Our second item of business is to take evidence on the Children and Young People (Scotland) Act 2014 from the Cabinet Secretary for Education and Lifelong Learning. He is accompanied today by Stuart Robb and Scott Mackay from the Scottish Government.
I intend to allow around an hour for this part of the meeting. I welcome Mr Russell to the meeting and invite him to make a short opening statement.
Thank you, convener. As you may have noticed, I am not Aileen Campbell. I proffer her apologies; she has, unfortunately, been taken ill. I look forward to answering the committee’s questions today, to the best of my ability.
I thank you for the opportunity to give evidence on the additional capital costs that are associated with implementing the early learning and childcare commitments for additional two-year-olds, in relation to the supplementary financial memorandum for the Children and Young People (Scotland) Act 2014.
My colleagues and I appreciate the need to provide the Finance Committee with that information, and I know that Aileen Campbell would like to have got it to you sooner. Unfortunately, in the very short period between the new provisions being put forward and the date by which the supplementary financial memorandum was required, it was not possible to secure the essential information that was required for making a robust estimate, nor even to provide the committee with a best estimate.
We want to make sure we get the information right in order properly to inform parliamentary consideration and to deliver the policy properly. That has meant our going through a complex process that has required close engagement with local authorities, through the Convention of Scottish Local Authorities, to produce what I believe is now a robust estimate.
The Scottish Government is committed to funding fully the agreed costs of the policy. We have already committed more than a quarter of a billion pounds—£280 million, in fact—to local authorities to support implementation of our early learning and childcare commitments. That includes significant capital funding, £59 million over the next two years in revenue costs for the expansion for two-year-olds and £3.5 million of funding to strengthen the capacity and skills of staff. That demonstrates how seriously we take the policy and how committed we are to delivering it.
With regard to capital costs, we have already made significant funding available. In the original financial memorandum, we provided £90 million in capital over three years for additional capacity for three-year-olds and four-year-olds. The Cabinet Secretary for Finance, Employment and Sustainable Growth reaffirmed that commitment with a further allocation of £31 million to the capital funding requirement of local authorities for the financial years 2014-15 and 2015-16, specifically in relation to the expansion of early learning and childcare to additional two-year-olds.
The method for estimating the capital costs that are associated with the provisions is not straightforward and has required close engagement with COSLA and local authorities. We have analysed data from local authorities, which includes their estimates of required investment, and recent examples of capital that has been spent on the nursery estate for new builds or adaptations.
The work has been underpinned by data on location and numbers of eligible children, along with estimates of likely uptake rates, availability of existing capacity and distribution of children among local authorities and partner providers. That work has shown huge variations in the costs that are applied by local authorities and in the delivery models.
We have not yet been able to reach a final agreement with COSLA on the figures, although we intend to do so. However, we have produced a proposal, which is detailed in the paper that members have in front of them. It suggests an overall capital cost of £61 million for the extension of early learning and childcare to 27 per cent of two-year-olds. I believe that that represents a fair allocation that is drawn from clear evidence from the data that were submitted by local authorities on the costs of recent new-build and adapted accommodation, linked to the latest available statistical information on uptake rates and existing capacity.
The process has necessarily been complex, and although we have not yet been able to reach final agreement with COSLA, we will continue to engage with it and with local authorities, and we expect to reach agreement.
I am, of course happy to take questions.
Thank you very much for your opening statement. As is normal on the Finance Committee, I will ask some opening questions before I open out the meeting to colleagues.
Paragraph 4 of annex A of your submission states that
“Twenty returns have been received and analysed by the Scottish Government.”
It adds that there has been
“wide variation in costs per child being applied from £1,000 to £23,000.”
How can you give such a definitive figure of £61 million when it seems that the figure is not based on all 32 local authorities?
The answer to your question is in the detailed information that we have provided to the committee, in particular the metric that we applied. Paragraphs 14 to 16 and table 1 indicate the overall calculations and the following paragraph shows how the metric was developed based on the local authority examples. I ask Scott Mackay to expand on that, but I think that the figure is based on very firm information and experience from, for example, the well-advanced work of the Scottish Futures Trust.
Not all local authorities sent us data on new build and estimates of future build. We analysed what was available in order to underpin an average, which was generated in the metric that is displayed in the submission.
