 I welcome everyone to the 18th meeting of the Public Audit Committee in 2023. The first item on our agenda is for members of the committee to consider whether or not to give to taking private agenda items 3, 4 and 5. Are members of the committee agreed? We all agreed. I should also record that we have apologies this morning from calling BT member of the committee. What we are planning to do this morning is to hear evidence on the Audit Scotland Accounts Commission section 23 report into early learning and childcare progress on delivery of the 1140 hours expansion. To that end, I welcome our four witnesses this morning. First of all, the Auditor General Stephen Boyle joined us and the Auditor General is accompanied by Trisha Meldrum, who is a senior manager at Audit Scotland, and Rebecca Smallwood, who is an Audit manager at Audit Scotland. I am also pleased to say that we are joined this morning by Sophie Fleming, who is here from the Accounts Commission. It was a joint report by the two organisations, so you are very welcome. We have quite a number of questions to put to you on the report this morning, but before we get to questions, Auditor General, can I ask you to make a short opening statement? Many thanks, convener. Good morning, committee. I am delighted to present this joint report that Audit Scotland has prepared on behalf of myself and the Accounts Commission on funded early learning and childcare. From August 2021, the number of hours that eligible children are entitled to receive annually increased to 1,140 or 1140, as is more commonly referred. The report today provides an update on expansion progress and outlines associated risks that were covered in our 2018 and 2020 report. Our audit report found that the Scottish Government and councils allowing for the impact of the Covid-19 pandemic did well and delivered the expansion by the revised deadline of August 2021. Councils had completed most of the infrastructure projects required and significantly expanded the workforce. Take-up of funded ALC by three and four-year-olds remains high and most parents are happy with the flexibility available. More two-year-olds are now registered for early learning and childcare, but many more two-year-olds are estimated to be eligible and not yet receiving funded places. The Scottish Government and its partners have made progress with data sharing arrangements that will allow councils to identify eligible two-year-olds. The sector, however, remains fragile. The report highlights that some risks have changed since the expansion came into effect in August 2021. There are budget pressures on the Scottish Government and councils, workforce pressures, including the sustainability of funded providers such as private nurseries and childminders, risk limiting flexibility and choice for families. This is important to achieving the intended policy outcomes. The Scottish Government invests around £1 billion annually in funded ALC, but the report highlights that there are complexities in apportioning spending specifically to the expansion. The Scottish Government plans to assess the value for money of the expansion as part of its next phase of evaluation. We have again highlighted data gaps. There have been further delays in developing software needed to improve the management and monitoring of ALC services, and there continue to be gaps in data impact on planning and monitoring, including whether funded providers pay the living wage across the ELC service. It is too early to assess whether the expansion has led to better outcomes for children and increased opportunities for their parents to work, study or train. The Scottish Government has developed plans to evaluate the impact of the expansion and collect the necessary data. Baseline data has been gathered. The impact of Covid-19 will make the evaluation more challenging. We intend to come back to funded ELC with future audit work to examine the impact that the policy has had on outcomes for children and their families. Our report makes recommendations to both the Scottish Government and local authorities. As you note, I am joined by Rebecca and Trisha, who are part of the audit team that produced the report. I am delighted that Sophie Fleming from the Accounts Commission is here with us to answer the committee's questions. I ask my first question on that last point. You make clear in the report that it is too early or that you are not yet in a position to make an assessment around the impact of the policy. What do you envisage your timescale being for being able to do that? We have not nailed that down yet when that will take place. I think that what we have done today and what we say in the report remains our intention to do further audit work at the right time. That is the third report that I mentioned in my introductory remarks. Given its significance, both in terms of the impact that it will have on outcomes for children and young people, part of the continuation of early intervention that is prevented of spending to deliver benefits in the long term for young people and families, we will give that careful consideration together with the Accounts Commission as to when it is the right time to do so. It will probably be sometime over the next few years difficult to be more precise than that, convener. We can see that there are staged approaches to the roll-out of this by age, for example. It will be interesting to see where that gets to. One of the other things that, by way of introduction, we wanted to ask you about, was that you indicate in the report that, roughly speaking expenditure in the year that you have looked at was about £1 billion of public money. What is the projected funding figure for future years? I will bring Rebecca in a moment just to say a bit more about what that means, but there is some volatility. That brings a degree of risk to the future. Around £1 billion is spent annually. I will come on to say a bit more. I am sure that the committee will be interested in that the precision with which the expansion of early learning and childcare cost is not there because of some of the complexities around the collection of information between councils and the submission to the Scottish Government. What it means for future budget provision will be a matter of policy choice for Government scrutinised by the Parliament as to how much it intends to spend. We know that the commitment remains to deliver future early learning and childcare, but the actual amount that is being spent is reducing slightly because of projected changes in the number of children and young people accessing the service. Rebecca can say a bit more about that, convener, but there is some volatility both in the short term but also significant choices that will have to be made by councils and the Scottish Government among its other priorities. We set out an exhibit to the funding allocations that have been made by the Scottish Government for ELC up to 23-24. That is the only year for which we have information. We do not know at this stage what the arrangements will be for 24-25. That is a flat cash settlement, is not it, in that exhibit, too? Am I reading that correctly? There are two aspects to the funding for ELC. Some of the allocation from the Scottish Government goes through core funding for councils. That reflects the historic arrangements that were in place to fund the 600 hours of funded ELC, which prior to the expansion was the number of hours that children were eligible for. The second part is a ring-fenced grant. It is a specific grant for funded ELC, and that was intended to fund the additional 540 hours brought in through the expansion. There has been some change in that over the past couple of years. As we set out in the report, in 2022-23, it was £15 million less than it was in the previous year, and in 2023-24, it was £9.1 million less than it was in 2022-23. There was movement in that specific grant, but the core funding has stayed the same. I want to say a word more about what it means from councils funding and some of the wider challenges that councils have. There are two components. There is the ring-fenced element for the expansion, and there is an indicative allocation in the wider funding to councils. That indicative component that is allocated notionally against early learning and childcare has dropped by 14 per cent in real terms. There is an element of protection in terms of the expansion ring-fenced grant, but the indicative bit is not protected, and that is the choices that councils will have to make among their other priorities. It applies the same to the Scottish Government as it thinks about its priorities and choices through its allocations, but I am sure that Sophie will want to say a bit more about that. I think that you have covered the most. What I would like to add is that the complexity is by design, because the initial 600 hours and the entire design are meant to pick up local differences so that councils have the flexibility to respond to their local needs in the way that is best suited to the needs and the changing needs of the population. I suppose that adding the complexity of the geographical spread, urban rural and so on and so forth, the predictions in terms of what the intake will be in terms of children eligible for the policy, but overall also that the budget is pre-primary education. Rebecca will keep me right on that, so it is not even that it is just ELC. Within that, there are also things about wraparound care or some additional spend about additional support needs and so on and so forth. As far as the big takeaway from our side is complex, it is complex by design, but there is also that absolute data need in terms of getting the clarity. If I reflect on some of your earlier reports, there were concerns, weren't there, about the extent to which the expansion was going to be fulfilled because of delays to the provision of new buildings and the refurbishment of buildings, because of concerns about whether the increased level of staffing that was going to be required to deliver the expansion was going to be met. When I read that report, I was quite pleasantly surprised that that appeared to have happened, but when we talk about this billion pounds of funding, is that revenue funding? Does that include the capital investment that has been required to increase the capacity of the sector? In the public sector, for example, could you maybe break down those different components for us? I am going to bring Rebecca in to say a bit more about the split of capital and revenue, and again, there is an element of not all of its funding. Some councils, as it was set out in the report, have had to or chosen to use their own capital funding as they have increased the supply of buildings. There are some useful examples across Scotland where different councils have done so. If I can step by your wider point for a second before turning to Rebecca, this is a positive story from our perspective and that of the committee, because I am sure that councils and the Government have done well. That is our key message to get the necessary infrastructure just about in place. About 90 per cent of the intended buildings are in place, the provision is still being met across the country with some contingency arrangements while remaining capital