefits for parents and can enable parents to undertake work training and study that the weight of evidence is really in that the short term benefit to children's development and then the long term effects that that early years investment and preventive investment can have so that gave us a very clear benefits framework for the programme also including family wellbeing that provided that framework for our analytical colleagues with input from academics in a review of international examples to to develop measures and to develop the methodology for the Scottish study of early learning and child care so is that evidence borne out in the quality of the gradings that inspection reports are returning on early years institutions is that showing that that you know there's an improvement in the inspections for these I think it's too early for us to say because of the disruption to inspection activity over the Covid pandemic period so that has meant we've not had a normal cycle of inspections over the last two years but what we we have in the policy framework set a national standard that all providers are required to meet whether they're public sector, private sector, voluntary sector and that includes a requirement as you refer to on care inspectorate grades so we would expect all settings to be achieving good or above but the slight difficulty for us in terms of that longitudinal analysis is that it's only really now we're getting into that more routine inspection cycle again to generate that data but we are looking at other indicators to help us monitor and understand quality and we'll be publishing a refresh monitoring and evaluation strategy that takes account of the impact of Covid within the next few months. Can I just pursue that issue about the inspections because obviously they are very important and parents find them particularly important when they're making a choice. Is it the case that you think that these inspections will be back in a routine timing very shortly or are we going to have to wait for a prolonged period where some may not have an inspection for quite some time? No, certainly I think that on the getting back to the routine care inspectorate cycle they're pretty much back to the kind of normal level of inspection activity they resumed inspections earlier this year so certainly within the next 12 months we would have that more normal if I may say if anything is normal anymore cycle of inspection and data to draw from. Right and that data that comes back is obviously very important in determining the success of the policy so that will be analysed will it? Yes and we're also as well as looking at setting level the the Scottish study of early learning and childcare is looking at individual child level as well so we have within that measured using the strengths and difficulties questionnaire that will help us understand particular impacts on children's development as well as quality measured at the setting level. Good and just one further question I mean obviously we did hear last week extensively that there are serious concerns about the amount of bureaucracy and the amount of time that it's not just the actual filling in of bits of paper it's the fact that the people who are doing that are taken away from some of the other jobs that they would like to be doing caring for children. To what extent do you think that there are sufficient staff within the whole system to address the quality that you're really wanting to drive at? Do you think that we have enough staff or are we having to look to recruit more? I think in terms of the overall workforce we believe that there is sufficient workforce there to deliver a high quality expansion but we also very much recognise that the quality of the workforce itself will be the single most important determinant of children's outcomes so we are continuing to look at how at Scottish Government level and how across the whole system we can be continuing to invest in that workforce so for me it's not a question of us needing more people in the workforce to deliver the level of quality it's about us ensuring that the system as a whole be that Scottish Government local authorities the employers themselves but also various bodies who are involved in supporting at national level including the inspectorates are really supporting that workforce and providing them with the resources and opportunities to continue to develop. Just to be clear is that are you implying that there needs to be some qualitative changes within that workforce that they can deal with some of the issues on the front line as it were looking after children rather than doing other things is that the issue? I think we'd always be in a position of striving for improvements and looking for improvements. I don't have any particular concerns about the balance of time that staff are spending with children but with reference to my earlier comments we are looking at ways through the shared inspection framework for example that we can be reducing any duplication or bureaucracy and administrative requirements but I don't have any evidence to suggest that there's any sense that that's taking away at the moment from the quality of experience that's being offered to children. I'm interested in the capital costs side of things and there's a wee bit of I say a muddle I don't mean that trying to project any negative connotations on it but I'm trying to get a little bit of clarity around how the capital costs worked out. The Audit Scotland report points out that some local authorities ended up receiving less than what they'd estimated the capital cost would be that's not surprising that happens across a whole range of areas where local authorities are funded by government for specific project but in other cases some local authorities actually ended up getting more than what they estimated the cost would be. Did either government or the futures trust look into why there was that disconnect between local authority estimates and allocations? Yes as you see that we used the allocations were based in the interest of fairness and consistency on metrics that the Scottish Futures Trust developed in terms of cost per square meter and square meter per child. The Scottish Futures Trust undertook very detailed work with each local authority to understand their plans and the reasons for the differences. In some cases there were factors related to maybe the specification at local level being a little bit different from a standard specification of a nursery building and also perhaps just some some of the ways that the local markets and had maybe been different or authorities hadn't commissioned this type of nursery project before and with