Finance Committee

Meeting date: Tuesday, April 13, 2010

Official Report 459KB pdf

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Children’s Hearings (Scotland) Bill: Financial Memorandum

Item 2 is to take evidence from the Scottish Government’s bill team on the financial memorandum to the Children’s Hearings (Scotland) Bill. I welcome to the committee Denise Swanson, policy and programme manager; Kit Wyeth, children’s hearings reforms team leader; and Chris McCrone, who is from the finance directorate. I invite the witnesses to make an opening statement.

Thank you. The Children’s Hearings (Scotland) Bill aims to strengthen and modernise the children’s hearings system. As set out in paragraph 395 of the financial memorandum, the primary purpose of reform is to improve outcomes for children and young people and the effectiveness of the system, rather than to seek to reduce costs.



Government has been considering change to the children’s hearings system since 2003. Throughout that time, there has been not only clear support for the principles and ethos of the system but a recognition of the need to strengthen and modernise it. A consistent theme was the need for a consistent national system that is underpinned by national standards, training and accountability. Attempts were made to achieve changes in culture and practice within the current system, but they did not work. Ministers therefore believe that it is right to establish a national body—children’s hearings Scotland—to put in place national standards and monitor performance against them. Children’s hearings Scotland will not be a regulatory body or have an external audit and inspection function; the monitoring of standards and performance will be relative only to the functions of the national convener. In developing the model for children’s hearings Scotland, the Government sought to minimise costs wherever possible—for example, through the use of shared services—and was mindful throughout of the need to secure best value.

The financial memorandum reflects the Government’s assessment of the likely cost of the bill. The costs that were identified are based on available evidence. They were taken from a survey of local authority expenditure on the children’s hearings system that was commissioned specifically for the purpose, as well as from relevant published research, such as the baseline study of corporate services. The financial memorandum was prepared in consultation with colleagues in the Scottish Government finance directorate and our economists and statisticians.

The financial memorandum estimates the maximum cost of the new arrangements for the children’s hearings system to be around £2.51 million per year. It is worth noting that that is not the cost of the new body alone; change is needed to help to secure the necessary improvements to the system. The gathering and sharing of information about the implementation of supervision orders—we call that the feedback loop—along with the provision of independent advice at hearings and increases in the rates of pay for legal representatives at hearings, all of which are needed, are not contingent on the establishment of the new body. Instead of breaking down the costs in line with the structure of the bill, the financial memorandum looks at the cost of the bill in the round. It does that because the changes are so interrelated.

The Presiding Officer has written to the Cabinet Secretary for Education and Lifelong Learning to confirm that a financial resolution is required for the bill. A motion will be lodged in due course.

We are happy to take questions.

Under the new arrangements, we expect the new body to pay panel member expenses. Those expenses will be paid by children’s hearings Scotland.

Table 2 is confusing in that respect.

That is the single biggest—

Over and above the new roles in terms of reporting to the centre and that kind of thing, what other new costs do you think will arise for local government from changes to the system? I note that they could be forced by the centre to implement the decisions of panels, which might be for expensive services. I do not know whether the centre could direct a level of support costs. Also, one of the current concerns is the fact that there is great variation in what safeguarders are paid—they are paid differently in different local authorities. Will there be some cost to equalising their pay? Have those possible additional costs been built into the calculations, or have you made a broad assumption that the spending will be much the same?

I want to be clear about costs. Is it correct that there will be additional net costs of £2.51 million as a result of the bill?

Yes. The financial memorandum makes it clear that there will be an additional cost of £2.51 million as a result of the bill and that the principal driver behind the change is improving the effectiveness of the system and outcomes, not reducing costs.

Will the minister appear before the committee?

No, but I am sure that there will be opportunities for you to pursue the matter.

We have a bill in front of us. If the lead officials on the bill team say that they do not know what will happen and a key element of the bill may or may not be implemented in the future, how can we properly assess the bill’s financial implications?

The financial memorandum sets out the costs of the bill as drafted. The bill enables local authorities to play a substantial role in the children’s hearings system in the future. There is £3 million in the local government settlement to enable them to play that role.

I am the politician here, and we are the people who are usually accused of abusing language. The COSLA submission states clearly:

“We do not believe that ... it facilitates the strengthening and improvement of the Children’s Hearings System.”

You might claim that there is not a big divergence between Government and local government, but that seems pretty big to me. If COSLA is right, the losers will be children.

The figures in the financial memorandum are based on evidence that we collected from local authorities. The figures on how much the system currently costs to operate are based on what they told us, on what the Government spends and on what we provide to the Scottish Children’s Reporter Administration.

We will highlight such comments by COSLA in our report to the lead committee. The members of that committee will no doubt read the proceedings of today’s meetings and the comments that have been made. The issues can be raised directly with the minister at that point. It is rather unfair to direct questions about such policy points to the civil servants.

Convener, our questions have been on the financial memorandum. We have been looking at the evidence that we have been given to make a decision on the financial memorandum. That is what COSLA, Dundee City Council and North Lanarkshire Council are saying. I am just asking why the bill team thinks that it is right and everyone else is wrong.