projects have to be completed and the necessary workforce is also in place to deliver it. Yes, risks remain, but delivering what was anticipated with the extension result of the pandemic has been met. Rebecca can say a bit more about the nature of the funding that was used relative to budget, as she wishes. The £1 billion, around £1 billion, is the allocation from the Scottish Government for revenue funding annually. That is how much is allocated on an annual basis for revenue. The capital funding for the expansion was separate. There was an agreement to provide £476 million between 17, 18 and 2020-21, so that was the capital funding for the expansion. As we highlight in the report, councils are projecting, as in August 2022, that they would spend £598 million on capital for the expansion. We also get into the report that there are a number of reasons why that projected figure is higher than the allocation itself, including some of the projects that councils have included and their projections were not intended to be funded through those allocations. We also know that there will be more up-to-date information available on that, so our report highlights the position at August 2022. That was the most recent data available to us at the time of doing the audit, but the Scottish Futures Trust gathers information from councils on a reasonably regular basis. We know that there has just been another data collection in May that they are working through at the moment, so we are expecting a more recent figure to come out shortly, which we will be looking at also. That is really helpful. Other members of the committee have questions about the financing arrangements and staffing levels and so on, so we will come on to those. I want to turn now to Craig Hoy, who has a question for you. We note that the legislation and the associated statutory guidance places an emphasis on what is described as flexibility and choice for parents in terms of how they access early learning and childcare. However, that degree of choice is very much determined by local authorities themselves. Can parents access early learning and childcare outside their local authority, should that local authority not be giving to the flexibility and choice or the patterns of childcare provision that they might need? I will say a word or two about councils' choices and what options they have. Flexibility is absolutely recognised in the legislation and the report. At a high level, parents are saying that they are happy with the expansion arrangements, but not everybody. Some people have not got what they wanted in terms of provision, and some of that is reflected in the report and the reasons behind it, whether they got the provider or location that they wanted. That is not all spelled out in the legislation to say that everybody is going to get exactly what they want. You will get the provision, but not every need of yours will be met. As it relates to what happens next from that, what onus is on a council, because the legislation will set out that it is for the council to be the lead in the provision and then using funded providers accordingly. Risks from that will come on to me, but I will turn to Rebecca and Sophie. I might be going first on what I mean for councils' roles for how they bring out and sustain the sector. Thank you. Overall, as Steven has highlighted, what we refer to in the report is data from the Scottish Government. There is a survey of 8,000 parents and 88 per cent of the three to five-year-olds were happy with the allocation. It is higher for the eligible twos. Again, the baseline value seems to be broadly working for the needs of most, but not all. There is always the significance of who the remainder is, which is not our data. I think that your question was specifically about flexibility across councils. Did I get that right? To my understanding, there are agreements in place, because you will have situations in place, and residents will be different. I will bring Rebecca in on that, but I think that there are agreements in place. However, the planning is made much harder if it is not your own local population, which brings us back to the predictions and the need. Yes, Sophie is right. There are cross-boundary arrangements in place for councils. Part of the funding follows the child guidance, as put that in place. Councils should be able to offer people who ask for a place in a different council area that option. Mr Boyle, you alluded to the fact that most parents seem satisfied or content with the arrangement. I will use an example from East Lothian, where the parents were not happy, which was that there was not the council for perfectly valid reasons. It cancelled a contract with an organisation called Bright Star Nurseries. Immediately, within a period of weeks rather than months, parents had to scramble to get the children into the available nursery provision, which was in the council-provided provision, which was very, very strictly determined around a model that was not highly inflexible, in my view. Given that you have identified that there is effectively a funding shortfall here in the sense that councils are being asked to do more with less in relation to the financing for this, is there a risk that, effectively, the buck is being passed to councils here and that flexibility is really just affordability what is affordable within any given area. The flexibility for councils that have the resources can be offered to parents, but councils that are squeezed—and that is the vast majority of councils, if not all—are having to come up with very rigid models, so people's working patterns and behavioural patterns have to fit the model of provision, rather than being the other way around. That is quite a lot on your question, Mr Boyle. I will share that with colleagues. I think that Trisha might be helpful to set in some of the context around quality. I think that you are referring to some of the criteria that the Government and councils using the Care Inspectorate assessments of quality arrangements, so Trisha can cover that. In terms of the funding arrangements, I will say a word about that back. I think that all those will want to say a word or two about your question. There is a range of views about the extent to which funding is sufficient to meet the requirements. As I mentioned a moment or two ago, funding levels are changing, dropping slightly in years to come. The Government's position on that reflects its modelling that there is going to be a reduction in the number of two, three and four-year-olds who will be accessing the service. Therefore, that is a linear relationship. In terms of the COSLA and councils, it is more complicated than that. Some of their costs are fixed, and it is not going to be as quick to allow them to vary provision and their cost base as quickly as the annual allocation. There are a range of perspectives on that. I am not close to the detail of the case that you mentioned in terms of the circumstances of a particular private provider and what it means. However, it speaks to some of the wider point that we make in the report about some of the fragility in the sector that, if a particular provider—whether it is as a result of not speaking of that case, but a quality issue, that judgment from the Care Inspectorate—remains with the local authority to secure the provision. Given that we have set out aspects of the report about rising costs, inflation, workforce pressures and some of the movement that is talked about between private providers and staff, I should say, and council providers, not always the consistency of terms and conditions can make it more challenging for some of the private providers to sustain their business models in light of those changes. That is at a high level. I am keen, maybe first of all, through Tricia and then brought it out to others. I am not getting into the specifics of the individual nursery or the individual council. The requirement on providers is that they meet the criteria set out in the national standard. That covers 10 elements, but a number of those elements relate to the scores that they would receive on care inspections. They have to achieve scores of good or better on the six-point scale that is in place through that kind of quality mechanism. If a provider does not meet those criteria and meet that standard, then they have an improvement period of time to put in place an improvement plan, have a re-inspection. At that point, if they still do not meet the quality standard, then that would be where, potentially, they would no longer be able to provide funded early learning in childcare. That is the approach that is very much through the care inspectorate inspections and the gradings that setting would receive. I think that Tricia has set out the detail. Overall, Stephen has said that, for what the scope of the audit and what we looked at, we clearly say that the Scottish Government councils have achieved their goals, but we also highlight the risks that you are pointing towards around workforce and the next steps. We are quite clear on the report about that. We need more certainty on data to tackle the issue that is being addressed. Overall, as I referred to beforehand, there is the question of how allocations work on a local level. The complexity there is obviously that you have different settings—private, statutory provision by councils themselves, which, in a way, are more immediately manageable, but also childminders—again, a different model of provision. In terms of flexibility, councils have it in their grasp, depending on the private provision available, to offer parents a wide array of choice, but that is contingent on those private providers, be they childminders or private nursery to be there. To a certain extent, coming back to the numbers, I think that there is a question in all of these times around flexibility and needs. They mean different things to different people. This is not to say anything. Your example shows the validity that expectations weren't met, but from the point of view of the policy and what we were looking at, the overall intention is being delivered. There is a range of options. However, Stephen has pointed out not always meet the specific individual family's needs as those things unfortunately come and go. Rebecca, have you got anything else to add on the flexibility for what looking? Councils consult with parents. They should do that every two years, and that should be used to inform the models that they offer. However, as colleagues have said, that does not necessarily mean that the models that are on offer will meet every family's needs. Those models should reflect the results of the consultation, but that might not work for everyone. I do wonder whether councils, given the financial constraints, are providing what they can provide rather than looking at what parents need. In terms of the whole system, Mr Ball, is there a risk that councils, as providers and the rule setters, and they determine the rates for the PVI setter? Is there a contradiction, or is there a conflict of interest in the system that the Scottish Government has overlooked, perhaps? The sector is changing rapidly, I would say, Mr Hoy. In terms of this new legislation, the expansion and the roll-out of 1140 has had a significant impact on the sector. We have mentioned to the convener's question that there has been a significant investment in infrastructure, new buildings, supply, workforce has changed fundamentally. 