a little bit of input from the experts at the SFT they were able to support them in refining their estimates. Which set of numbers ended up being more accurate in terms of eventual actual cost? Was it the allocations or the local authority estimates? I don't have data on that with me today but that's something that we can certainly look into. I would say that a number of authorities did take local decisions that they wish to invest more than the Scottish Government's level of funding. I think that committee perhaps heard from that last week, for example, from Scottish Borders Council. In some cases that's because of the impact of the local procurement approaches and construction policies in the authority. In some cases it was just about what they were looking to deliver from that being a little bit different from what was envisaged in the metrics that the SFT provided. If you could provide that information I think that that would be really interesting for the committee. The supplementary financial memorandum didn't include any additional capital costs for the expansion to include eligible two-year-olds. Looking back now, has there been any effort to disaggregate the costs and try to allocate an estimated cost for the capital impact of expansion to two-year-olds? No, we haven't really because of the integrated way in which services tend to be delivered. We tend not to have separate capital projects just for two-year-olds. It's tended to be about investing to deliver the capacity overall in the move from 600 hours to 1140. It's something that I could take back to my colleagues in the Scottish Futures Trust who have been doing the detailed analysis and monitoring for us to see if there's anything that we could usefully draw out. I think that that would be interesting because as much as I accept absolutely the difficulty that there would be in trying to disaggregate that data, I think that we could all agree that there's currently going to be some additional cost and expansion to any additional group, so for there to have not been any additional capital allocation in that financial memorandum, it does raise a point of process that the committee is interested in in terms of the effectiveness of those memorandums. Has there been any review on that process, I don't think, of putting aside what the actual numbers were? Has there been any consideration of whether that was the correct process or whether it would have been more appropriate to allocate some additional capital funding in the second memorandum? We haven't, to my knowledge, unless anything was done before I came into post in 2016, done anything specifically to review that process. What we did do as part of 1140 was learn the lessons overall in terms of how we work with authorities to plan for the capital requirements and how we make sure that in doing that planning it was an integrated process in terms of local authorities developing an expansion plan that had a capital component to it. I didn't want to suggest that there was some sort of separate planning process, but it's been more through the learning and the approach that we've taken. Particularly, my understanding is, a greater involvement from Scottish Futures Trust colleagues in the work on 1140 than perhaps there had been on 600 hours. That's great. Thanks, Rach. Thank you very much, John. Thanks, convener. Maybe just to follow on from Ross Greer for a minute on capital costs, there seemed to be some uncertainty as to whether the original plans for capital meant that some of the money would go to local authorities and some would be passed on to the partner providers. They seemed to be suggesting that very little had gone to the partner providers. Can you clarify what the intention was and if that actually happened? The intention in the planning guidance that we published in 2017 for the 1140 hours expansion was for local authorities to use the assets that they've got to then consider where they could buy in capacity and finally only if they couldn't meet the needs to build new capacity. What we had looked for in terms of the, that was for local authorities to consider that system in their local area as to what was currently there from PVI and what potential there was for growth there now, there are accounting and legal restrictions also in place as to how public capital funding is used to create private assets. We did write to local authorities to provide clarification that we were content for the capital funding to be used to provide capital grants if they could deliver a capital grant scheme that met those legal and accounting requirements and we know that several authorities did do that and provided grants that might have involved, might have allowed investment in developing outdoor space for example or in extensions or modifications. Another model that is increasingly being used by local authorities including Glasgow City Council, Aberdeen City Council and Murray Council has been where the local authority invests in the building but then seeks a private operator to deliver a service from that setting and we know that that has still at early days for those services being in place but that appears to be a very successful model and has overcome the challenges about us creating building assets and them remaining in the public sector and looking at those issues of best value for local authorities. I think some of the external providers felt that maybe they had capacity or they could produce a little bit more capacity at a less cost than the council but there was a general comment that the councils have a conflict of interest because they are both providers and in one sense they are competing with the other sectors but at the same time they are the funders. Do you think there is a conflict of interest there? I don't think there has to be a conflict of interest there. I think it is correct that the policy framework that we have developed of funding follows the child with the accompanying national standard means that local authorities are, that we describe them originally, as the guarantors of quality and the enablers of flexibility and choice. Local authorities in statute have that legal duty to ensure that children can access their entitlement and that is a very important underpinning of the whole system. The national standard that we have introduced was intended to bring that level of consistency and funding follows the child really drives a lot more parental choice. Parents have that ability to access a place for their child in any setting that meets that national standard and the local authorities should be developing their local delivery plans in a way that makes best use of that and making assumptions