 Felly, fel secondsalliad yn diwrnod am gyfnod i gael siostASS i gael яdwyr ni yn 2018. Felly, mae'r amser yn y gallu gael ei ffordd o gael eu gallu ffordd o edrych gyffredinol ar gyfer gyllideb yn cymryd meddwlol yn ddyn nhw i'r cymaint gyda'r cymmydd. Felly, fel secondsalliad yn gael i gael Iabeth Gebsen yn gweithgaf Cymru, Alex Neil. Gael, yna ydw i ddweud, yr aelod wedi bod i ddim yn byd. Felly, febau'r iawn i gael i ddim yn y llefyddol. themed item two, early learning and childcare. We will now take evidence on the Auditor General's report and I welcome the witnesses from Audit Scotland, Caroline Gardner, Auditor General for Scotland, Anthony Clark, Assistant Director of Performance, best value and audit, Trisha Meldrum, senior manager and Rebecca Smallwood senior auditor. I now invite the Auditor General to make an opening statement. Rwy'n credu'r cyfnodd y Llyfrgell Gwyrdyn nhw'n defnyddio'r oedd y cyfnodd y ti'r cyfnodd y byddai'r cyfnodd yn gweithio'r gwrth gael sydd yn cael ei sylfaen, ac mae'n helpu'r byddai'r ardal, lleol, ddiolch, a'r diolch. Yn agos 2014, cyfnodd y byddai'r cyfnodd y ti'r cyfnodd yn gweithio'r gael, yn gweithio'r gweithio'r cyfnodd o'r 475 oes yn yr ysgol, gyda'r unrhyw o'r 3 a 4-year-olds a'r 2-year-olds. Mae'r Gweithgofyniadau a'r Gweithgofyniadau yn gweithio'r gwaith o'r eich gweithio'r ymdegwyd o'r 1,140 oes y peth ar y cyflwyn 2020. Mae'r gweithgofyniadau yn ysgolion o'r eich gweithio a'r eich gweithio'r eich gweithio'r 1,600 oes ar 2014, a'r gweithio'r 1,140 oes ar y cyflwyn 2020. Mae'n ystod yn ein gweithio'r cyflwyn a'r gweithio'r gweithio'r for the crucial next stage of the policy. The government and councils have worked well together to expand provision and parents are positive about the benefits of funded early learning and childcare for their children. But parents do report a limited impact on their ability to work due to both the number of hours available and the way in which they're provided, particularly their flexibility. We found that the government implemented the increase in hours without comparing the costs and outcomes associated with alternative ways of achieving the increase. It's invested almost £650 million of additional funding since 2014 to expand funded early learning and childcare to 600 hours, but it wasn't clear enough about the specific outcomes that it expected to achieve and it didn't plan how to evaluate the impact of expansion. It's therefore not yet clear whether this investment is delivering value for money. The government has done more to plan how it will evaluate the expansion to 1,140 hours, but there are significant risks that councils won't be able to achieve this goal by 2020. In particular, it will be difficult to put in place the necessary infrastructure and workforce in time. Given the scale of the change required, the government should have started detail planning with councils earlier than it did. Councils prepared initial plans for delivering 1,140 hours in the absence of some important information on things like quality standards, the flexibility required and how funding will follow the child in future. There are initial estimates of the costs that are around £1 billion a year, which is significantly higher than the Scottish Government's figure of around £840 million. The government and councils are currently working together to refine those estimates. We have made a number of recommendations to reduce the risks of failing to deliver the expansion by August 2020. In particular, the government and councils urgently need to finalise their plans for recruiting and training the additional staff required and funding and building the necessary infrastructure. As always, convener, we will do our best to answer the committee's questions. Thank you very much. I am going to ask Ian Gray to open questioning for the committee. Thanks very much, convener. Thanks to the Auditor General. I wanted to focus on the plans for expansion to 1,140 hours. The report seemed to identify three areas of concern about the capacity to deliver on that. Two were financial, but one was about workforce. That was the one that I wanted to ask a little more about. The first thing was that there seemed to be a very significant discrepancy between the Scottish Government's estimates of the required workforce, 68,000 full-time equivalents, and the estimates submitted by local authorities on their plans, some 12,000. Is there any plausible explanation as to why there was such a discrepancy in the expected workforce requirement? I will ask the team to come in in a moment, but it comes down to some of the guidance that was not available to councils at the time that they were required to put their plans together, particularly around the quality standards that are needed. That is particularly relevant to younger children to two-year-olds, because of the higher staffing ratios that are needed for high-quality there, the flexibility that is needed to meet the requirements of parents as well as of children, and the way in which the funding will follow the child in future. The team can give you more of a sense of where the differences lie within that. Rebecca? Some of the difference councils have included central staff in their estimates, and the Scottish Government has not included that in theirs. One of the other possible reasons for the difference— Sorry, do you mean administrative staff in the council? Yes, other staff in the council, not just the practitioners. Those are additional staff that they believe that they will have to employ in order to administer the system? Yes. Some of the differences might be to do with the different ways that they have modelled it. We know that the Scottish Government has done a zero-based model. They have looked at how many hours of ELC can a practitioner deliver in a day. They have worked out that about six hours of the seven hours that that person has employed will be directly delivering funded ELC, so that they can do that for 11 months of the year, taking into account their leave allowances and things like that. They have assumed that existing members of staff and all new members of staff will deliver that same output of hours. They have then used a zero-based model to work out how many hours are needed. Therefore, that is how many staff they think are necessary to deliver their expansion. Councils have taken a variety of different approaches, and from their expansion plans it is not always explicit exactly how they have modelled their future workforce, but where there is information on that, it looks like what they have done is taken their existing model of staffing and applied that forwards to work out how many people are necessary. The Scottish Government's model assumes potentially that there are efficiencies in the existing staffing model that could be achieved, whereas the councils have not necessarily done that. As I have heard, the Scottish Government's estimate is an entirely theoretical one, which takes no account of the management and administration of the programme, whereas the local authority estimate is based on the reality of current provision and does take account of the administrative requirements. I think that we have taken a different approach. The Scottish Government has just been looking to model the practitioners for their estimates, which is why that is an estimate of. It has taken into account the time that they think that they need to deliver the kind of management aspect, so it is the hour of day that they have given practitioners for doing the various things that they need to do