It is worth pointing out that Dundee City Council’s submission mentions that the greatest costs are demand led. Clearly, the bill will have no impact on costs that are demand led, so I think that it is a bit disingenuous of Mr Whitton to make those points about Dundee City Council’s evidence.

Again, that point comes within the parameters that I have just discussed.

For the financial memorandum, the committee agreed to adopt level 2 scrutiny, which involves taking oral evidence from the bill team and written evidence from financially affected organisations. That being the case, the committee asked for evidence from all organisations that would be financially affected, but we received responses from only three of the 32 local authorities, COSLA, the SCRA and one panel member. That does not seem a huge representation. I know that the bill caused a lot of controversy when it originally went to the Education, Lifelong Learning and Culture Committee, and I understand that an accommodation was reached among the relevant parties about moving forward. What discussion was there with other local authorities and interested parties about the costs? What was the level of response to the bill team on the financial memorandum? The list of concerned people who have written to this committee is short.

16:15

In the consultation, the issues that created the largest response were around the role of the reporter and the fundamental operation of the system rather than the financial side of the system. The original proposal that we made last summer, which, as you suggest, was not particularly well received, was that the new national body would have a much larger role than is currently envisaged and would have cost more money than is currently envisaged in the model in the bill that is before Parliament.

To be quite honest, we did not receive many comments around the financial implications of the bill. As you would expect, there were some concerns about the fact that it would result in a net cost, rather than a net reduction in cost, and about the cost of setting up a new body. However, as I said earlier, there is recognition of the need to improve consistency and the effectiveness of the system. Generally speaking, people welcome that motivation and objective.

The SCRA raised two specific points that it says need to be addressed to ensure that what has been said about the financial implications of the bill in the financial memorandum is accurate—one point concerns part 8, on pre-hearing panels, and the other concerns section 151, which involves appeals. What comments do you have on that?

On pre-hearing panels, what currently happens is that there is a business meeting, which is organised by the SCRA and involves panel members. Children and relevant persons are informed of the impending business meeting and are asked to submit views in writing to the panel. The bill proposes that business meetings will henceforth be called pre-hearings, which is a much more accurate description of the intention behind the meetings. Children and relevant persons will still be informed of the meeting and will be able to attend the meeting. They will be able to express their views personally or in writing, or they may choose not to express a view.

The bill adds the ability of children and relevant persons to attend the meeting; all other aspects of the activity remain the same. I should stress that that ability is a right, not an obligation, which means that, if they do not attend, the business that must be conducted in the pre-hearing is not held up.

On appeals, the bill provides for a continuation of current practice. Under the current legislation, the sheriff has the power to conduct a wide range of appeals. The bill proposes no change to that. However, it proposes that if the sheriff takes an appeal, they can change the decision of a hearing, if they decide that that is appropriate. The thinking behind that power is that a sheriff who decides, for example, that a child in residential or secure accommodation can be released immediately could use it without having to wait for a hearing to be convened to make that decision. The power would be used only on rare occasions. Sheriffs tend to think that the hearing is the best place to make decisions and are more than happy to refer decisions to it, but there will be exceptional cases in which it is in the best interests of a child to be released immediately, without waiting for perhaps three days for a hearing to be convened.

Yes, the rows have slipped down one.

How do you know that the money will be available?

That is a fair question, but ministers and senior officials will make the money available to the system. Ministers are committed to the improvements in the hearings system, and the money will be found.

I have not been able to follow some of the figures that were presented with regard to legal aid. The partial regulatory impact assessment has been helpfully provided, and I have also been looking at table 2 in the financial memorandum. Before I ask my question, can you explain whether the figures in that table are all on the right lines? “Legal representation (current scheme)” is shown as £375,000. Is that correct?

What is the explanation for the difference with the costs in table 4, as shown in the regulatory impact assessment document?

That was an oversight on our part. The RIA was completed at the same time as our original drafting of the financial memorandum, but we revisited the number of appointments of legal representatives in the children’s hearings system so as to provide a more accurate figure before publication. We did not capture that change in the RIA. Apologies for that—that is something that we will move on. Table 4 shows the most accurate figure for the committee’s purposes.

It was our intention to continue to revisit those figures as the bill moved through its parliamentary stages. The service is very much demand led, and the additional provision for relevant persons in certain circumstances is fairly new to the system. It proved quite difficult to project figures early on in the process, and we were intending to update the figures as the bill moved through Parliament. We do not expect the figures to fluctuate a great deal now, however—we have a better handle on the projections.

Several errors have been spotted by the eagle-eyed Jeremy Purvis, so could you write formally to the committee, setting out the accurate statement?

We will amend table 2 and the RIA.

Absolutely, convener—we can send an amended table 2, with the correct figures.

So you will set out the errors and the corrections.

Our intention, which is covered in the financial memorandum, is that there will not be a hearings adviser at every children’s hearing. We are pretty confident that, through a combination of written information for panel members, access to help over the telephone, training and education, panel members will be able to deal with the majority of issues that they face without the need for a hearings adviser to attend the hearings.