8,000 new people are working in this sector. On top of that, some of the business models will have been disrupted from the private providers. There is a real change there. We have talked about it in the report. There is an expectation that the living wage will be paid in different terms and conditions existing across providers. Some of the statutory responsibilities are remaining with the council. The flexibility is on offer to all. Probably not. I think that it is set out in the report. I am not sure that there is a conflict of interest. I think that there is a statutory responsibility, and there is an expectation that there is a requirement in different parts of the country for a mixed market to operate effectively. I think that there are some of the risks that we set out in the report. If there is a failure of a private provider, such as the example that you mentioned, the responsibility remains with the council to provide that service, and that is not going to be straightforward for councils, because not all of the provision would be available. There needs to be a mechanism between the Scottish Government local authorities and private providers to work towards a stable provision across different sector settings. One thing that is really important is that we talk about it in the report and again bring Rebecca on some of the issues that she wishes about measures of the stability of the sector. There is a stability survey that is carried out that assesses how the volume of people who are remaining in posts each year. On top of that, there is work that has been undertaken by the Government of a financial health check of the private sector providers as well, awaiting conclusions on that. It is not the case that we say that the Government and councils are not aware of those issues, but very clearly are what we are seeing at the moment as they are working through that. As we can think about where that leads us, once we are clear on the valuation arrangements, the totality of the investment is the right point for us to come back in. We are watching this carefully, but I will bring Rebecca in first of all. The financial health check is something that the Scottish Government has done in previous years, and we understand that there will be more information available on that in the summer. Essentially, that is looking at the sector as a whole, so it is broader than just DLC. It will also include out-of-school care providers, too, but it is looking at the sustainability of the sector, and we expect that there will be actions associated with whatever comes out on that in the summer. The stability index is measured, so that is something that has been looked at in the absence of good data on the movement of staff. We talk in the report about the potential movement of staff from funded providers into council settings, but there is not a great sort of information on that, but what we do have is the stability index, which basically looks at whether someone is still in post after a year, and that is consistently higher in council settings than it is in funded providers. Mr Hoy, I think that we make the specific recommendation in the report that the data needs to be accessible. We need to be able to make a judgment call on it. Obviously, there is a lot of anecdotal evidence, which is not dismissed, and we make reference to that in the audit work, where it means to have those conversations with providers, charities and so on, but the message that Rebecca has just alluded to is quite clear that that data needs to be in place, it needs to be comparable to answer your question specifically about movements between sectors and therefore the stability or, in fact, the interplay of where councils sit. Thanks. We have spoken a little bit already about flexibility and outcomes. One of the outcomes that was expected that I think there has been some measurement of was around, because of this increased provision for preschool education, that it might lead to parents and carers taking a decision to defer their children going into primary school. On the evidence that you have produced in the report, that does not appear to have happened to the extent that people may have expected. Can you say a little bit more about that? Have you got any understanding of why that is? Is it a cultural thing? Are there other factors at play that mean that we haven't seen choices being made that are there for deferral of children going into primary school? You are right, convener, and colleagues again want to comment. We covered the paragraph 20 of the report. There was concern initially that if there was an increase in deferrals and parents have the relative of the straightforward option to defer entry to the start of school for children whose birdies fall in January-Febru before the start of the cut-off for the school year in the beginning of March, and options for birdies that fall in December and before that. That hasn't been as much as was anticipated, because the concern would have been that more deferrals would lead to more pressure placed on early learning and childcare settings. Is there some further work that is underway in terms of pilot activity? Just reviewing that impact in more detail with that report is awaited, convener. Again, I'm just maybe bringing Rebecca in for any kind of more detail to share on that. The pilot actually published on the same day that we did, so we haven't included any of the findings in our report, but we have now seen it. The legislation on deferrals is changing from August, but in advance of that 10 councils, we are piloting the new approach that would let the children with birthdays after August up to December also defer. What we have seen from the pilot report that came out was that there is some evidence of a sharper increase in deferrals in the pilot areas compared to the rest of Scotland, but it is difficult to ascertain a specific trend. It concludes that more data is needed in future years. Partly it is complicated because of Covid and the impact that that has had on deferral rates more broadly, so assessing whether it is the result of the pilot in those areas rather than the impact that Covid might have had on parents' opinions about whether to defer their children or not is difficult to disentangle, so they are monitoring this data going forward as well. What it highlights is that there were some localised capacity issues, which we did highlight in the report, but it has not been a more widespread issue. Although I think that staff have some concerns that that might change going forward as it becomes perhaps more widely known about from parents that there is a risk still to how that works in future. The report into pilots, who produced that report, was that produced by the local authorities? Was that produced by somebody on behalf of the Scottish Government? Yes, it was commissioned by the Scottish Government and they published it. So have we had any response yet? Do we know what actions the Scottish Government is going to take in light of the report into the 10 pilots? I haven't seen any actions from the Scottish Government, but the report has now published. We can take a further look at it if we be in a small welcome back to the committee. Thank you. I think that that would be helpful. One of the things that we were also interested in is, of course, we speak about the expansion to 1140 hours, but it's not mandatory. I guess that we just wondered whether you've got any data or you've done any work to understand why parents' carers may be exercising their right not to avail themselves of the 1140 hours. Rebecca, who is on top of a lot of the detail on that, will set that out for the committee. I think that it's absolutely the case, convener, that it's not mandatory. You can't force parents' carers to engage children and young people in preschool education. That's not to say that there's not significant changes in behaviour and volume of registrations. Three and four-year-olds is one part of it, but it's also important to recognise that for the policy broadened out the statute provision for two-year-olds as well as vulnerable two-year-olds with the intention, again, as part of that theme of earlier intervention, preventative spending to deliver longer-term outcomes and objectives. In terms of the reasons why some people don't engage, they'll be widen and varied. The report covers that, and Rebecca can say a bit more, which will come down to parental choice activity. Some bit will be a bit of flexibility that we've touched on with Mr Hoy, that the provision doesn't suit individual families' circumstances. That will always be a factor, but I think that the legislation is clear that they will not be able to meet every single family's choices, but Rebecca can take the committee through that. As the Auditor General says, we know that the uptake is higher for the three and four-year-olds, and the two-year-olds tend to be the area where you can see that there are more children eligible than are accessing the service. One of the main barriers that has been found in previous then, I think that we've included this in our previous reports to the committee as well, in terms of two-year-olds accessing the service, is that councils don't know which families are eligible, so it's difficult for them to promote the uptake to the families who might be entitled because they don't have information on who those are. That's an area where we've highlighted in the report that we've seen some positive progress this time around in terms of the data sharing arrangements that are now being put in place to allow councils to access information on who specifically in their council area might have an eligible child so that councils can then contact those families and let them know that they are eligible and then they can make a choice as to whether or not they wish to take up their place. That's something that the new legislation that was brought in in October is allowing that data sharing to start, and we just had an update that we saw yesterday suggesting. In the report, we're highlighting that councils will be able to access the data once the governance arrangements are in place, and we know that 15 councils now do have access to the data and have got those arrangements in place. That's the most recent update. Okay, thank you. I've just got one final question before I bring in Willie Coffey, and that is again in the report you refer paragraph 25 to satisfaction surveys of parents in consideration of the flexibility of the arrangements and so on. If I read it correctly, there was a much higher satisfaction rate amongst parents or carers where the children were living in households where parents were not at work, for example, or also living in the more deprived areas, there seemed to be a higher satisfaction rate. Have you got any rationalisation of that? Could you perhaps enlighten us as to why you think those are the results that you've come across? I think it would be realm of speculation, convener, as to why I could offer a thought in terms of why it wasn't as high perhaps a converse in families who were working. Perhaps