that are not directly delivering funded ELC. Councils have taken a variety of approaches, and we are not clear on the detail for all of the councils, but where that information is explicit, it looks like they have just continued with what they do currently, rather than making changes to that. We know that the Scottish Government and councils are now having a series of one-to-one meetings around the plans to discuss the areas of discrepancy and to refine those plans. We know that the council's plans were initial plans, and that there will be further work going forward to refine those plans. Is it fair to say, though, that your report comments that it will be difficult to achieve or to recruit this level of workforce? Is that a view that you take even at the lower end of the estimate of what is required? We think that across both the workforce and the infrastructure that is needed, it will now be difficult to achieve. It was always ambitious, and that is not a criticism. Going from 600 hours to 1,140 hours is obviously nearly doubling. It is a big thing to deliver. The concern that we raised in the report is that planning could have started earlier when the decision was taken, given the timescale that is needed, both to train and to recruit staff to deliver this very important service and to build new buildings or refurbish the buildings that are required. Those two things together will make it difficult to achieve the full expansion to 1,140 by August 2020. On a couple of occasions in Parliament, since the report was published, the issue of workforce has been raised, for example with the First Minister directly at First Minister's questions. She elaborated a number of measures that had been taken in order to increase training places. She talked about the work that SDS is doing to increase the number of apprenticeships in this area and the funding council to increase graduates. I will check that those additional training places that the report is entirely aware of that. When the comment is made, that will only provide a very small number of the additional staff that needs to be trained. That takes account of those changes. The report takes account of all of the initiatives that were under way at the time that we finalised it, which was the beginning of this year. We also talked about a number of initiatives that individual councils are taking, for example here in Edinburgh to retrain their existing workforce to meet the demands of the expansion. We recognise all of that and we still think that it will be difficult to have all of the staff required by August 2020. Our view is that, as we stand right now, there is no possibility of training enough additional workforce in order to deliver those 1,140 hours. We did not say that because we do not think that it will be impossible. We do think that it will be difficult. What would make it possible? I think that some of the things that individual councils themselves are doing will help. We have got a number of examples here of councils working well in Edinburgh, in Perthincan-Ros to tap new groups of people who can become part of the childcare workforce in the future. We have got the pipeline developing now from the things that are happening at a national level through the funding council through SDS that the First Minister referred to. I think that it is making sure that all of those work as well as they can do and that individual councils are working with Government to refine their estimates and to make sure that the staff that they have got are in the right places and that the clarity about what childcare will look like in terms of flexibility and quality standards is also bottomed out as quickly as it can be. That is something that really should have happened some time ago in your view. We think that it could have stashed us sooner and we say that in the report. Thanks. Kenny Gibson. I want to check in here. Following on the theme and issues that the EEN has asked, a number of questions were asked at General Questions leaving an actual fact that asked the first question last Thursday on the specific issue, looking at workforce. All the questions and answers seem to be talking about Scotland as a whole, but I am just wondering what the differential is in terms of progress at the lack thereof across Scotland. Are some local authorities doing particularly well? Are some local authorities, where you get particular concerns with regard to progress? There is clearly a mixed picture across Scotland and it is worth noting that some councils started further along back in 2014 with the expansion to 600. I think that the team can probably give you more information about the variation that we are seeing across the country. At this stage, what we have done is reviewed councils' initial plans and we know that those initial plans have already probably moved on in discussions with the Scottish Government. At this stage, it is hard to pull out a particular example of a council that is further ahead than others or ones that are particularly challenged. I was looking to see if there are any that are doing particularly well that other local authorities could perhaps emulate. Obviously, in terms of workforce planning again, the questions that were asked last week talked about Scotland, but there are specific geographic areas of concern in terms of recruitment. Obviously, the economic picture varies considerably across Scotland. I would imagine that in some areas of Scotland it would be relatively easy to recruit, in other areas it would be considerably difficult, possibly in rural areas, island communities such as the Monk constituency, for example. I think that there are a couple of things to say before I bring Anthony in. First of all, on Exhibit 3, you can get a sense in the report of the extent to which individual councils are already able to provide more flexibility in the way that they provide the childcare at the 600-hour level. The ones who have more flexibility are in a better place for being able to get to 1140 by 2020, so that is the starting point. Beyond that, we say in the report that no council has currently got a clear commissioning strategy, which sets out, on the one hand, the demand from parents, the number of children in each of the year bans and how that changes over time, the extent to which different types of flexibility are needed. It is quite foreseeable that that is different in a city like Edinburgh or Glasgow compared to the more rural and remote parts of Scotland. Setting that out and then being very clear about the provision that is currently available and how that needs to change and develop would give them a great basis for saying here of the staff that we need to recruit, retain and be thinking about changing from other services that the council currently provides. There are differences but, without that commissioning strategy, it is not possible to say that this council really has not got a problem and this one has got a big gap. I will just respond in the same way. There are no real areas of best practice that you can look to to take it from that answer. I have been given a bit of leeway with the convener, which I appreciate. Are there any additional initiatives that have come out since the report that you are aware of that would help to deliver that target? I will kick off by saying that there is no single council that we think is doing everything right, but we have got a number of examples of good practice through the report that we would want to pull out. In terms of new initiatives, I wonder if the team wants to add