One of the issues about which COSLA has raised concerns in its submission is the 60:40 split in provision between the public and private sectors. It states:
“this is by far the most significant issue and this aspect needs to be reconsidered.”
COSLA’s submission states that
“Private providers have been approached but in the vast majority of Council areas they are unable or unwilling to offer places for 2 years olds.”
The submission goes on to say that
“Two Councils in the west of Scotland are needing to work on a 100% local authority provision, with one of these Councils finding that only 1 of 70 private providers is willing to place 2 year olds from families seeking work. ... As an average, COSLA considers the true split of local authority provision will be between 80-100%.”
It suggests that that means that the figure of £61 million is somewhat optimistic.
We do not believe that it is, and I will tell you why, convener.
The latest pre-school statistics show that, on average across Scotland, 60 per cent of early learning and childcare provision is delivered by a local authority, and 40 per cent is delivered through partner providers. The pre-school statistics show that 5,700 two-year-olds receive funded early learning and childcare, of which 50 per cent is delivered in local authority settings and 50 per cent by partner providers. Where such provision already exists, 60:40 is a favourable split for local authorities. COSLA has given examples of a number of councils that are using up to 100 per cent local authority provision. I do not deny that, but we have seen a number of examples of councils using partner providers to deliver in excess of 60 per cent of provision and, in some cases, 100 per cent.
There is a variation in current practice and in plans around the use of partner providers. We propose that the acceptable split needs to draw on current experience and what is happening. That leads us to the 60:40 split. I am not saying that negotiations cannot continue and, of course, in a negotiation both partners take robust positions in discussing the matter. However, the evidence that we have is that the 60:40 split is an accurate split and is based on actual activity now. Of course, we will continue to discuss the issue.
COSLA’s submission states:
“The information obtained from Councils has been shared with Scottish Government officials during our discussions, and we had agreed a process to seek further clarification from Councils to help in the discussions with the metric. However, before this process could be completed we received an updated copy of the metric”,
which basically said that the figure had been set at £61 million. If negotiations are continuing with COSLA, how flexible are you about the figure?
There was an obligation on Aileen Campbell to come to the committee and give it further information. It is quite right that she did so. The metric that we have been working on is the information that you required. The metric leads us to the figure of £61 million. The COSLA figure is very substantially higher, but we have moved from earlier discussions of a lower figure. We will continue to discuss the issue, but we are confident in our robust calculations. Of course, there will be flexibility, but in terms of our estimate of what is taking place, the calculations that are laid out before you are very robust.
I have one more question before I open the discussion out to colleagues. We are talking about a policy that will have to start being delivered from August, although discussions are still on-going with local authorities and COSLA. How confident are you that we will be able to commence the policy from August, as intended?
I am entirely confident that we can do that, but we are also offering local authorities as much help as we can, which is the right thing to do. I do not question COSLA’s commitment; from the beginning, COSLA has shown a strong commitment to the policy. In turn, we have said that we will fully fund it—there has been no question about that. We are now talking about the detail.
Let us remember the numbers that are involved. Roll-out will start in August with a comparatively small number, which will rise over the next year and a bit from the 15 per cent that is to be achieved at the end of the first year to the 27 per cent that is to be achieved at the end of the second year. In those circumstances, what requires to be spent now can be spent now. Further discussions will have to take place, but I am confident that authorities can deliver.
Members will understand that delivery will be most difficult in rural areas because of the need to provide for small or very small numbers. I represent a rural area, so I understand that. We will give COSLA every assistance. We are trying to deliver the policy as partners and we are confident that we will do so.
You could have chosen a legislative instrument other than the Children and Young People (Scotland) Bill to implement the policy, which could have been in a stand-alone bill. What might have been the effect of that?
A stand-alone bill would have delayed implementation. The timeline on which we decided shows that we are trying to achieve as much as possible as early as possible. It is important to consider that timeline and how we got here.
We introduced the bill on 17 April 2013. On 5 December 2013, the Chancellor of the Exchequer made the autumn budget statement, which included consequential funding. On 7 January, the First Minister said that we would use consequential funding to expand provision to 15 per cent of two-year-olds in 2014-15, which will rise to 27 per cent in 2015-16: we said only in January this year that we would try to do that. There was a lot of parliamentary interest in that and we believed that we should try to do it.