about that capacity that does exist and the likelihood that parents will want to take up places in those settings. The suggestion was that at least some local authorities were almost requiring the parents to take up hours in the council facility if that was available and then they were only meant to be getting the extras kind of round the edges. If that were to be the case that would be contrary to the policy of funding follows the child and if any specific examples of that were brought to our attention we would follow that up with Cawslam, with the local authority involved. That is great. To move on to a wider issue, one of the things that we are trying to look at and this bill was an example is how financial memorandum work overall. I do not know how many financial memorandums you have been involved in because I think you said you came into this area in 2016 so you were not there when this was done. I am just wondering if you are able to comment on how easy it is to do a financial memorandum and if we are actually expecting more accuracy than is actually possible. Clearly one of the key figures—you mentioned the number of kids eligible had dropped by 7.5 per cent but when we look at the whole picture it dropped from 225,000 to 206,000 to 184,000 so there has been quite a dramatic drop in what everybody probably expected, so I do not think that Andy is criticising the original forecast. When we see that kind of change is it just impossible to get a financial memorandum that is quite accurate? It very much depends on, without sounding unhelpful, on the nature of the policy change that has been delivered or legislative change that has been delivered. I think that what we should all be looking to do as civil servants preparing those financial memorandums is ensuring that we are using the most robust information that is available to us at the time and also being prepared to highlight where there are, what assumptions we have made and where it may turn out to be that those assumptions change over time. Hopefully as a result of things outside our control it may also be that some of the underpinning assumptions turn out not to be correct, but it is very difficult to say that we can absolutely, particularly for something as complex as the expansion of early learning and childcare, estimate costs to the pound or to the even the nearest thousand but what we need to be able to do is ensure that the methodology is as robust and transparent as possible to support that parliamentary scrutiny whereas there may be certain other types of financial memoranda where we do have greater certainty over the costs and that should be brought out in the level of detail that is brought to parliament as to how we have arrived at those estimates. That is a fair answer. Specifically then on the two-year-olds and the uptake, that has not been quite as great as had been hoped or planned and I think from written this down 41, 45 per cent, but the hope is to get up to 75 per cent. Is that realistic? We want to drive the maximum uptake that parents are looking for. The other important thing to recognise throughout all of early learning and childcare is that it is an entitlement that is not an obligation to parents to take it up. We would have liked to have seen greater levels of uptake than we currently have for two-year-olds. We were very pleased to see the 25 per cent year-on-year increase reported in the ELC census from figures taken in September 2021, but there is still a very significant room for improvement there. We are looking at developing a further programme to support local authorities in improving uptake. A very important underpinning of that will be the data sharing gateway that the UK Government has agreed to legislate for very recently. There was a consultation on allowing data sharing between the UK Government, but effectively HMRC and DWP, with Scottish local authorities, which will, for the first time, give local authorities data on exactly which families within their area are eligible for the two-year-old offer. It has been challenging for local authorities to always be able to identify with certainty all of those families and reach out to them on the offer. It is really important that we will have that in place, but it also means that, when we have been estimating uptake levels at around 45 per cent at present, that is an estimate, because we do not have that data either on absolute certainty on the eligible population. There are important changes coming that will help us. Alongside that, we need that real engagement with parents to understand what further and make sure that we are removing any barriers to them accessing that offer. I was very surprised that we only had robust data from 17 local authorities, and I think that that was after questioning and chasing. Can you give an explanation for that, or why was it only 17? Was that their fault? The timing of the exercise probably did not help in the midst of the Covid pandemic, and what we now have is the more robust data set for 31 authorities. I suspect that the lower levels in that exercise was a product of the timing at which the exercise was undertaken, but we also sought to, in moving from that to the most recent data collection exercise, look at if there were ways that we could collect the data a bit differently that would support a greater number of robust responses that we could use to inform the analysis of future funding. We have engaged with them, but they have yet to provide the information that we would need to include them. You mentioned earlier that local authorities were meant to use existing buildings first, then use existing private facilities, and then only if that was not available to build new facilities. There was a lot of capital work taken place, which would suggest that there was no existing private facilities to use. Were private nurses and private childminders given the opportunity to flag up what they could do when it came to providing us hours? They certainly should have been, and the processes that should have been undertaken at local level should have facilitated that. There was also a reality that we knew that there needed to be a growth overall, so we anticipated that there would be a need for new facilities. There are some parts of Scotland that have a very low level of private sector provision and established private sector provision. It is very variable across the country. We will also have seen quite different patterns in terms of the new build activity across the country. What checks and pushback would there have been to local authorities when they were putting forward the plans for new facilities? People had actually gone to the private