anything to that since publication. There was an announcement about increasing the number of modern apprenticeships back. That is the only initiative. We are aware that there are quite a lot of pieces of guidance that are due to be published sometime later this month, which will clarify some issues, so there are guidance about flexibility and things like that. Thank you very much, thank you. On Mr Gibson's point about councils, clearly the Auditor General said that some progress has been made in Lothian and Perth and Kinross on recruitment. Ms Small would you say that some councils were better prepared than others? Is it possible to publish some of that information to give us on the committee a flavour? As you know, we would look to universal and service provision being of equal standard, so it is really important for us to know where the gaps are. Can that information be published? Clearly, there is some information there. The report contains some of the stuff that we have referred to already. The example is a good practice and it is ready towards it. Exhibit 3 pulls out where councils currently stand. The plans themselves were initial plans, which, as Trisha said, are being discussed between Government and councils as we speak. I am not sure if there is much more that we can do with them at this stage, but Antony I think is looking to come in. I think that it might be a question that you might want to pick up with the Scottish Government and COSLA when you get advice from them in terms of the progress that is being made, given the on-going discussions that Rebecca has already mentioned. Okay, so apart from the exhibits that are pulled out, there is, okay, Willie Coffey. Thank you very much for that opportunity for a supplementary here. It is on the issue of the £8,000 and the £12,000 that was mentioned by Iain Gray. The £8,000 is estimated by the Scottish Government and the councils say £12,000, but I have just heard that this additional £4,000 may principally be in central staff admin. Does that know what you said? That is one element of it, but the large element is the way in which the modelling has been done that the Government has had to take a standardised approach to assuming how many staff you need for an additional number of hours, for an additional number of children. Each council has started by extending the model and the types of provision that it already has in place for the additional children who are affected. I do not think that it is surprising that there is a difference between the two, but we do say in the report that some of that difference was inevitable because councils did not have the guidance that they needed around quality standards, flexibility and funding following the child. That has affected the way that they have been able to make assumptions about what it will look like in two years' time. The estimate of £12,000 includes admin staff. The estimate of £8,000 includes admin staff. The funding that has been provided for workforce expansion, as I understand it, the current year when there is about £21 million for councils, but it is going up to £52 million next year. Presumably, that will help us to try and bridge this gap. The overall gap in revenue terms at the moment between the two estimates, and I would stress again that they are estimates, is about £160 million between the £840 million estimated by Government, the £1,000 through the billion estimated by councils when you add it together. In some ways, I do not think that it is surprising that there is a gap at this stage. As always, there is an element of negotiation and moving towards a common vision of it. The finding that we make in the report is that that gap would likely be smaller, had some of this guidance been available earlier, as councils were preparing their plans. Good planning needs good data, and we seem to be back again talking about quality of data or lack of data. I am looking at some of the comments in the report. For example, on paragraph 26, there is no available information on children's attendance or number of hours of funded ELC they receive. Paragraph 32 research highlighted that councils are not knowing details of exactly who is eligible and so on. How can we base anything on this level of lack of data? There is nothing there. You are absolutely right that it is a common theme in the reports that we have produced for this committee. In some ways, those data gaps are not the most significant challenge that councils and Government are facing in delivering the expansion to 1140 hours. We make some recommendations, particularly around the eligible two-year-olds, where it is very difficult for councils to know which of the two-year-olds in their area are among the estimated 25 per cent who are eligible because they are from more disadvantaged backgrounds. I think that that would be a big thing that would help councils to plan and particularly help families to be aware that they were eligible and to access the childcare that is available for their children. The bigger data problem that we have identified in this one is that with the expansion to 600 hours back in 2014, the Government did not set out the measures that it would use to evaluate the success and that is making it hard to look back and see whether that was value for money and to inform the decisions about how best to manage the expansion to 1140. I am taking it that the most appropriate people to be collecting this data of the councils have to receive any guidelines at all as to what data they should be collecting because here it seems to indicate that they are all using different formulas where they are collecting any information. The expansion to 1140 is still a framework being delivered, being developed about what measures are needed to evaluate it and monitor it over time. I do not want to underplay the problems with collecting some of this data. I have touched on the difficulties of identifying who the eligible two-year-olds are. DWP at the moment is not able to share information with councils that would be necessary for them to know which were the children who were eligible. We talk on paragraph 26 that you referred to about the fact that the number of registrations is not the same as the number of children being who are in receipt of funded early learning in childcare. There are some of those niggles that are simply a reflection of the way that childcare is delivered rather than a failing in planning or monitoring what is going on. Rebecca King can probably give you a bit more information about the work that is under way to fill those gaps, but they are not due to a lack of foresight, they are due to challenges in the data genuinely being available in the first place. In terms of the registration data, we know that the Government is working to improve this. At the moment, the information is collected through a census that happens every September, and it happens at individual centre levels, so that the nursery or other setting that provides childcare provides information about the numbers that it has in its setting. What the Government is looking to do is to make this an individual child level data. At the moment, there can be issues around double counting children who are registered across more than one setting. If you collect information at an individual child level, then you get rid of that issue, and they are working towards that. I think that it is likely to be in place around the time that 1140 is introduced. According to the report, they are not even taking the basic data like attendance. Attendance is not