On 19 February, stage 3 took place and the committee had its final discussion of the financial memorandum. On 19 March, the chancellor’s United Kingdom budget included consequentials. On 1 April, John Swinney announced the use of the entire £31 million of capital consequentials as a down payment on the capital costs. It was accepted that that would not be the final position. What he said was important. I quote:
“We will continue to work with our partners at the Convention of Scottish Local Authorities to fully understand the capital cost implications of the expansion of childcare services, but the initial investment of £23.5 million in 2014-15 and £7.7 million in 2015-16 will emphasise our determination to properly resource our early learning and childcare services within the constraints of devolution.”—[Official Report, 1 April 2014; c 29606.]
We have moved quickly to deliver something that is required and desirable, but the negotiations will take longer. If we had not done what we did, we would not have been able to deliver the policy this year and we would have had to use a special legislative vehicle or part of another bill. The earliest we could have done that would probably have been next year. If we had had to wait for a bill to be passed next year, that might well have meant a delay not of a single year but of two years. We did not want that.
So, 15 per cent of two-year-olds would not have been getting the provision by the end of 2014-15—that could have been delayed until 2016-17 or later.
Yes. You put it more succinctly than I did.
You estimate that the average capital cost per child will be £6,900, which is lower than the schools for the future metric. Will you explain the difference? Is it down to the fact that the approach differs slightly from the schools for the future programme, which involves new builds?
Scott Mackay will talk about the metric, which is complex. It covers new build, reconstruction and other actions, and it also involves sessions. We calculate the cost per pupil, but the new metric involves the cost per two pupils, because there are two sessions a day.
The detail of the metric and the variation from the standard Scottish Futures Trust metric result from the interaction with COSLA and the acknowledgement that different types of build have different costs.
Based on the returns that we received, we factored in an adjustment for the costs of adaptations to existing provision, we included a standard cost—an approximation of the costs of a new build was accepted—and we adjusted for a slightly higher cost of extensions to existing build. After factoring in all those costs, we came to the revised figure in the table. That was an attempt to reflect the information that we had received from COSLA on cost variations based on the type of provision that is needed in particular areas.
09:45
Thank you for that. COSLA’s paper makes the point on discussions that the cabinet secretary made. It says:
“COSLA has had a number of discussions with Scottish Government officials around the capital costs and the use of a metric was first proposed by Scottish Government in early May. Through discussions some of our concerns have been taken on board.”
That is COSLA’s view, but will you respond and set out how the Scottish Government has moved towards taking on board COSLA’s concerns?
It is probably for the officials who were involved in those discussions to respond to your question.
The main shift in our position to meet COSLA’s concerns has been on full-time equivalent places. We have moved to two children per space on the basis that local authorities deliver sessions in the morning and the afternoon. Our previous estimates had a slightly higher figure.
Scott Mackay mentioned the cost per child metric. We have looked at the data from local authorities and we have adjusted our capital expenditure costings in the original financial memorandum based on that information. We have increased the cost for extensions, as Scott said. We have also adjusted the split between the adaptations, new build and extensions that local authorities are expecting to deliver, and we have factored all that into the calculations, which has resulted in a higher figure.
In the process of dialogue and negotiation, has the Government taken on board what COSLA has said?
Yes.
We will continue to do so. We are having a positive debate. We think that we have a robust metric, but we are listening.
Thank you.
Cabinet Secretary, you explained that it was not possible to give capital costs in the supplementary financial memorandum because of the lack of time between 7 January, when the new provisions were presented, and the supplementary financial memorandum’s publication at the end of January. Why has it taken almost five months to get any details on capital costs to the Finance Committee?
As I tried to indicate with the timeline, the process has been fast moving. The original bill had only a tiny inclusion on two-year-olds, but in January it was decided that they would be a major feature. Capital money was allocated only in March, which was followed by discussion of the metric process.
On 1 April, John Swinney announced the allocation of the money. The reality is that we should look at the process only from 1 April until now which, by my calculation, means that we have been looking at the matter for only two months and a few days. Since that time, following the down payment of the full amount of the consequentials and how we took that on, a complex series of discussions have taken place about how to progress the work.
We have reached a position whereby the discussion is meaningful, but we have not finished the debate, I suppose that, in a sense, Aileen Campbell, on whose behalf I speak, would have preferred to have come here with a final agreement with COSLA. We are not in that position, but we are in a position to share substantial information and to show, if I may put it this way, the workings.