it is those families that require on that precise provision in a particular location to support the requirements. Families who weren't working, maybe the provision is closer to home, offering more choice as distinct from and more open to flexibility. It really matters now when the Government is using this information as part of its longer-term evaluation, that it is capturing families' views, the outcomes that it is leading for children and young people, and one of the recommendations that we are making in the report, and I am sure that Sophie might want to say a bit more about that too, and I have keen interest in her, is that it is taking children's views into account as part of the evaluation article 12 in the Convention on the Rights of the Child, that they are engaging properly with very young children who are using the service to part of their wider evaluation as a key next step for the Government and their partners. However, it would be speculation in terms of your earlier part of your question. Was there quite a wide variance between those different groups of households? One of the stated and agreed public policy objects of the expansion of early learning child care is about increasing levels of economic activity, isn't it? If it is not serving the needs of parents' carers who are at work or want to go to work, that is a public policy issue as well, is it not, which needs to be addressed? Yes, very clearly. When we are just moving into the evaluation section for a moment, and again, Sophie, I am sure that we want to say a bit about that too, looking at the arrangements for evaluating the success of this policy, the value for money that has been achieved, the connections to the national outcomes, what we have seen so far is positive from the Government's perspective. They have captured baseline data and their approach to evaluation as they have set it out, both in terms of the aims of the evaluation that was covered at paragraph 98 of the report and the individual measures that they looked to assess and the detail of those at paragraph 99 of the report. Very clearly, one of the stated aims was to increase economic activity for families of low income who are not working. The signs are positive, with some caveats. Rebecca Rowley rightly mentioned some of the progress in terms of data sharing, which was one of the barriers. The earlier the intervention, the more likelihood of longer-term success. If that is not achieved for vulnerable two-year-olds, the long-term implication of that is much more significant, so that data sharing is in place is really positive. The building blocks are there, and that is what we are seeing at the moment, but lots of work is still to be done before the Government councils can take an informed view that this has had both the benefits to children and young people in terms of outcomes and the economic success of the policy as well. I thank you for bringing it here in CRC in article 12. The team will keep me right on this, but this is obviously the third audit in the series. When we started, the focus was very much on quality, as it should be. The experience of the children, the outcomes for children, and therefore, I suppose you can see where potential trade-offs or the complexities lie in making that work, because it is sometimes not quite aligned with prevental or let-alone workforce needs. I think that there is a tension again where that will be difficult to manage, and it will be looking differently for different families. Overall, however, we need to bring it back and make the recommendation to involve children. If I am not mistaken, there were two settings that were at the very beginning, at the inception of the policy involved earlier settings, where children and parents were consulted on how best to go about the expansion. There are good foundations to be built on moving forward, but there is also quite a lot of work in the charitable foundation sector. Specifically, I suppose your question around the differential experiences between the eligible twos and other children. I suppose that the foundations are there, and hopefully in the next audit we will be able to answer that question more precisely, because it is just to reassure you a keen interest of, if I can speak for Stephen, the Auditor General and the Accounts Commission that we have really, really come back with an answer to the question, has it worked, and on what levels has it done that? Of course, not all other things will be equal over that period of time either, but I think it would be still very useful to have those assessments over time. Willie Coffey has got some questions to bring in. Thank you very much, convener, and good morning, everyone. I wonder if we could stick with our very young friends, our two-year-olds, for a moment. Stephen Your report tells us that 25 per cent of two-year-olds are eligible, but that is going up. The numbers of two-year-olds, families presenting their two-year-olds, wishing to take advantage of the policy, is going up, probably because of the current economic circumstances. Have you got any sense of whether that is uniform across Scotland or other pockets of Scotland, where it is much more of an increase in an uptake demand than others? I will bring Rebecca and Sophie in just to say what information we have about the geographical implications. You are right that that population group is liable to change very directly in terms of economic circumstances, and all the more reason for that. The data is clear, and the policy objectives that accompany are likewise, Mr Coffey. I will bring colleagues in if we have that geographic information. The difficulty with that is that we know that 25 per cent of children are estimated to be eligible, two-year-olds are estimated to be eligible, but it is an estimate, and that comes back to the data-sharing issues that are only an estimate of how many children are eligible. We do not have that broken down at a council level, although there are statistics published by the Scottish Government in terms of uptake through the census uptake of two-year-olds. That is available at a council level, the extent to which that reflects the number of eligible children. We cannot differentiate that, but we are expecting that the estimate of the number of two-year-olds has not been updated for some time, because it relies on information from HMRC, DWP to estimate how many children in the population might be eligible. That is something that the Scottish Government is going to be able to refine as a result of the data-sharing arrangements with councils that have a better sense of the numbers of eligible children and be better able to compare that with the uptake to get a more accurate measure there. As that demand increases, there is bound to be a consequential impact on the funding that is needed to support it, or is that unfair to say that at the moment? Sophie Mett wants to say a bit more about that. As we say in the report, there are different views about that. As the policy becomes more mature and is implemented, the infrastructure is in place, whether there is a direct relationship between the change in young people accessing the service relative to the funding that goes alongside it. The costs do not follow each other directly. There are fixed costs that you cannot change just with the volume, but it is something that really needs to be worked out. As Rebecca has mentioned earlier, what is the clarity of how the cost relationship works with individual places? Your report also talks about some work going on to try to help the councils to identify the eligible two-year-olds and there is some work going on between the Scottish Government and the HMRC. That is not the same as the software issue that we might talk about later on. It is a different piece of work, I understand. Has that been concluded? Is that technical ability to identify eligible twos complete? I think that you said that maybe about 15 councils are starting to reach out when the rest of them start to do it to identify the eligibility. It is just a case that the individual councils need to put their governance arrangements in place. The software that provides them that information is available is called data pipeline. As soon as councils have their information governance arrangements in place, they can access the data. The remaining councils are just going through that process. We do not have an update on timescales for the ones that are outstanding still. I might come back to that and ask you about the other software component that is coming later on in the report. Just a wee final query from me on access to the provision with kids with additional support needs. The satisfaction rates are pretty high. Your report tells us that it is 88 per cent, broadly, but 85 per cent satisfaction among families with kids with additional support needs. Is there a story to tell or share in there about whether we are delivering fully for families with kids with additional support needs? There is a bit of a story again. Sophie, I am sure that I want to comment on that. It is one of the themes of the report, Mr Coffey, about totality. That is a good news story, but there are still risks around data. It is an example that it is difficult for the Government and councils to assess fully the extent to which children with additional support needs are accessing the expanded services that are done through the use of census data, rather than in aggregate. There are connections to the point that you are making about the quality of IT and software provision. Totality was designed to provide better monitoring planning information to support councils, and children with additional support needs could very much be one of those. It does not detract from the overall point that 85 per cent of parents with children with additional support needs are satisfied. Where they were not, there was commentary around staffing not being fully or appropriately trained, some aspects of lack of support, concerns about communication or about the hours that were being provided. There will always be concerns from individual parents. However, although there is a general high-level satisfaction, there is still more work to be done in this area. That work is being undertaken to try to improve, perhaps, if it is training that is the biggest element of those concerns, the work that is being undertaken in your view across the board. I cannot give you a clear answer. I want to add to the complexity that will that training be delivered in some places? I am sure that it will be. However, when you come back to the local spread, in terms of the workforce adequately trained, the provision available with the right hours will probably have a different picture across different areas of Scotland because of workforce issues. In terms of the risks that we identify, we will keep a very close look at precisely those questions, those cross-secting complexities going forward. Additional support needs, geography, workforce and so on. As far as we can tell from the data that we have, and Stephen has already pointed out that we are looking forward to having more, it will be one of the key things in the next report. When we are ready to come up with a very firm answer to your question in terms of where is what delivered and what are the