currently collected through the census, no? Again, in paragraph 36, it says that the council has different ways of apportioning costs relating to nurseries that are obviously attached to schools. Not all councils include spend on partner providers. It just seems very basic data, very basic information that is not available and must affect what evaluation you can make of this. Do you make a recommendation in the report that Scottish Government and local authorities work together to gather better cost data to inform judgments about which models are most cost effective and value for money? They are working on that at the moment. Clearly, the information has to come to the local councils, but local councils need some guidance as to what information they should be gathering. Is what going ahead on that? That is part of the discussions that are taking place at the moment between the Scottish Government and local authorities. Any idea when that is going to be concluded? I would need to double check and get back to you on that. It is certainly part of the work that is going on at the moment, but I need to get back to you on the data. Given the relatively short timescale to the introduction of the larger number of hours, it does not have much time to start getting information together. I will stay on data, but I will come at it from a slightly different angle. Have I not mind that, at some point, we have had a discussion—it might have been in the debate that Kenny Gibson refers to—about the discrepancy between what those hours are actually for. There seems to be some guidance that does not necessarily clarify it. Is the aim of providing a certain number of hours to improve children's outcomes, perhaps close attainment gap, or is it to improve outcomes for the parents? Where is the bias there? It is a really good question. We say in the report that, with the expansion to 600 hours from 2014, the Government was not clear which of those two outcomes it wanted to achieve. In some ways, it is easy to respond that clearly more childcare is a good thing, and most people would support that. The reason we highlight it as an issue, though, is that which outcome that you are focusing on affects how you go about expanding childcare. There is little evidence that providing more hours of childcare for children who are already receiving does not increase their outcomes, does not improve their attainment or the quality of life that they achieve later on in their lives. If you are focusing on outcomes for children, it makes sense to cover more two-year-olds with fewer hours or concentrate more hours on the two-year-olds from the most disadvantaged backgrounds. That clarity around the expansion to 600 hours about what your focus was had an effect in the way in which the childcare should have been delivered, and we say that the options appraisal was not done. With the expansion to 1140, I think that the Government is much clearer that the focus is on outcomes for children, but that is where the questions around the quality standards and how they play against the flexibility that is available to parents become a very important one. Again, that evaluation framework, because we are talking about outcomes over a long period of time, becomes important. That is why we think that clarity about what the outcome you are seeking to achieve is important, not simply because we are a bunch of encounters because it affects the way you go about it. I have to say that that is a very important point. I am glad that there is that clarity now. I might come back later on, depending on whether the rest of the committee wants to come in on it, about the flexibility and the ability for parents to access ours. If I am hearing you right, there is a lack of research about the impact of simply increasing hours on children's outcomes. My understanding is that there is research saying that access is an earlier stage, particularly among lower socioeconomic groups or those with poorer home learning environments, has a more positive outcome for those children. If that is right, surely the suggestion is that the Government, when looking to increase hours, should have looked more at targeting towards, say, two-year-olds, who, at the moment, we have not got a particularly big uptake, rather than a blanket, here are some more hours. Is that correct? We say in the report that, for the expansion to 600 hours, there was first of all not that clarity about which objective was the prime one. Secondly, there was not an options appraisal that said, and therefore, given the objective, this is the way that we intend to invest the additional resources that we are putting in. For 1140, the focus is clearer, that it is about outcomes for children, and I will ask the team to talk about the evidence that we have seen, about the way in which that is being planned and carried through. Rebecca, Trisha, sorry, we should be used because it is going. The blue plan around 1140 has been very clear that outcomes for children is the primary reason for the expansion, and impact on parents would be a sort of side effect, if you like that. That is important as well, but it is not the primary goal of the expansion, so that has been a much clearer statement. There has also been better planning around thinking at this stage what those outcomes would look like, so there has been some planning about what are the process measures that need to be in place, so that you can measure a kind of shorter term. What do you then expect that to achieve in the medium term? Going to the longer term around eradicating child poverty is ambitious, so longer term outcomes as well. We are seeing more clarity around what is expected, better planning around what information has to be collected to see whether that is working, but there are still some gaps that need to be addressed around still further clarity about the long term outcome measures and how you will actually measure that, and making sure that the baseline information is collected at this stage or prior to the implementation of 2020. We do feel that it is in a better position, but there is still further work to be done. My substantive question, though, is because I accept that. Everyone wants better outcomes for the children. The primary reason might be to reduce inequality at a later stage, but is there any research that says that simply by increasing hours from 4.75 to 6.00 and now from 6.00 to 11.40, there will be a positive measurable outcome as a result of doing this, or might it be suggested that we have just thrown £650 million, increasing it to the 600 hours, on the basis of, let's try it and see what happens. That is the suggestion if there is no research saying that this is going to work. We have been critical of the expansion to 600 for that reason. If the Government had been clear about what it was trying to achieve and had it been clear then about the importance of outcomes, it may well have done it differently, either by funding more childcare for all two-year-olds, but at a small number of hours, or increasing the number of hours for two-year-olds, which is the age group for whom the evidence is strongest, so this makes a difference to outcomes. We also say in the report that the number of two-year-olds who are accessing the early learning and childcare that they are entitled to is lower than we would expect. We think that it is about 10 per cent rather than 25 per cent of all two-year-olds. Part of that is because of problems with councils that councils are knowing who are the children who are eligible and parents not