The policy was announced in January, the supplementary financial memorandum was published at the end of January and the legislation was passed in February. Why are you saying that we should count only from 1 April?
We have a situation whereby, on 1 April, the first scoping out of the money that would be made available was announced by the cabinet secretary. I quoted his words when I said that we had
“an initial investment of £23.5 million in 2014-15 and £7.7 million in 2015-16.”—[Official Report, 1 April 2014; c 29606.]
From then on, it has been a matter of negotiation.
We are where we are—we are having a detailed discussion, and that is useful. The alternative would be to say that we could not implement the policy this year, that we should put the issue away, that we should not address it in legislation and that we should not put the money aside for it. In that case, as Mr Hepburn has pointed out, there would be a delay in implementation. That would not benefit the children whom we are trying to benefit.
The alternative would be to have done the scoping before announcing the policy.
The policy was something that we wished to pursue. When the money became available, we tried to find a way to do that. It is a positive and ambitious thing that we have been trying to do, and we are getting there.
I understand that a Scottish statutory instrument, the Provision of Early Learning and Childcare (Specified Children) (Scotland) Order 2014, was laid on 19 May this year, with a figure of £31 million attached to it. How was that £31 million figure reached?
I have just explained to you that it was the entire capital consequentials that were available from the budget. John Swinney said:
“We will continue to work with our partners at the Convention of Scottish Local Authorities to fully understand the capital cost implications of the expansion of childcare services, but the initial investment of £23.5 million in 2014-15 and £7.7 million in 2015-16 will emphasise our determination to properly resource our early learning and childcare services within the constraints of devolution.”—[Official Report, 1 April 2014; c 29606.]
That is what was available, and that is what we were starting with. I think that it was the right thing to have a discussion and debate with COSLA to see what the final figure would be.
To be clear, that was based on what was available in consequentials, as opposed to what you thought would be needed.
As John Swinney put it, it was an “initial investment”. We were listening, and we should be listening. We continue to listen, debate and discuss.
COSLA is saying that its estimate, from what it calls a “bottom-up” exercise, is £114 million. You are now saying that the amount is going to be £61 million. You said earlier that both parties take a robust position and then discuss and negotiate. Is your £61 million basically you taking a robust position for discussion and negotiation?
No. As I am sure you are aware—I am sure that you have read the paper—
Of course.
The £61 million is based on the metrics. That is a provable figure, and it is the figure that we are discussing. Sparing my officials’ blushes, I think that the set of calculations were well worked out as regards what we believe to be the right approach.
I am not going to indicate an inflexibility, as there is no inflexibility. We are working as partners on the matter, and we will continue to do so.
We heard evidence from the Scottish Government on 19 February. In response to our questioning about the capital costs, the Government said:
“we have shared our working and calculations with COSLA ... and concerns have not been raised”.—[Official Report, Finance Committee, 19 February 2014; c 3665.]
At that point, workings had been shared and concerns had not been raised. How do you explain that statement, given what COSLA has said in its written submission to us, where it is clearly raising what it describes as “significant concerns”?
Considerable work has been done since then on both sides. No indication was given that there was an agreement, and we have continued to proceed in a very positive way. However, there was no final agreement—there was not even an interim agreement. A lot of work has been done since that time, and that will continue.
But it remains the Scottish Government’s position that there were no concerns from COSLA in February this year.
It depends on the interpretation of “no concerns”. There was a good mutual relationship, and that continues. There is clearly a discussion to be had about the fine detail of paying for something.
With respect, it is not—
Does Scott Mackay wish to say anything about that?
I was not at the evidence session on 19 February, but I think that that statement was made in the expectation that we would continue to engage positively with COSLA until we achieved a resolution.
You are saying that it is a matter of interpretation. Either COSLA had raised concerns at that stage, or it had not. Which was it?
The evidence that an official gives is the evidence that the official gives. They obviously have a good, positive relationship, and they have been discussing the matter. We continue to discuss it. Figures have been worked on and have varied since that time. We are trying to deliver the policy in partnership in a way that benefits two-year-olds. It is a positive approach from both sides.
Okay. In relation to timescales, obviously the pace needs to accelerate somewhat if the policy, or at least a portion of it, is going to be delivered in 10 weeks’ time. How many children will be eligible as of August 2014 for the first cohort?