specific plans? However, councils are definitely wanting to address the need. There is no doubt about that. I would certainly like to see the picture as it emerges, council by council area, if that was at all possible, Stephen, in any future update that you might give to the committee. I am very happy with your responses so far. Thank you. I will come back later on, if I can, on the software issue that you are also raising in the report. Willie Coff is also the deputy convener of the local government committee, so he has got a particular interest in seeing how that spread works. Can I return briefly to infrastructure and capital spend and so on? In the report, you talked about completion rates. You said that the completion rate had risen from 87 per cent to 95 per cent over the course of the year that you were looking at. What is the current completion rate? You mentioned 95 per cent by August 2022, convener, and then a projection from all projects to be completed by 2025. Colleagues might want to say a bit more about the detail that sits behind that paragraph 40 of the report. We give a bit more flavour as to which local authorities have experienced delays and some of the reasons behind those. Although not all the projects are completed, all the service is being provided just not in the new place that was intended, so it is not like there are families, children and young people who are waiting for a building to complete in order to receive a service. Contingencies are in place, and the service is being delivered just not yet in the new building. If we have any more detail beyond the 95 per cent of past colleagues to bring, we will go to Rebecca first. This is linked in with the monitoring that the Scottish Futures Trust does on the capital spend. They also monitor progress on completion, so we know that there will be more recent information. It is coming out soon, but we have not seen the May data collection yet, so that is still being worked through. I will come on to something that is an increasing part of our agenda and questioning, which is about net zero targets. We have seen a significant capital infrastructure investment primarily in new buildings or in refurbishment of existing buildings. To what extent were net zero targets set around those infrastructure projects, either by the Scottish Government or by the Scottish Futures Trust? I will turn to colleagues with a bit more detail, but it is an important point. First, I will reference some work that we have already done and the work that we have planned in this area. Paragraph 42 of the report firstly notes that there were some additional measures with the capital investment, such as insulation, to help councils in individual projects to achieve net zero aims. However, the committee will be familiar with the report that we recently produced on the Scottish Government's arrangements to support net zero and the need for additional emphasis to be placed in governance risk management as part of the leadership that they are providing across the Scottish public sector to ensure that infrastructure projects are factoring in net zero ambitions. We are also at the stages of planning some further audit work on how that is progressing in terms of whether there is a clear connection between infrastructure activity and net zero being at the heart of that, so we are looking to bring that to the committee later this year. As it relates to those infrastructure projects, I suspect that there will be a mixed picture in terms of whether net zero was an inherent factor in some of the infrastructure developments, and if colleagues have more information, we can share that. If we don't, we can come back to you in writing. I do not have the specific dates to hand, but my understanding is that the capital allocations were based on a metric that included specifications for insulation, but I think that my understanding is that I might have predated the net zero, so this is going back to 2016, as it was in our first audit, which was published in 2018, but that was based on some of the information. I think that it might have predated it, but some councils have then subsequently changed their arrangements, as we have highlighted in the report, and that has changed the specifications that they have used relative to the metric that was used to allocate the money. I am just reflecting on the report, Auditor General, that you referred to, which you brought out earlier this year, where you reminded us that a climate emergency had been declared in 2019, and that, with four years down the line, in an emergency situation, what urgent action has been taken? Has anything been included in construction specifications around new public infrastructure that recognises the seriousness of the emergency that we are facing? You are quite right, convener. Those were the overall judgments that we were making, that there was a lack of clarity in terms of how the Scottish Government was arranging itself as part of its system leadership role to deliver net zero targets, a stronger focus on climate emission reductions and not adaptations, all of which will be relevant. As it relates to individual projects, I am sure that Rebekah is quite right that there will be a timing difference. We are also planning to do further audit work in this area to examine how well the climate emergency is then translating into individual projects, sectors and what that means over the course of the rest of this decade. We have work in progress on that front, which we will bring to the committee. We would be keen to hear the results of that investigatory work that you are doing. I have one other question before I bring Sharon Dowey in. That is again something that we have spoken about in other contexts at the committee over the last couple of years, certainly over the last year or so. That is inflation, especially in the construction industry. In paragraph 43 of the report, you referred to a concern that has been expressed by councils that construction inflation is estimated to be around about 30 per cent. I suppose that the fairly obvious question is what is being done in terms of the allocation of funds to address that. You are right. 30 per cent is the figure that we quote in terms of the impact that inflation has had on capital projects. We have seen over the past six to 12 months the impact that inflation has had in a wider setting, in terms of pay inflation, cost of materials, cost of purchasing goods and supplies. How that is translated into individual allocations is less clear. It is not going to be enough to meet that, convener. There are factors in the report that we set out that the cost of delivering the projects is correct. In capex terms, funding of £476 million was allocated. Spend is just shy of £600 million. There are a variety of factors behind that. One will be inflationary cost increase, and the other is that councils have had licence to vary the spec of their particular projects, as well. There will be a debate about funding. Sophie is close to me, and we wish to say a bit more as to how that will be. However, what we are not seeing is the Scottish Government funding councils to the totality of what they have actually had to spend to deliver the projects. As I mentioned a couple of times already, there is a further debate between Government cosilym and councils about where that should best land. Sophie can say what I am sure. I think that I would just want to add to what you have already said, Steven, that there is maybe in that definition of the reporting in which just over 100 million overspend is coming from. There are some projects that were not originally budgeted and meant to be in the reporting, but because of the delays of the implementation of the policy, because of Covid, they have been included. I suppose that there has been a moving picture in terms of the overall budget, which may make it harder to make that assessment, whether the increase is solely due to inflationary pressure or rising costs or, indeed, higher specifications. I think that that is the mixed bag. Unless, Rebecca, you have got any further data, I think that that was not the focus, but it will be about disentangling, if that is even possible, all those various factors that Rebecca, if you have got any more detail. No, that is a complex picture. For reasons of transparency, if it was possible to disentangle any of that and to understand what the different drivers of inflationary costs were and what was happening to the overall capital settlement, that would be useful. Presumably, it would be useful for local authorities in order to help them to prosecute their arguments for perhaps additional funding. Quite. It is not something that we have to hand today, convener, but it may be that it is something that the committee might wish to explore directly with the Government and individual authorities. I turn now to the Deputy Convener, Sharon Dowie, who has a series of questions to put to you. Your report highlights significant recruitment and retention challenges for the ELC sector. We note that the Scottish Government is working with stakeholders to draft a strategic framework for the ELC and school-age childcare workforce and an associated action plan to address the challenges, and it is due to be published in summer 2023. To what extent will the development of this framework and action plan address the challenges that the ELC sector is facing and is it in track to be published this summer? I want to say more about what we know about the extent of progress to compile the strategic framework and action plan. Workforces are a very strong theme in our report. As I mentioned earlier, 8,000 additional people are now working in the sector, but it is still fragile, and one of the biggest risks will be about the sustainability of the workforce across different providers. We have talked about factors behind that in terms of cost of living and the consistency of terms and conditions between council settings and private providers. The wider aspects of the availability of workforce are attractive as a place to work, relative to other options. We will all have a bearing on the sustainability of the sector and helping the Government and local authorities to meet the wider objectives of the hugely significant investment of public spending to deliver the longer-term outcomes. Before passing to Rebecca, I want to draw the committee's attention. This is one of our key recommendations for the Scottish Government in today's report that it works with councils and other stakeholders to develop a long-term workforce plan to tackle some of the risks to sustainability, modelling and targeting what future demand. As Sophie and others have mentioned, it is clearly part of our further follow-up and future audit work to see how that comes to fruition. However, I will bring Rebecca in just to say more about the framework and action plan. We have not seen any of the draft actions that are part of the strategic framework, so we do not know what that will cover at this point in time. The most recent update that we had from the Scottish Government at the time of clearing our report with them was that it would publish over the summer, but we have not seen a draft to be able to comment on the content of what that will include. I would