knowing that they may be entitled to it. We have made some recommendations for increasing it, but there is clearly a priority there about increasing the number of kids who are eligible and who are actually taking up their entitlement among that subsection of two-year-olds for whom the evidence is clear that it would make the biggest difference. Willie Coffey On the same theme, it was about general uptake and whether you could drill a wee bit further into it. This year's report editor general tells us that almost all three and fours are accessing the funding hours, but it is much lower for the twos. Can you say anything about across the socioeconomic groups again, in terms of take-up for more of the deprived communities in Scotland? Is it pretty high in terms of the three and fours right across Scotland or is it patchy? The way that information is collected makes it very difficult for us to do that, because it is collected from a census. It is not individual child-level data. We cannot say anything about the children within each council that are taking it up. We just know that at a council level and at a Scotland level it is high for three and four-year-olds. I assume that part of the recommendations will be asking for that to be collated to tell us to examine that more carefully. Do you think that the eligibility issue for the twos is one of the factors about whether, because the take-up rate for the two-year-olds is so low, is it confusing or is it based on birthday dates and so on and so forth? What is the reason, do you think, for that, for being so low? The work with families of eligible twos has found that one of the main reasons why people do not take it up is because they are not aware that they are eligible. It is so where people know that their child is eligible. There is higher uptake. It is just getting that information to the people to let them know. We talk about some good examples of how personal engagement is very important to that. The health visitor, social worker, job centre, etc. People being able to share that information with people that they are working with has been an important way of getting that message out, but one of the big barriers is that people just do not know that they are eligible. Is part of your recommendation again to ask councils perhaps to try to do a wee bit more to raise awareness that the facilities are there for families to use? There is also the particular issue that councils do not know exactly who is eligible themselves because they do not have access to the information through HMRC, DWP, so we have a recommendation about Scottish Government councils working to try to improve access to that information so that it can help councils to target these families better. Looking ahead to evaluation, you have mentioned that through the report. As Liam Kerr was saying, what is it that we are evaluating? Is it the impact on entertainment when it comes to children or positive benefits for families and allowing them to go back to work? I suspect that it is probably both. I think that the Scottish Government is accepting and agreeing in working on those two strands to evaluate it, but have you made any further recommendations about whether that evaluation should be short, medium or long-term? It is a relatively new policy, to be honest, and the impacts and the benefits of that may not be felt for some years to come. Is the evaluation scope looking at short, medium or long-term? The Government itself is committed to a short, medium or long-term evaluation strategy, and we set out some of that in the report. As we have already mentioned, there are still some gaps in some of the baseline data that need to be filled, and there is still no ongoing discussion with local authorities in terms of what measures might be used in some of the important areas. In doing that, we are asking for us to collect data on a per-authority basis so that we can see and on a per-community basis, I suppose, within the authorities so that we can get a really clear picture of how that policy develops over the years. We have not made recommendations in that respect, but we are very aware that those discussions are taking place between the Scottish Government and local authorities. Mr Beattie is bound to ask the same question in a few years, if we are all still at this committee, about what does the data tell us about the values and the benefits that impact the policy. Can I pick up a point that Mr Coffey raised, or in answer? I think that Trisha Meldrum mentioned it on the information from DWP and HMRC. Is there any barrier to that information going from the DWP and HMRC directly to local authorities? Is it a constitutional issue that that cannot happen, or is it just an arrangement that has not been set up? The way that we phrase it in the report is that councils do not have a statutory duty to identify the two-year-olds, and they do not get information from DWP and HMRC, which means that it has not been happening so far. We have recommended that the Government should engage with DWP and HMRC, both of whom they are engaging with very significantly around the new financial powers on taxation and social security, to see if that can be overcome. We do not yet know what the position is around it, but it seems to us key that if councils are going to make sure that every eligible two-year-old, at least their parents know that they are eligible, they need to know who those families are, because that part of the entitlement is not universal. It is about 25 per cent of all two-year-olds. It seems very frustrating that that information is there, but it is just not being passed on. Perhaps we can take further evidence on this, raise it with COSLA and see if we can push that information sharing along. It also strikes me, general, that NHS has information on how many two-year-olds have data on how many children were born two years ago. Is there any obstacle under data protection to that sharing of information between the NHS and local authorities? We are seeing more of it for a whole number of purposes, but just the number of two-year-olds or which children are two years old is not very helpful with this age group, because it is a subset of them who are entitled at two years, as opposed to at three and four. It is children whose parents are in receipt of particular social security benefits or otherwise looked after children, for example. Just knowing that they are two isn't enough, you need to know whether they fall into one of those other categories. The information from DWP and the HMRC is much more helpful. Can I ask another question related to this? Constituents have told me on a few different occasions that their children of age three and four are losing nursery places and their parents are working because the places are being given to eligible two-year-olds whose parents are not working. Did you find any examples of that in your research? We found some examples of where councils are having to prioritise children in particular groupings in order to meet the targets. I will ask the team to give you a bit more information about what we saw there. I do not think that we found any specific examples of the type that you just mentioned, Jenny, but there are examples of local authorities capping access to certain services that we set out in the report, which can have an impact on whether or not individuals are able to access local authority services or private authority sector services. What does that mean, capping access to particular services? It is limiting the number of places that they offer