The figure is 3,440—well, that is the anticipated take-up figure.
How many will be eligible?
That figure is 70 per cent of the total eligibility figure. Is that correct, Stuart?
Yes.
So we will get the figure for 100 per cent by adding to the 70 per cent figure of 3,440.
The total eligibility figure is roughly 8,000 for the 15 per cent target. The anticipated take-up is 70 per cent, which would give an anticipated take-up for the 15 per cent target in the first year of 6,800. The anticipated figures have been broken down for the phasing timetable, of which you are aware. The exact anticipated figures—which I fortunately now have in front of me—are 3,440 in August 2014, 2,293 in January 2015 and 1,147 in March 2015. Therefore, the estimate for August is 3,440.
Thank you. That is cohort 1, and time is tight, as we are only weeks away from the August start. Assuming that the 3,440 figure is correct, how do you know definitely that they can all be accommodated?
I know that local authorities wish to ensure that that happens and that that is their intention. I am therefore sure that they will be able to make that provision. I would like to have that resolved as soon as possible, but we would expect local authorities to make that provision and we are continuing to work with each local authority to help them to do so. We will go on doing that right up until the first day of term—although there will not of course be a universal first day of term, as it varies from place to place.
I get that, but do you see what I am driving at here?
I do.
The local authorities are raising concerns about whether that can be delivered. I am asking you how you know that it can be delivered.
I believe that the local authorities want to deliver it as much as the Scottish Government does, because we are doing it for the benefit of two-year-olds. We believe that the policy is right. It has been challenging from the beginning, but we are going to continue to work together with the local authorities to deliver it. That is our firm intention, that is what we want to do, and that is what we are working together to do.
How many of the 3,440 will require some form of building work or adaptation to happen?
I do not think that it is possible to say whether that is the situation. We must remember that COSLA applies a formula, so I do not think that it is possible to say how many of those will require additional build places.
I think that we can apply some logic to this. Given that we are talking about 3,440 and that the ultimate total—once the 27,000 is in—will be 12,971 minus the ones already in the system, we are really talking about something like a quarter of the total. I would have thought that it would be much easier to accommodate those in existing space, if that were required, than it would be, for example, to accommodate the total after the two-year process. I think that there will be the good will to do so.
I guess that that is my question: can they be accommodated in existing space?
The local authorities wish to do so, we wish to do so, and our intention is to do so. Mr Brown, I am doing my very best to indicate to you that there is a strong commitment to the policy on both sides and that we intend to deliver it.
Thank you.
Again, the issue comes down to some of the figures that have been used. You have been very specific in terms of the number that currently exists, which is 12,971 minus the 1,983. I suppose that it is easy to be specific when you already know that those children exist and you can count them.
You then have to project, but the figures become a bit less clear. I understand that. However, according to the financial memorandum, the figure that you used would suggest that an additional 10,988 places are going to be required, whereas the supplementary financial memorandum suggested that the additional figure for two-year-olds from August 2014 would be 8,400 and would rise to 15,400 from August 2015. There is therefore a question because, no matter how you do those sums, they do not come out to the same figure. Can you explain that to us?
I was myself concerned when I saw those figures. Let me explain them to you, because I had to ask for an explanation. If I fail to explain them adequately to you, I shall ask the person who explained them to me—Mr Robb—who will then explain them to you.
10:00The figure for total eligibility at the end of the second year—which is the 27 per cent—equates to the 15,400. That is the total eligibility at the end of year 2. The assumed take-up rate in year 2 is 84 per cent, which is higher than the assumed 70 per cent in year 1. That is because experience elsewhere tends to show that the take-up rate for the first group will be lower than the subsequent take-up rate. There is also a particular issue in the group that is eligible in relation to the first take-up rate. Parents from workless households paradoxically may already have made some arrangements, because they themselves often do the care.
Therefore, the assumption for year 1 is a take-up rate of 70 per cent and the assumption for year 2 is a take-up rate of 84 per cent. The eligibility figure goes from 15 per cent in year 1 to 27 per cent in year 2. The figure for the end of year 2 is 15,400. If I am correct, an 84 per cent take-up rate is 12,971. When we take away from that the children who are already in the system, we come to 10,988.