be confident that it will come out in the summer or? That is the most recent update that they have given us. PAGRAF 49, page 17, states that, similar to the findings of the last audit, representative bodies of private and third sector ELC providers continue to report that their members have challenges in recruiting and retaining staff. Can you say out in a wee bit more detail why staff stability is higher in council settings than in the private and third sector? If there is any more detail on what the Scottish Government can do to improve stability across the sectors? There will be many factors behind why people choose to work with a private provider, run private businesses or decide to work in a local authority setting. Terms and conditions will be a key driver behind that, but they are not always the same. One of those is about the extent to which private providers can or are choosing to pay living wage arrangements. You will see one of the points that we make in the report is that there is not enough data about whether living wage is being paid by all private providers. That level of clarity needs to come. Rebecca MacDonald mentioned earlier this morning about the stability index. One of the mechanisms that we use to assess whether people are remaining in post for a year or more and there is variation. It looks like that there is more stability in the council setting and less so in private providers and third sector providers. The factors behind that are not clear enough. There is one of the gaps that is based on index and national monitoring. The Scottish Government has recognised that and is working with the Social, Scottish and Social Services Council to try to get better data to look beneath more of the trends for why people are moving between different sectors. Again, that will be important intelligence as we expect to implement our recommendation and a detailed workforce plan that takes account of the different sectors that are providing services. You mentioned earlier on as well that there is not a comprehensive picture on how much councils have spent specifically on the expansion at national level. You have mentioned that there are other various complexities as well that exist, which can make it difficult for the Government to establish the overall amount spent on implementing the expansion from 600 hours to 1140 hours. Does that mean that we might never know the cost of implementing the policy? I am sure that I want to say a bit more about the set-up for the committee on how we are in the circumstances, but what we have reported in the report is that at a headline level, the Scottish Government does not know specifically how much was spent on the expansion of the programme for the additional hours up to 1140. There are complexities in it, some relate to data, some relate to IT, the way that information is reported by councils to the Scottish Government through local financial returns, but it is also the case that this is the third time in the events that the Scottish Government has not yet received the information that it needs. It is too early to be definitive to answer your question directly, whether we will ever know. The Scottish Government has plans in place, as we mentioned to the convener earlier, about a secure more deep baseline information. Its evaluation arrangements are in the right place in terms of whether the policy at a high level will deliver value for money. It will make that assessment based on pre-pandemic provision and spending through to outcomes and spendings next year and beyond. However, it is an important factor that you are highlighting that that level of precision information is not yet available. Rebecca and maybe Sophie want to say a bit more about why those are the circumstances that we are in. The councils report what they have spent through local financial returns or LFRs. The way in which those are set up, councils report on pre-primary spending, that is the closest that we have to funded ELC, but it can be a bit broader than just the funded ELC offered through the 1140 expansion, so it also includes councils spending on other ELC that they might offer families. They might choose on a discretionary basis to offer additional hours to some families. They might choose to offer hours to families who do not meet the eligibility criteria for two-year-olds or for younger children as well, so pre-primary spending is potentially a bit bigger than just the 1140 hour. The other complexity with the LFRs is that it does not differentiate between what was spent on 600 hours and what was spent on the extra 540 hours that was brought in through the expansion, so we do not know what the split was. The expansion was phased in by councils over a number of years, so we cannot work out how much was spent on those extra 540 hours over time. That is the bit of the expansion that we do not know what was spent on that. It is complicated for councils to do that, so they took a range of approaches to piloting and phasing the expansion. We highlighted that in our previous report to the committee. In some councils, they chose to offer it in some settings, not in others. As they began to phase in the entitlement, they took approaches to best out their local needs, so they have all taken a variety of approaches, but in some councils they chose to incrementally increase the number of hours that children got, so it went from 600 to 800, up to 1,000. There are a variety of different approaches, and that adds to the complexity of councils being able to split out that money. That was one of the issues that the Scottish Government has requested councils to provide them with that information, so separate to the reporting that councils already do through the LFRs, the Scottish Government had requested information from councils on a number of occasions to try to gather that information. There are a lot of data quality issues that mean that it is still not possible to get that national level picture. Part of your question is related to whether it ever will be possible. What we know is that the Scottish Government has plans to look at value for money of the expansion, but it will take a different approach to that, so it will not be able to sum up the total of what was spent on phasing in the expansion. What it will do is to look at what was spent on providing 600 hours of funded ELC in 2017-18. It will be able to look at the outcomes that were being achieved for children and their families at that point, because it has that baseline data that it has been gathering through the Scottish study of early learning and childcare. It is gathering the outcomes information, so it will be able to compare the costs and the outcomes at that point in time for 600 hours with the costs and the outcomes that are going to be achieved in 2023-24. It will be able to draw a comparison between those two points in time to look at value for money. If I may just add, the complexity thrown in there is, as we all know, the pandemic. How you account for the effects of the pandemic in terms of outcomes is the right approach to take looking at best value in that sense, but we will have to take that with a caveat, as in every other policy, that we are looking at a different status quo that we expected in 2017-18 when the baseline was taken. That is one of the additional complexities that is layered on top. In paragraph 64, the report states that the Scottish Government allocated 9.1 million les to councils for funded ELC in 2022-23 and that COSLA is concerned that reduction in funding may affect service delivery in the future. To what extent do you share COSLA's concerns? I am sure that Sophie from the Accounts Commission will have a perspective on that as well. I do not think that we have reached a judgment on it yet. We are reporting that there are different views in today's report between the Government and COSLA as to whether or not the funding that is made available and the model is right. I mentioned to Mr Coffey earlier that COSLA and councils' perspectives are not a linear relationship, so there are fixed costs that cannot vary with changes in funding that is more connected to individual child places. I have not reached a position on that, deputy convener. I think that it is likely to come as part of our next stage, relating to the adequacy of the funding model alongside whether it has achieved outcomes for children, young people, economic activity from families and alongside the wider value for money judgment. We are recognising that it is a factor that needs to be resolved between the Government and COSLA in today's report. We are coming back to the complexities that are in-built in trying to respond to local needs. I think that COSLA is suggesting that the picture may not, in all cases, mean that a reduction in children, as Stephen has pointed out, will be on a per capita basis to the same reduction in cost. That is highly dependent on the local provision, so, as with many things, it will not be uniform across the board. What we are clear on in the report is that the financial pressures, without a doubt, are high. That is for the Scottish Government and for councils. Rebecca has set out the complexities that go beyond the expansion, which is ring-fansed, in terms of the initial £600,000 and the discretionary spend to respond to local needs. Undoubtedly, as councils face difficult choices, that will be part of those difficult choices as well. We are acutely aware, and I think that we highlight that those pressures need to be discussed and addressed and that both local authorities and the Scottish Government need to work together to start with the right data to make informed choices about how the difficult decisions that lie ahead will be met. Craig, how you had some questions earlier about the sustainability of providers, and he's got some more questions on that. Thank you, convener, and I'm just to delve a little bit deeper into this whole issue about the sustainability of providers, particularly those in the independent sector. You report that there's no national data available on the demand for childcare across both funded and non-funded ELC, and that you recommend that the Scottish Government addresses this gap in data. What work do you understand that the Scottish Government is presently undertaking to address this recommendation? Rebecca might have an updated picture on that, Mr Hoy, but there are data gaps throughout the report that needs to be tackled so that the Scottish Government and councils have a more rounded picture of the drivers between what's going to be the sustainability of private providers. We've touched on already this morning that, in the event of a provider not being available for whatever reason, whether it's precious or outlawing, whether it's quality factors or financial factors, there's still a statutory provision to provide that, and that will be very challenging for local authorities to step in and make that provision, perhaps speaks to the example that you raised earlier. In terms of having a wider data, and that's key to understanding the scenario planning that they'll need to do, part of the workforce recommendation that we've made fits neatly alongside that, but I'll bring Rebecca in to say more for the committee. In terms of our specific recommendation on