to families to manage the market, so they have confidence and certainty over how many places they will be purchasing across private and third sector providers and making effective use of their own in-house services. You might have a situation in a nursery where the places for three and four-year-olds become capped to make way for the eligible two-year-olds. I am not sure that that would necessarily happen, and this is not a widespread process. We set out a number of, I think, six or nine local authorities at the cap at the moment. Colleagues may be able to give you the detailed section of the report. Did anyone like to add to that? Or I will look for it myself. The third of councils at the moment capped places in their partner providers, about a third of them do it. It is to do with, it is less about the ages. Where it becomes an issue for parents is a child may already be attending a partner provider. When they are younger than eligible, they are either one or two. Depending on when, if the child becomes eligible at age two or age three, they might not be able to continue in that same nursery with a funded place because the council has capped a number of funded places it will offer. Therefore, they might still be offered a place for early learning and childcare, but it might not be where they want that place to be, so it might be in a different nursery. It might be in one of the council's own nurseries rather than in the partner provider setting, which is their preference. I certainly know that that is happening, and therefore you have situations where families are then asked to attend nursery outside of their own community and perhaps split up siblings to different providers. It can get very complicated, but thank you for answering that. Bill, sorry, does someone else want to come back on that? It was just related to the work that we did with parents and a number of the parents' stories that were similar around that and not being able to get places at their first choice of provider due to capacity. Sometimes that was about prioritising four-year-olds over three-year-olds, or prioritising looking after children or people in our children in some of the priority groups. We did not find a particular issue around two-year-olds compared to other age groups. Nobody is denying that it is a complex area. Bill Bowman. My colleagues here have tended to ask questions in the body of the report. I got a little bit stuck on the summary page where we say that the Scottish Government and councils have worked well together to expand provision. Looking at the next four comments, we have remarks like it is not clear whether this investment is delivering value for money. Parents said that funded ELC had limited impact on their ability to work. There are significant risks that councils will not be able to expand the care. Finally, the cost has significantly higher than the Scottish Government's figure. How is that working well? We are recognising the fact that 600 hours were available for all three and four-year-olds and for the two-year-olds who were entitled by the date that was put in place. That is an achievement and we think that it could have been done better in the ways that we set out in the report. Looking to the future? All the more important that the lessons are learned and that the baselines that would enable value for money and the impact on children are in place as the money is being invested and not afterwards. That is not the feeling that you get from reading that it is working well. We said that they worked well together to achieve the expansion of the places. The places were available and there is a benefit to that. We think that it could have been done better and we have been very clear in the report about how that could have been done and the lessons that can be learned. If you consider that it could have been done better, why what they have done as well has worked well? The wording is clear that we think that they worked well together to do it, not that everything was done well. They are two slightly different things in the way in which the report was drafted and I reached the conclusion about the investment that was made. I think that Kenny Gibson was asking for an example of what was going well. I think that you said that there were not any examples. Did I mishear that part? No, I think that what we were intending to say was that there was not a single council that was doing all of it well. There are a number of examples of things that are going well in particular councils around flexibility, training workforce for the future and retraining staff from other areas of council services. I think that we were not able to identify one council that was doing everything well. Is this a curate tag? Yes, and we have recommended a number of areas where things can be improved. When you finalise your report, you have a discussion about factual accuracy. The Scottish Government is happy that that was all factual. Can they be confirmed? Which, without necessarily giving names, who is the person or the title of the person that you would have agreed that? The director general is the accountable person for us. I'll ask Anthony Sturgeon. Paul Gray is the director general who signed off the clearance comments on the report. Paul Johnson, sorry. Paul Johnson, sorry. A personal discussion. We met Paul Johnson and his colleagues as part of the clearance process and then we received a formal letter confirming the factual accuracy report. Okay, thank you. Liam Kerr Thank you, convener. So, this is my opportunity to come back on the parents' piece and the accessibility. 90% of nurseries have no full-time places, as I understand it, and many places are only available during school terms. I recall that, I think, 19 councils don't have any nurseries open full time and 45% of nursery places are half days. Against all that, surely the Government can put in as many hours as it wants, but if parents can't access it, if parents can't actually avail themselves of those hours, then there is limited value, both to the parents who have now established the secondary outcome, if you like, but also limited outcomes for the children. Isn't that correct? There is no doubt that childcare needs to be available in ways that meet the needs of parents, particularly those who are trying to use the childcare entitlement to get them into work or to increase the number of hours that they work. We show in exhibit 3 that there is a variation in the amount of flexibility that individual councils are able to offer in their areas across the range of things that are there. In many ways, that is why we think that the absence of commissioning strategies in each of the 32 councils is so important, because they need to understand what the children and the parents in their area need in order to be able to deliver their own services and commission from their partners the services that will help parents to get back into education, work and study and to deliver the improvements for children that are the focus of the policy at this stage. I just have a very quick question, just a matter of clarity, if I may, so this might be slightly left field. Does the cost only occur? Does a cost only arise if a place is filled such that 1,140 becomes a great headline, but it only actually has a cost if the place is drawn down against, if that makes sense? How does it work? It depends, I think, is the answer. Anthony, do you want to pick that up? It's a very complicated area, but clearly the cost doesn't just arise when a place is created. There are marginal