In year 1, the eligibility figure is lower, as we are dealing with 15 per cent. The 8,400 figure relates to the total entitlement in year 1, which is a lower figure. The assumed take-up rate of that total entitlement is 70 per cent. That gets us down to the expectation that the figure will be around 6,800 in the first year, which is further subdivided by the phasing of the take-up. The first phase will involve 3,440. That is the phase that comes in this August, and it builds up to 15,400 at the end of year 2.
That is how it plays out. I had to have that explained to me this morning. I hope that I have explained it adequately.
You certainly have. The difficulty is that that answer must have been known when the SFM was drawn up, so why could you not give us that answer and explanation at that time? If you did, we would not have had to speculate on why those figures do not add up and it might have helped the misunderstandings about affordability and deliverability between COSLA and the Government.
Perhaps Stuart Robb can explain that.
We did not know those figures at that time. The initial announcement was based on annual statistics that related to the number of children in workless households. Since then, we have had to work with COSLA and the Department for Work and Pensions. Members will have seen the criteria that we set out in the eligibility order that has been laid. We had to identify the qualifying benefits that would allow us to identify the right number of children, and it took a bit of time to get to that stage. We therefore did not know the exact numbers at the time.
I understand that you might not have known the exact numbers, but there was a disparity between the financial memorandum and the supplementary financial memorandum. Those figures were in the SFM, so you knew them. The explanation about why there was a difference was missing.
That is a fair point, and I am glad to have been able to provide an explanation today. You are absolutely right to say that it would have been better to have provided that earlier.
I want to look at the two basic reasons why COSLA is in disagreement with you. The convener has already touched on one of them, but I want to ask further about it.
Your response to COSLA’s objection to the 60:40 split was to quote current percentages. Are you confident that the composition of the two-year-old cohort that currently has childcare will be identical or even similar to that of the new cohort? I suppose that many two-year-olds who are currently in private provision get all-day provision, as their parents work, for example.
I will quote just one sentence from COSLA’s submission—I do not know whether it is right, but it possibly makes some sense. COSLA said:
“private providers can be reluctant to provide the service for 2 year olds from workless households due to the expectation that the parents would be unlikely to buy additional further hours from the provider.”
I suppose that it is true that the majority of the new cohort of two-year-olds will not necessarily be from workless households, but they will certainly be from households that will not pay for extra hours for one reason or another. I wonder whether the percentages that you quoted are directly relevant to the new situation.
That is a fair point, but we have not seen that evidence from COSLA. Equally, we believe that there is no evidence that a local authority will have to provide all of that provision itself or that it would do so where there is not already some existing capacity. We have not been inflexible in that discussion, but we have seen no evidence that suggests that. The evidence that I have quoted shows that provision for two-year-olds is provided by private providers, and there is no evidence that they will stop providing that.
We are not inflexible in the discussion and, because the policy is fully funded, the actual revenue cost of meeting that policy aim—were it to fall more extensively upon local authorities—would be reflected. I do not think that we are seeing the evidence from COSLA that proves the point, and the evidence that I have quoted shows that private providers will continue to play a major role. There is a capacity question as to whether local authorities would be able to provide in that way without fairly major changes, so I think that the Government’s assumptions are reasonable.
The second point that COSLA makes—it makes only two major points—appears to be more objectively provable, because it questions your estimate of the cost per square metre of new build. COSLA says that it should not be an estimate, because
“the cost per metre for a new build provided for in the metric is £2,400, however figures obtained by COSLA suggest that £2,800 per square metre is more realistic”.
One would think that that could be proved one way or the other.
Mr Chisholm, I share your hope in physical fact, but I have found, having dealt with the Scottish Futures Trust funding for school buildings, that there is often a huge debate that rages over a long period of time about what the actual costs will be. I shall ask Scott Mackay to address that, because it is a debate that arises especially in the provision of school buildings.
We have drawn the figures on the basis of the data that was provided to us by individual local authorities, as the COSLA paper says. Because of the timing of our commitment to appear before the committee, we had to submit the paper to you before we really had a chance to engage fully on the detail of that metric. I expect to be able to resolve that with further discussion. We are perfectly willing to share the details of information that we have based our figures on and how we have arrived at them, and I hope that that discussion will allow us to arrive at some consensus.
I can add a bit of detail about how we have reached the £2,400 figure and how that has fed through into the calculations.