providers to see if there was capacity there that could have been used instead. Those are certainly questions that we put back as a Scottish Government when we received expansion plans and the work that the Scottish Futures trusted alongside us as part of that review of expansion plans. It involved some very detailed analysis and interrogation of the plans, and there are assumptions about where new facilities may be required. Are you confident that the private providers have an opportunity to present what they could provide to local authorities? I am confident that the arrangements that we have put in place at national level would have allowed for and facilitated that. I cannot speak to that having been the case on all 32 authorities. Just following on from a question that John Mason had asked about, the flexibility that parents have—I believe that they do have flexibility to use a local authority nurse or a private child minder—was that parents might not realise the flexibility that they have. Is there anything more that the Scottish Government can do to try to make parents more aware that they can mix and match between local authority and private childcare? We have extensive material through parent club, on the website and through their social media. We have also probably compared to the number of funded hours that are currently delivered by child minders, specifically to child minders overrepresenting child minding services in that material because we recognise that there is a specific gap in terms of parents' understanding on how child minders can be part of the offer. We did run a national marketing campaign at the very beginning of 2020 this much, which I will not imitate just now, but children were stretching their arms out. A lot of that material has been—the product from that was made available to local authorities to support their local communications with parents. That set out the basis that there was that flexibility and choice over the range of provision. We are looking at how we can continue to develop and invest in that material, but recognising that a lot of the places that parents go to get their information on the offer will be at local level. How can we be supporting local authorities in that communication, too? The feedback from the private providers that there is not that awareness—would you say that that is a non-fair criticism, really? I would say that we have made significant efforts to ensure that that awareness is there, but this is also a very significant change in terms of the way that parents can access early learning and childcare. We are at the early stages of that. I have alluded to the ways that parents get their information, although they have been a bit different over the past couple of years than it might have been otherwise. We will absolutely continue to pursue and ensure that parents can only make those choices if they are well informed. Thank you very much for all your information thus far. I think that we have covered a lot, even in this short inquiry. My colleague John, who pointed out to what extent financial memorandum can truly be accurate. We all recognise the complexity of that, but I want to give you the opportunity to reflect on knowing what we know now—the process that we have been through—what you would actively choose to do differently with the benefit of hindsight. We all recognise that there is improvement that can be made both in terms of developing them and even in our scrutiny, so it appreciates your reflections on that. My learning and reflections are probably slightly more to the process that we went through for 1140 rather than in the financial memorandum. Regardless of whether it was for a financial memorandum or secondary legislation, the process sitting behind it should have been the same and equally robust. I welcome on to what I do differently, but what really worked well was investing in that shared understanding with local government. I think that that is really important for good quality financial memorandum, because it does not serve anybody of Scottish Government and local government to come to a committee and have different estimates of cost. That can be a bit more resource intensive, but it was a really important investment that we made. As with anything, it would have been helpful to have had more time to have worked through that, but we reached agreements more than two years ahead of the date. That is probably what fed through to what we saw as some of the underspends in some of the years leading up to the expansion from authorities, because they have perhaps been a little bit overly ambitious about how much early phasing could be delivered in that period. That amount of ensuring that there is sufficient time for the analysis and sufficient time to allow the policy to be implemented is really important. Overall, what would have been particularly helpful for us and where some of the learning is about how we have that same level of shared understanding that we have got between Scottish and local government of overall costs between the private and voluntary sector and local authorities in terms of rates setting. That is definitely still an area that we need to keep supporting and building that trust through transparency and openness. In general terms, the tension between effective accounting and new loot in terms of more time and scrutiny of spend will never go away, because the only accurate estimates are at the end of a project, as we all know. Do you have any reflections on having that healthy tension at the right balance, because that is a common problem in that type of thing? Certainly with 1140, we recognised that we reached a point where we did end up with a two-stage process. We had gathered initial financial estimates from local authorities in 2017 as part of their expansion plans. We hoped that we would be able to use that as a basis, but when the finance working group got into it, we still had too many questions. We took the decision to do another round-off of cost collection with local authorities, which took us into 2018. In order to ensure delivery, there has to be that cut-off point for us. In 2018, we got to a level in which we had a shared understanding, but it would have been highly detrimental to the overall delivery of the programme had we taken an extra six months after that to continue to refine those costs before agreeing funding. I think that the multi-year element of the funding package was particularly important to support that planning. The ultimate successful delivery of the expansion would have originally been in August 2020, but with that revised timescale as a result of the Covid pandemic, so there is definitely a