costs associated with the delivery of these services and one of the reasons why local authorities are quite keen to make full use of their resources is because that creates efficiency. The thinking, I think, of the Scottish Government in the funding follows a child is to make sure that the funding follows a child and that creates an efficient use of resources for the expansion of early learning and childcare. Right, thank you. A similar question to my first one then. If full-time hours are not offered, then parents are going to have to pay for their own childcare or they cannot get free childcare unless they pay for the extra to access. That suggests to me that that will have a, and I think there's research on this, that that will disproportionately benefit the more wealthy in society, presumably because they are more able to access that, they are more able to have a job in the background to pay for it. If I'm right on that, the very children for whom this programme could impact the most or most positively are less likely to be able to access as a function of the hours not being flexible. Wouldn't it have been better for the Government to examine the use and accessibility of the 600 hours, say, to ensure that they get maximum benefit from that and on the childcare outcomes or on the children's outcomes before increasing hours to a figure that potentially can't be accessed or won't achieve the attainment end game? I think it would have been better had they had the information to be able to evaluate 600 hours at the point of making decisions about 1140 hours, that wasn't there. The process of planning now is more difficult because it's not clear what councils are required to put in place around flexibility, and we know that flexibility is key to parents in being able to use this and to be able to make it work with the particular circumstances of their jobs, their working hours, how far they have to travel, where other children may be in school or in nursery provision, so all of that's making it more difficult. Having said that, I think that we are seeing evidence coming through of increasing flexibility of parents able to use their funded entitlement as that moves to 1140, and then if they work longer to pay for top-up hours that would enable them to have wraparound care, to pay for it during school holidays as well as just in term time to make it work. That flexibility is increasing, but in the absence of commissioning strategies, it's hard for us to be sure that it's increasing where it's needed and that the ways that it's being delivered both meet the needs of parents and provide the best value for money that they can. This is very complex and we've tried to simplify it as much as we can, but this has to meet the needs of parents, as you say, if children are going to benefit and that will undoubtedly mean an increase in flexibility. The question is how much more that will cost and how many more staff it will need, and we don't yet know either of those because of the gap in the estimates between councils and the Government. I was going to finish there, but just on that last point, isn't that something that should have been planned before? I struggle, as you know from our previous sessions, with this idea that you can just say, okay, we're going to do this and we'll worry about the cost and how we're actually going to implement it later. Perhaps that's a comment rather than a question, but I'll throw it to you anyway. Thank you, I appreciate it. I think we've said a number of times in our work over the last few years that the Government's outcomes approach is a good thing. There is no doubt that thinking about the outcomes that you want to achieve with public investment and public services is much better than not, but setting the outcome is only the first step. We think that this is an example where planning for how those outcomes were going to be achieved could have been done better, both in terms of the priority between outcomes for children and helping parents back into work, and then the details of how the expansion is going to be achieved and the planning earlier for that within what was already a short timescale towards 2020. Planning for outcomes matters, and it could have been done better in this case. Auditor General, keep me right on this. If my understanding of this is correct, the Scottish Government hasn't agreed to the totality of funding yet for the expansion programme. Is that correct? First of all, we are still working with councils to refine the plans to try and close that gap between £8.40 million and £1 billion, and they are in negotiations with COSLA about a multi-year settlement for funding, both the capital and the revenue costs, to get to 2020. That was due to be concluded in November, and I think is now due to be concluded towards the end of this month before the start of the new financial year. Okay, because it's my understanding that Dundee City Council has money in its 18-19 budget to meet the 600 hours but no money to meet the expansion programme. Would that be correct? I can't comment on the specifics of Dundee, but we know that the multi-year settlement has not yet been agreed, and it was a decision between Government and COSLA to postpone that agreement to allow more time for negotiations. So that would be true of every local authority in Scotland. That's my understanding. But the expansion programme target for 1140 is 2021. It's August 2020. 2020, okay. So if there's no money in the budget for the expansion programme in the 2018-19 budget, it then goes into the budget of the year that councils are expected to meet this target. Is that correct? Our understanding is that the intention is still that the multi-year settlement will be agreed very shortly, ideally before the start of the 2018-19 financial year. That's obviously urgent because the money is there for training staff, building or refurbishing the buildings that are needed, and generally investing in this expansion. And Rebecca is desperate to add something to this. Can I just say one thing before you come in, Rebecca? It's my understanding that the councils expect agreement to be reached by May, which would be too late for the 2018-19 budget, and the money would therefore go into the 2021 budget, which would be in the exact year that local authorities are expected to deliver this expansion programme. Rebecca Smallwood. Our understanding is that the 2018-19 settlement has been agreed, but we haven't got the full details of that in terms of the distribution. They haven't decided on how capital will be distributed yet. They're delaying on making that decision until they've seen the details of the multi-year settlement. Cos, am I correct in saying that this is not going to be distributed on the normal formulaic basis? Yes, I believe that there's been a separate decision about this funding. Okay, so they're still in negotiation about really what the need is in different areas, is that correct? That hella money will be distributed between different areas. So there's a bit of a bridge here between need and allocation. Even if the money, even if this agreement were to be reached by the start of the financial year at the start of April, and the capital money was to go into the budgets in 2018-19, is that really sufficient time for, say, because there's got to be new infrastructure here, hasn't there? There's got to be new buildings, they've got to be planned, they've got to be approved, staff have got to be trained to teach in these buildings. Given that the end date for this or the target date is 