The figure of £2,400 is based on the metric used for the schools of the future programme, which we agreed with COSLA for the previous allocation of capital. For that reason, we used it as a starting point. However, it is clear from the information submitted by local authorities that the costs per square metre vary depending on the type of capital programmes that are being considered. For example, adaptations are cheaper than new build and extensions are more expensive than new build.
Accordingly, as set out in table 2 of the proposal, we adjusted the cost per square metre to reflect the different kinds of capital costs that local authorities have told us will be involved. From a new build figure of £2,400, we are down to £1,700 for adaptations, because they are cheaper, and up to £3,100 for extensions. Based on local authority returns, we have estimated a split of 30 per cent adaptations, 30 per cent new build and 40 per cent extensions.
Since we are talking about square metres, are we clear about whether all the councils are on a level playing field when it comes to how much space is needed for each child? There is mention of areas from 2.8m2 up to 7.5m2 but, if I understand the figures correctly, that is because we are sometimes talking just about the play area that the kids are in most of the time, not including office space, changing space, cloakrooms and all those things. Is it all the same when you boil it down?
It is, from a wider educational perspective. Those are exactly the issues that are addressed in the new build and replacement of primary schools and in questions of school closures when considering what the space occupied by a child would be.
Stuart Robb is better placed to talk about the issue in this context, but it is a common problem in the negotiation that takes place about any educational establishment or building and in determining how to reach an agreement on the total space occupied and how that space is used.
In the returns that we had from local authorities, some used the Care Inspectorate metric, which involves a figure of 2.3m2 to 2.8m2; some used a different measurement, which comes out at about 5m2; and others used the schools for the future programme figure, which is 7.5m2. Other authorities have used slightly different figures. On average, we have come out with the figure of 7.5m2 as the right one. There is huge variation in the returns from local authorities.
Is it the case that some councils are more optimistic, or do some just want more space than others?
You were right when you said that the lower cost metric includes just the play space. That is perhaps what some authorities have used for their costings, whereas others have done that by including all the other facilities. That is what is included in our metric—it covers a wider area.
The figure of 7.5m2 is in essence the highest figure. In the calculation, we make a full estimation of all the additional space that is required to support the provision.
It is significant that we have not accepted the lower figure. That was done after some thought and because we have seen circumstances in other school building processes in which lower figures were accepted. That is not really what we are trying to aspire to.
That is helpful. As long as that is all being looked into, I am content. I know that, with primary school buildings, councils have had different ideas as to what is required.
On the point about private providers, I assume that the word “private” includes both the voluntary sector and what we would normally think of as private providers. Are we convinced that the councils are supporting, helping and approving the private providers? Historically, I have found that some councils have been a bit resistant to using private providers and want to do everything themselves. Are we convinced that it is really the private providers that are not willing, or is it the councils that are not willing to use those providers or to pay them properly?
We have to be careful about our involvement in that issue. The delivery of the policy is an issue for local authorities—they choose how they will deliver it. Some local authorities believe that it is best to deliver that substantially through their own efforts; others believe that it is better and more cost effective to deliver it through the use of private providers; and there is a mix between the two.
I do not think that it is or should be our position to tell local authorities how to do that. The decision is rightly made by the local authority. There are national standards that have to be met, and we expect them to be met—indeed, they are enforceable. However, I would not intrude on that any further.
A local authority will have its own reasons for making a decision. Nobody would want us to second-guess a local authority’s decisions in that regard. We need to know the balance of provision across Scotland, and we think that our estimate of that, from what we know of the sector, is correct.
So if a family in one part of a council area had no provision near them and the council said that they should just travel to the other side of the council area to get the council provision, that would really be an issue between the family and the council and is not something that the Government would get involved in.
Yes.
My final point is to seek clarification on the figure of £61 million that we have touched on. In negotiations, one party starts at one end and another party starts at the other, and there is a movement towards the middle. Has the £61 million figure been reached after some movement towards the middle, or is it the starting point?
It is not the starting point, but we are in the process of negotiation. We are talking about £61 million not only because it is our obligation in talking to the Finance Committee but because we believe that it is robust and well founded. We have laid out our workings, and that is the strong position that we find ourselves in, but we are discussing the figure. COSLA has talked about £114 million, but we do not agree with that figure, for reasons that we have given to COSLA. That is the position that we are in.