measuring the demand, our understanding from conversations with the Scottish Government is considering how to address that recommendation, but I'm sure that the Scottish Government would be able to give you a more up-to-date picture, potentially. Sophie, you used the word anecdotal evidence earlier in relation to what's happening in the master place at the moment. I get the impression that the independent sector is squeezed, and the expansion in care, given that they do not feel they're being adequately funded for providing that care, means that their opportunity to turn a profit, which is effectively why they are in the sector in the first place, is being squeezed into that wraparound door, like the effectively breakfast clubs after hours provision, et cetera. So to what extent are you getting the impression that the independent and private sectors are starting to shut their doors and move out of provision? Is there a risk that that's going to feed through to put more pressure on councils to provide that provision? A couple of factors. As I mentioned earlier this morning, the market has changed fundamentally with the provision up to 1140 hours. That has a bearing on private provider's ability to vary their income significantly. You mentioned a couple of areas that they are able to do so. There will be relevant factors behind that. Also a tribute to the cost of living, the desirability to work in a local authority setting for staff relative to private providers. However, there is some emerging evidence about the fragility in the report, the phrase that we use, Mr Hoy. Just about the number of childminders operating in the sector has fallen by 29 per cent in recent years. We set out paragraph 53 of the report that childminders are reporting that there are recruitment and retention challenges. Some work under way, there are pilots being undertaken about looking to expand their role in other parts of Scotland, particularly in remote and rural communities, with almost 60 new childminders being completed or applied for registration with the care inspectorate. That goes some way to addressing it, but in the round, those are the issues that the Government and councils need to address. There is a sustainable market provision, because it speaks to the point that you are raising your question. If that is not addressed, then the provision comes through to local authorities who may or may not have the workforce and the facilities to offer that services to families. My next question is about remote and rural areas. Child minding is a critical part of provision. To give an example from the Scottish Borders, the Scottish Child Minders Association has said that the workforce in the Scottish Borders has declined by 43 per cent over the past six years and that that could double by 2026. That is presently affecting 386 families with 56 businesses having withdrawn from the sector. That will obviously have in those rural areas major implications. To what extent is child minding, which is already a Cinderella service, at risk in Scotland as a result of 1140? The first thing that I should say is that our audit has not looked at individual areas that have taken a national perspective. I think that some figures speak for themselves, but 29 per cent is the national picture in terms of the reduction of child minders. That risk, undoubtedly, will be higher in remote and rural areas. There are risks in totality to the provision of the service. There is some fragility for private providers, both nurseries and child minders, as you say, that requires real careful consideration by the Scottish Government and local authorities in Scotland. They have that sustainable mixed market provision that can deliver the 1140 expansion. We make recommendations to that effect. We reference the pilot activity that is being undertaken. Those are the kind of steps that Government working with our partners and local authorities have to get right with the private providers. Just to return to the Scottish Borders, the Scottish Borders Council funded a child minding link worker, which the child minding sector said to me was vital in their operation. That funding has been withdrawn because of the pressures that local authorities are facing. To what extent is the wider financial environment within councils, for example those link workers or those outreach workers, that operate between councils in the independent voluntary and third sectors? Is that at risk? Could that also mean that there is going to be greater pressures washing back up on councils? Sophie Macdonald might want to comment on councils positions in particular. There are financial pressures. There will have to be choices. Both the Scottish Government will want to make in terms of the delivery of its policy intent and similar for councils, too. How that feeds through into individual choices will be policy choices for those organisations. However, workforce financial pressures are, too, the very clear risks that we set out in today's report. Sophie Macdonald might want to comment on the individual circumstances and individual councils, but your examples highlight that. We keep coming back to this complex picture, just how complex and interconnected it is. It goes beyond the expansion where, in child minding, we have seen a trend over years. Stephen has pointed out to the work that the Scottish Government is doing with the Scottish Child Minding Association that commissioned in 2020. I think that the root cause analysis in terms of what issues are and not just in terms of losing child minders but also in terms of registration. I think that people are talking about where solutions could lie across inspectors. Colleagues from the CCCC and the Care Inspectorate will be involved in these conversations. Whether that is at pace with where we are going in terms of future policy changes, I suppose that is not for us to comment on, but actors are aware of, as Stephen has termed, the fragility in our moving to address those. Before I ask my next question, I would better remind members of my register of interests. I want to ask about the living wage and fair work practices. You remind us that there has been established an ELC living wage and fair work implementation group. You have also mentioned earlier on that there is a porcassity of data about the living wage and whether or not it is enforced. Does that organisation have, in its terms of reference, some responsibility for getting that data? It is an implementation group, is it not? Presumably, it needs to have the data to understand whether or not the promises that have been made are being kept. I will bring colleagues in, convener, if we have any detail on the terms of reference of that group in a moment. What we have reported is that the application of the living wage, and some of that will be reflected in the requirements of local authorities for providers, is a significant change for some private providers. You can tell from my language that it reflects that there is not enough data on that. That is one of the factors that we draw out in the report that there needs to be better information. Given how central both private providers are to the sustainability and delivery of the service, there needs to be better data to understand what impact that is having. We are drawing on survey information about sustainability indexes to assess the overall movement of workforce in different sectors. That needs to be a clear action coming from today's report that there is far more clarity on what impact terms and conditions are having and the application very specifically of the living wage across different providers. Can you turn to colleagues if we have more detail on that specific question? That group will be developing an approach to monitoring the living wage that has not happened yet. We highlight in the report that it was due to discuss that at its next meeting, but we have not seen the minutes of that yet to see what progress there has been made. We also highlight that some information on living wage will come through the financial health check that we have discussed already this morning, so that is due to come out in the summer. There will be some information coming through that. We also know that some councils are doing it themselves locally, but there is not a national picture for us to report on at the moment. That is why we have made our recommendation that that needs to be monitored and the information gathered. The terminology that we are using here is living wage and fair work. Fair work covers things like the use of zero-hours contracts, for example. It covers things like the right to trade union membership and trade union recognition and so on. Is that something that is going to be monitored and is data going to be collected on that? We would expect so, convener, because the Government, with its fair work principles, has the ability to set that out clearly in its expectations in terms of its procurement requirements and its guidance to councils, whether that is part of the budget allocation, the ring-fencing conditions that go alongside it. As Rebekah mentioned, it is something that we will factor into our own consideration as part of our next audit work. Again, if I may, it may be something that the committee wishes to explore with the Scottish Government. That is a very clear answer, which is very helpful. I am going to turn now to Willie Coffey, who has more questions to put to you. Thank you again, convener. We referred earlier to a piece of software that was in development and stopped being in development, let's say, but I am not clear what it is supposed to have been doing from what I can see in your report. Data exists at a local level, but it is difficult to assimilate that and provide a national picture of it using this software, the education management software. Could you tell us a little bit about what it was meant to do and how work is progressing on that at the moment? I will bring Trisha in to say a bit more for the committee on where we are at with this software. The intent, Mr Coffey, was that it was going to address some of the data gaps to support monitoring and evaluation arrangements. We covered earlier on this morning, particularly for the two-year-old group, the intent that it was going to offer. At a high level, it has not progressed as intended. There have been issues between Seamus, which is the Scottish local authority-owned company that oversees education management software, and its provider that has resulted in some delays and some changes in grants to support the delivery of the project. I will turn to Trisha so that she can set that out for the committee. The software was due to be in place for the initial date of the expansion coming in in August 2020, but when we last reported in March 2020 that there were already delays and it already wasn't going to be available by that timescale, part of that was around delays in signing the contract and some of the technical issues. It was already delayed and there have been further delays since then, so that has increased over that period. The contract was then terminated with the third party developer in February of last year. There has now been a new grant agreed with the Scottish Government to the limited liability partnership to allow them to develop