2020, is it enough time to meet that deadline? One of our key messages, convener, is that that will be difficult now. It was always a short timetable. It became shorter because planning started later. We think in terms of both training and recruiting the staff needed and investing in the buildings that are needed. It will now be very difficult, particularly in the case of the buildings because all councils will be looking to put out tenders, contract with builders and others and get spades in the ground where that's needed in a short period in two years. So, as we say in the report, we think that it will be very difficult. I think that I know why you have to use very diplomatic language around this, Auditor General, very difficult. From the amount of time it takes councils usually to approve buildings and get them built, I would say it's frankly impossible. Councils have no idea of allocation here. They have no ability to plan projects. There's a chance to get them approved by the time that this happens. I turn to something that you said at the start of your report about the quality of childcare. You've said that the Scottish Government has stressed the importance of high-quality childcare, but it doesn't define what that is. How much of a problem is that then for recruitment of staff and training of staff if there's no definition of what we expect around high-quality childcare? We know that quality is key for parents. Obviously, every parent wants it, and particularly in terms of outcomes for children, the quality matters. A lot of that comes down to staffing ratios and the outcomes that you're measuring. Rebecca, I think, can put some all flesh on the bones of that for you. I think that what we were talking about there was specifically in relation to the statutory guidance for 600 hours. That talks about the importance of high-quality ELC, but it doesn't define in that document what high-quality is. We know that there are processes in place for quality-assuring ELC in terms of care inspectorate inspections and Education Scotland inspections, but that document doesn't set out, for example, a baseline or a particular benchmark for quality above which you have to meet to be able to deliver funded ELC. That's something that we know that are taking forward as part of 1140. They're developing a quality standard, which will be a benchmark standard that providers have to meet in order to be able to deliver funded early learning in childcare, but that wasn't an approach that they adopted for 600 hours. On this point about quality, my recollection is that care inspectorate data seems to suggest that the quality of early years provision has fallen in recent times and that the percentage of preferred providers that are rated good or better is at its lowest point for half a decade. Given that there's going to be this expansion, what confidence can we have? That will increase pressure on the system, so how confident can we be that the quality will stop declining and start increasing again? As we comment on quality in paragraph 57, we report that the most recent information from Education Scotland inspections from 2012 to 2016 shows that almost all centres inspected receive satisfactory or better gradings across three of the Education Scotland quality indicators. On the specifics of the care inspectorate that you just mentioned, their grades for daycare of children's services and child-minders have remained constant since March 2014, and that means that about 40 per cent of daycare of children's services receive very good or excellent grades for all the indicators over that period. So, in a sense, our judgment was that the expansion has maintained quality, it hasn't improved or deteriorated quality. Right, but there will be a further expansion. Indeed. And you're confident that that won't have a negative impact on quality as the pressure comes? I wouldn't want to speculate on what the impact of the expansion will be. I think that Rebecca has already mentioned that the Scottish Government is setting out a set of quality standards and criteria that providers, be they local authorities, third sector or private sector, will be expected to meet if they are going to be providing funded childcare in line with 1140 expectations. Great, cool, thank you. You said, Auditor General, at the start of the session, that there hadn't been work done by the Scottish Government on alternative business cases on how to deliver this. I think that that was roughly the language you used. The cabinet secretary was asked about this in the chamber during the debate last week, and his reply was that, we know what we need to do and we're just getting on with it. What value would it have been to the Scottish Government to investigate other ways of doing this, both financially and in terms of outcome for children and parents? I do recognise the point that parents value additional funded childcare. There's no question about that. The increase has been welcomed by parents, as we say in the report. The point that I was making in my opening remarks and in the report before you today is that, depending on which, what's most important to you, outcomes for children or helping parents into education, training and study, you would take a slightly different approach. If your focus is on outcomes for children rather than expanding the numbers of hours available for children already receiving childcare, the evidence suggests that it makes much more sense to invest in increasing or starting children earlier in childcare, particularly for more disadvantaged children. Rather than a blanket expansion, that outcome would have led you down the route of increasing the two-year-old eligibility, either giving all-two-year-olds some entitlement or focusing on the most disadvantaged and giving them a larger entitlement. That's why we think that, first of all, clarity about the outcome that you're focusing on and, secondly, an options appraisal about how best to improve that outcome would have enabled the Government to demonstrate value for money against the backdrop of the outcomes that it has set itself as a Government. That's not in any way to downplay the importance of additional childcare to the families who are receiving it. It is saying that if you're looking to achieve a particular outcome, you need to do more planning about the best way of achieving it, to minimise the risk of wasting money on things that don't affect the outcome, or of downplaying options that would have given you more bang for your buck. Given that there's such a tight timescale and we're going to struggle to meet the deadline anyway, do you think that the business case stage was passed over because of that timescale to try and achieve those targets in as short a time as possible? That particular comment was about the expansion to 600 hours, so it goes back to 2014. It was still a speedy expansion, but it's not the same scale of expansion that we're seeing between now and 2020. I think that it's probably part of a broader learning within Scottish Government about the next steps, having set an outcomes framework. This whole question that I was referring to in response to Mr Kerr's question about planning for outcomes being the more difficult stage and the one that really delivers the benefits of outcome we've seen in this report very clearly. We have seen it in some of our other reports. Thank you. Do members have any further questions for the Auditor General and our team? I thank you very much for your evidence this morning. We now close the public session of this meeting.