judgment call there. My last question is about capacity, because that also flows into the time element. In your judgment, have any of the areas lacked capacity to do what needed to be done, and that has been an underlying issue, or has it just been the standard? There is always too much to be done. We made particular efforts to support local authorities in investing in that capacity. There was a lot of fresh learning from the expansion to 600 hours within local authorities, but we invested in a delivery assurance team at Scottish Government level that we convened, but it was certainly not a team of civil servants. It was about people that had that expertise in supporting change, in supporting developments, so the improvement service brought really important business analysis skills into that. For example, the Scottish Futures Trust really important partners in terms of infrastructure. We did look at ways that we could provide that support to local authorities to ensure that the capacity was in place to deliver the change. Local authorities will also have invested in that capacity through the funding that they received. That is a highly legitimate use of the funding that they received during the expansion period. One of the challenges that any organisation has is silo working. Are you able to make sure that the learning from that is cascaded throughout all the departments of the Scottish Government? I am willing to bet that we will be in this position at some point down the future with a similar type project, not the same. Will that routinely be done? Yes, there are mechanisms in place for us to share our experiences in our portfolios and across portfolios about our lessons learned from delivery and from various elements of that. There is an increasing focus from the executive team and the Scottish Government on delivery and what is the learning that we can take from successful programmes to help us with future programmes. I am confident. We very frequently refer to the 1140 hours expansion as an example of effective partnership working between the two parts of government to deliver some significant change. The Scottish Private Nursery Association was not asked by us to give verbal evidence, but it has made a significant submission. I want to touch on that briefly. They have given us a series of recommendations. One of them is either that the Scottish Government directly set the rate for all children receiving 1140 hours or that a voucher is provided to parents or through an online portal that allows nurses to be funded directly. I wonder if you can comment on that. There has been quite a number of comments about whether there should be a standard rate and, of course, that would have to take into account, as I said at the very start of this session, such as rurality, additional needs and so on. The reason that I am raising this is because we did get a table of local authority spending on early learning and childcare of all children funded by private voluntary and independent rates. What is quite stark is that what they have done is compare how much would be spent in a local authority area by a local authority if everyone was funded at the same rate as the PVI sector in that area. What is astonishing is that I will give you two variances. Both East Renfisher and Aileen Shaw give £5.31 an hour to the private sector and yet if they were both given the same amount of money into the public sector, i.e., the local authority, it would cost 45 per cent less for the public authority and for the local authority story of Aileen Shaw in 22 per cent more in East Renfisher. What it is basically saying is that East Renfisher appears to get more in the private sector, in the public sector per child and significantly less in the western areas. Does that not show, because of these colossal variances, more than 20 per cent higher in one minus 40 per cent, that there has to be more work as you suggested earlier on in terms of rates? How do we go about that and try to ensure that we do not have such huge disparities between these sectors? At the outset, I would say that there are significant methodological challenges and reasons why it is not appropriate to try and come up with an average cost per hour from local authority. We will hold on a second, sorry, just to interject. You are absolutely right. No-one considers that the Western Isles with far-flung island communities can possibly be the same as East Renfisher, which is a suburban authority, but yet they are both getting £5.31 an hour? Yes. We have had quite a number of discussions with representative bodies of private providers over the years over why we do not think it is valid, as opposed to some comparisons that are sometimes attempted by looking at the total amount of funding that a local authority gets, by dividing it by the number of hours and saying that that should be the hourly rate. That is not something that, for a whole host of reasons, we do not have time to go into, that that would be appropriate because of the other duties that local authorities are seeking to discharge with that money. However, there is absolutely a need to keep investing in more robust rate-setting processes, more transparent rate-setting processes, but it is not an easy set of processes for local authorities, particularly those who have not had a long history of private provision in their local area. We recognise, through the improvement service and others and the work that Scotland excelled for us previously, that we need to look at how we can make sure that local authorities are well supported in developing their approaches to rate-setting. Very important is that those approaches for rate-setting are transparent locally and that providers understand the basis on which rates are arrived at. However, the reason that there is not a national rate is that we believe that there needs to be scope for local variation and to take account of local cost drivers. I hope that there will be continued evolution in that area in the months and years ahead. I want to thank you, Alison, for attending today. That concludes evidence gathering on our post-legislip scrutiny of the early learning and childcare aspects of the financial memorandum for the Children and Young People's Scotland Bill. We will consider draft letter or report of our findings after the summer recess. That concludes the public part of today's meeting. Members will not be able to escape from a considerable period of time yet. As the next item on our agenda, which will be discussed in private, is consideration of our proposed contingent liability. I will call for a five-minute break so that the public and our witnesses and a fish or poke can leave.