some of it in-house and also be supported by external parties as well. The last we heard was that the estimates are for the software to be complete by March 2024, but we don't know when that will actually go live in the councils. It means that there are gaps around things like recording information on individual children. Rebecca has already mentioned that at the moment there is data that comes through an annual census. That is at a point in time, so that would tell you how many children are taking up ELC or are registered for ELC at a point in time. It doesn't tell you about individual children throughout the year. It doesn't tell you about the characteristics of individual children to get that full picture that you really need to understand who is using it, anybody who is maybe up to it, not up to taking it, as you would expect. Where might the Scottish Government want to target the efforts to increase uptake? There are gaps in some of that data. As you say, councils are planning and managing the services, but they are having to do things in work-around ways and inefficient ways, as opposed to having the software that would do it and do it on a consistent basis and provide that consistent national information. Was the first project, or the initial project, abandoned three years ago? No, the contact was terminated in February 2022. Is the main problem changing to a new vendor or a new software developer? Is it not necessarily going to resolve data inconsistency if it is there? Is there work going on to try to make sure that the data that councils are collecting is in a consistent form that allows the software to present as a national picture? Is that one of the issues that sits at the heart of this, Trisha? I do not think that we have that level of detail. It has been technical issues and issues with the development of the software, as such. I could not get into the data behind that. I am always curious about the actual cause of the software failure when it comes to the committee. However, it is crucial to make any progress in assessing the impact of the whole policy. Presumably, that lies at the heart of it if we are to be successful at all in evaluating impact outcomes and so on. We are going to need some kind of data analytical tool to be able to draw on and tell us what the picture is across Scotland and in Scotland. Is that fair to say? I agree with that, Mr Coffey. A software tool will take you so far, but if it requires human beings to enter the data and to use it properly, there is always a risk if it is not applied properly and does not get that level of consistency. We have just for the committee's attention Exhibit 4, just to summarise the data gaps that already exist. We have covered many of those on the way through this morning. There is a need to get this right. I referred to a recent blog that Audit Scotland produced on high-quality data, which is essential for both the delivery, planning, monitoring and the evaluation of public spending and outcomes associated from it. There are next steps required and we have set some of those out in our recommendations in today's report on data. Those will be crucial so that we get to the point where the Government is heading. We see in a balanced way that the intent with the aims and the measures that the Government has to evaluate the policy are in the right place. Addressing some of those data gaps gives them the best opportunity to make that rounder assessment as to whether that £1 billion—let's not forget—in annual investment is delivering the intent. The data gaps are common in a familiar story here at the Audit Committee in a number of areas. Do you think that it is fully understood that your messaging to the Government and its agencies about data, data quality and data gaps is fully understood and being addressed as you have hinted at there? Is it fully understood to enable us to develop this and get this tool right? I am more optimistic now than I perhaps would have been 12 months ago that there is an improving understanding of the need for high-quality data to come back five years that Audit Scotland produced a report planning for outcomes to set out what is required for delivering policy, baseline data, milestones, predictive governance and the right data to make that evaluation assessment. Some signs of progress and only last week, Mr Coffey in a report on Courts Backlog that gave an example of an organisation that had used data well in difficult circumstances, so we know that it can be done. Even in today's report examples of baseline data in place to form that assessment. The assessment will be better still addressing some of the data gaps that we refer. Lastly, Auditor General, my favourite subject is value for money. We are always interested in the definition of that, what it means, who sets criteria and whether we can apply that criteria and use the data that we have to give us the answers that we seek. Where do we stand on that? Do you think that we have got clear enough criteria in place to assess and determine the value for money of the scheme? The value for money is a shared judgment, for the government and public bodies and local authorities. As you know, there is an onus on public bodies themselves to deliver value for money, personal onus and accountable officers to deliver value for money for public spending. As it relates specifically to the expansion of early learning and childcare, we have made a positive judgment that the measures that are in place give a very strong foundation to make that value for money judgment. Rebecca has given some of the criteria already. Just drawing the committee's attention to paragraph 99, there is a range of measures that the Government intends to assess as to whether its expansion of early learning and childcare has met the intentions behind it of improved outcomes for children, for their families and also for more economic activity. Positive signs would say, Mr Coffey, what comes next matters? Just to finally emphasise that our ability to determine value for money will depend largely on the availability of quality consistent data being gathered and being able to analyse fairly across Scotland and within the councils and anywhere across the country at all. Absolutely. Without reliable data, you will not be in a position to make around the assessment of value for money. Thank you very much for that. Thanks, Willie. I am sure that that is a theme that we shall return to as early as next week. We have one final question to put and I am turning to the deputy convener, Sharon Dowie, to put that question to you, Sharon. Thank you. It is on the views of children, and I touched on it earlier on. Paragraph 103, page 32, refers to a recommendation made in the 2020 Audit Scotland follow-up report that the Scottish Government considers how to include children's views in the evaluation of its policy. The report explains that the Scottish Government is working with stakeholders on whether and how to do this in a meaningful way, given other research priorities and capacity to undertake the work, but has yet to finalise plans. Could you tell us to what extent do you consider the Scottish Government is committed to seeking the views of children as part of its evaluation work? We think that that is the case, deputy convener, that it is considering how best to do this. I am quite sure that Sophie wants to come back in on that point as well, that they find a way of doing so meaningfully. It is a very young population. It is also a population that turns over very quickly as it relates to early learning and childcare. You are not only spending 18 months, two years for vulnerable tools, but slightly longer. So finding a way best to do that actually matters. It is consistent with UN rights of the child, article 12. The Government is thinking about it, but it is not yet finalising the plans. It is one of our recommendations accordingly. I do not think that we can speak to the specifics of what the plan looks like, and I suppose that that is not for us to say. We have highlighted it in two reports and made it clear. As I said in the initial setup of the policy, there were consultations, but we are coming back to what Stephen has already phrased, the meaningfulness of the engagement. That might be where those priorities will come in. Obviously, it is a different way of working, but I think that the Scottish Government has shown not just in the ELC expansion, but across the board that there is willingness and, in fact, eagerness to work with the youngest children as well. That is to be welcomed. I leave it at that. Obviously, we have set our expectations and we are looking forward to seeing what comes back. However, to reassure you that our interests are just as much at that point is yours. Craig Hoyt has one very final, short question. Just one question that I should have asked earlier, just in relation to the dynamic within the sector. Have you made any assessment, or is there any way to see whether or not, even though the independent sector is still quite large, whether it is consolidation of ownership, that those small, independently-owned and managed nurseries are effectively selling up to bigger, more commoditised, cookie-cutter approach companies? Is that part of the market fragility that the ownership of them is in far fewer hands now? No, I do not think that we have done any evaluation on, just checking with colleagues, no, we have not, as to whether or not that is a factor. It probably was not one of the criteria with which we drew the fragility judgment, more about the availability of staff, some of the remote rural factors, the change in composition of childminders and the reliability that local authorities have on them. If it is a factor, and there is no reason to doubt you, Mr Hoyt, that it is something that councils and the Scottish Government should be very alert to, and what influence that has on the quality and sustainability of the sector. If you lose one nursery, you lose one nursery, but if the holding company owns 70 and they pull out of Scotland, then that could be quite critical. I would second that from a slightly different perspective, but if there is a concentration of consolidation of ownership going on, it would be useful to have some kind of monitoring of that, because that in turn will affect the way that the sector functions and its relationship with the public sector might be too. I think that we would certainly welcome a bit more evidence on that. I thank you very much indeed for your evidence this morning. It has been very enlightening, so I thank Sophie Fleming from the Accounts Commission, Rebecca Smallwood, Trisha Meldrum and Auditor General from Audit Scotland. I thank you very much indeed for the work that you have done on that. I think that it is by everybody's understanding an extremely important piece of policy work, and the auditing of it I think is especially important. We certainly would like to ask you to give it your active consideration in the future as well, because it is an important piece of new developmental work that has got much broader implications for young people, the wider economy and so on. I thank you very much indeed. I will now draw the public part of this morning's session to a close and move the committee into private session.