Are you implying that you have already moved from a lower figure?
Yes. I think that we were at £41 million some time ago. I am absolutely not ruling out there being a different figure at the end of the day, but I am saying that we believe that the figure of £61 million is well founded and well established and we stand by the metric that we are presenting to you.
That concludes questions from members but, before you charge off, cabinet secretary, I still have some questions to ask, as is usual—I always have one or two wind-up questions.
I want to go back to the private sector issue. COSLA said in its submission:
“the location of the private providers is usually not in the same location as the eligible children from workless households targeted by the policy.”
How will the policy be delivered in areas in which a disproportionate number of children have to go to private providers, given the issues that we have talked about, such as the apparent resistance from the private sector and capacity in the public sector?
10:15
That is a delivery issue for the local authorities, which, in Scotland, are charged with the responsibility of delivering education at those levels. If a local authority believes that there is not adequate provision in an area and is under an obligation to deliver, it will have to find the way so to do.
I do not entirely accept that there is no provision in some areas. That is a very broad-brush approach to take. The third sector is involved in delivery in a variety of places in Scotland and might well deliver in areas where there is a high percentage of workless households.
We want to support local authorities to be able to deliver the policy in all the places where it is needed—the places where there is any demand at all, not just the places where demand is highest. That is the purpose of our negotiations. We will provide the revenue support that is required, in its entirety, and we will provide the capital support for delivery, in its entirety. Ultimately, local authorities will make the delivery decisions themselves. That is what they are charged to do.
As a result of the negotiations, you have increased the amount of capital from the £31 million that was announced on 1 April to £61 million. In relation to the private sector, if the issues to do with delivery that we touched on arise, will additional funding potentially be available to individual local authorities?
No, I would not expect that to be the case. The allocation that we are making is for local authorities to deliver the policy; it would not be normal for local authorities then to fund private providers to expand their services. That is a decision that local authorities could make, but it would not be dealt with through the provision that we are talking about.
Sorry, I was not clear. I was thinking about what would happen in an area if the private sector was unable to provide services and the burden fell disproportionately on the local authority, in the context of what had been estimated. Would there be additional funding for the local authority?
There would be no disproportionate burden, because the local authorities should be aware of what it will take to implement the policy in their areas. Education is delivered through local authorities because they know their areas and understand the best way to deliver education at every level. That is the system that we have in Scotland from early years and right through the education system.
We would not second-guess local authorities and say, “You must deliver it in this way.” The only area in which there is that sort of relationship is school closures, which is a complex area that is governed by legislation. In the circumstances that we are talking about, the current arrangement is that local authorities are keen on and will deliver the policy, and they are being fully funded to deliver the policy, but how they do so within that framework will be for them. I am sorry to keep stressing that, but it is absolutely the situation.
We do not interfere in the way that has been suggested. I think that members of the Parliament—indeed, members of this committee—might criticise us if we interfered in the decisions that local authorities rightly take on how they deliver policy.
Okay. You emphasised that the Scottish Government will fully fund the policy. There is, of course, a disparity between what the Scottish Government says it will cost and what COSLA says it will cost, which we have discussed. Negotiations are still going on in that regard. If, after a year, it is clear that there is a funding gap, will the Scottish Government reassess the figures and ensure that the gap is effectively plugged?
Yes, and I have made that clear to COSLA. We want to get this right, and we think that the best time to get it right is before we start, or in the process of setting things up, which is why discussions are taking place.
If COSLA comes back in a year or 18 months’ time and says that it has discovered 10 things that it did not know about delivering for two-year-olds, we will of course have a serious conversation, because this is about ensuring that two-year-olds, progressively, get the early years education that we hope ultimately—through the powers of independence, if I may make that point—to deliver for all two-year-olds in Scotland. This is a growing service, and we would not want it to be adversely affected.
We have made a commitment to full funding and we will meet that commitment, but that does not mean that full funding is simply decided on by someone saying, “This is the figure; take it or leave it.” There has to be negotiation based on robust fact, which is what we are trying to get to.
Okay. Thank you. Is there anything else that you want to bring to the committee’s attention?
I will just say thank you for the opportunity to give evidence. I hope that we have clarified the issues that required to be clarified.
I thank the cabinet secretary and his officials.
10:19 Meeting suspended.