We speak to panel members from around the country, and their views vary regarding how often they might need such advice. The general sense that we get is that they anticipate wanting such advice on relatively few occasions. I would not expect the demand for hearings advice to be anything like what Mr Anderson assumes in his written evidence.

As there are no further questions, I thank our witnesses. The committee looks forward to receiving the information that we have requested.

We will have a short suspension to allow our witnesses to leave.

16:31 Meeting suspended.

16:31 On resuming—

I will concentrate on the local government costs. Paragraph 445 of the financial memorandum says:

“local government will retain many of its existing functions, with the exception of payment of expenses for panel members and the delivery of training”.

However, table 2 shows that all current local government costs including those for travel, subsistence and training are carried forward into 2012-13 and 2013-14. What is the explanation for this seeming contradiction?

Let us take the example of panel member travel and subsistence. Table 2 says that the amounts will be the same in 2012-13 and 2013-14. Are you saying that that money will not be spent or that it will be spent on something else?

Is travel and subsistence the main item that will disappear from existing expenditure?

Your assumption is that it equates to the extra money that authorities will spend on providing information and so on to the centre.

We have had a long discussion about the budgetary situation. You are assuming that the same amount that was spent in 2007-08 will be spent in six or seven years’ time for each of those things.

So, the main additional costs will come from funding the new body rather than from additional costs to local authorities.

When I was doing my homework for the meeting, I was quite surprised to find, given that the general direction of Government policy is to give more freedom to local authorities, that the bill seems to be moving in the opposite direction, creating a new centralised quango and taking away power and responsibility from local government. That is puzzling, as it seems almost to contradict the general thrust of Government policy. Why is the policy going ahead if it will cost a lot of extra money and create a new quango?

Yes.

I can speak only about the bill. The financial memorandum to the bill states that reducing cost is not the primary driver of this reform.

I suggest that this is a question for the minister, rather than an official. You may pursue it in other ways.

It is unfair to continue this line of questioning with officials.

As I have said, ministers take the view that the setting up of the national body and the other legislative provisions in the bill are required to ensure consistency and standardisation in the children’s hearings system.

Mr Wyeth, you seem pretty robust in your defence, but COSLA, Dundee City Council and North Lanarkshire Council all question the Government’s numbers and say that the bill will cost them a lot more money. Why is it that you are right and they are wrong?

And the bill team has explained that.

I can deal with the first part and then Denise Swanson can speak about the RIA.

The key element of the local government funding is the total amount. As I said, the figures beneath that are purely indicative, although I accept that listing them in that way may be confusing and not particularly helpful to this discussion. The key point that we were trying to make by including the local government funding line in the table is simply that we expect current funding for local authorities to remain in the future.

The answer to your question is nothing. The funding that is currently in the hearings system and the funding that local authorities receive will remain. The statement that you quoted may be poorly worded—and I have to hold my hand up for that. The fact is that the additional money that will be required to fund the system in future will come from Scottish Government budgets. That will be new money for the children’s hearings system, as will the money that will be required to fund the transitional and start-up costs. The money will come not out of the system but from within our own budgets.

No, that is incorrect. The reference should be to the figure beneath that: the current budget for legal representation in the children’s hearings system is £300,000. Moving forward, we expect that to rise to £441,000, which is shown in the 2012-13 and 2013-14 columns.

Yes.

It would be helpful for the committee to receive the corrected information.

I take it that the witnesses have seen the evidence submitted by John Anderson. He mentions some scary figures. In particular, he notes that,

“if hearings are implemented with hearing advisers at some point in the new Bill history”,

there will be a potential expenditure of £15 million to £20 million. What do you think about that, and about his evidence in general? John Anderson is someone with pretty extensive experience of the system that has been operating for a number of years.

Fair enough. It is important to put that on the record.

16:30

Thank you. Malcolm Chisholm will put the first question.

Those figures are carried forward in the table for the reason that they are largely indicative. The key thing to say is that we expect local authorities’ current spending in support of the children’s hearings system to remain with them. The clear message that we have had throughout the consultation on the bill since last summer is that people value greatly the role that local authorities play in supporting the hearings system. We want that role to continue under the new arrangements.

As you correctly identify, some current local authority functions, such as the payment of panel member expenses and support for children’s panel advisory committees, will transfer to the new body. At the same time, local authorities will take on board new responsibilities such as the collection of information on supervision orders—as I said, we refer to that as the feedback loop. Our view at this point is that the bill is not specific on the exact role of the local authorities. If they retain their existing funding, authorities will be able to work out with the national convener and the Government exactly what their functions will be under the new arrangements. They will have enough money to take forward their new responsibilities on the feedback loop and to make decisions at the local level on how best to use that money in the whole.

Absolutely. We wanted to indicate that existing funding will remain with local authorities.

Yes.

But you take the point about how it is set out.

Yes.

Perhaps you will remind me of the overall costs. Table 3 shows that the overall costs are £3 million with £500,000 for in-kind support over and above that. Is that what you are saying?

16:00

The local authority survey that we carried out included a number of headings, which you see in table 3. There was also a column for other costs. Some local authorities identified under “other costs” some costs for in-kind support, although not all of them mentioned it. It is quite difficult to quantify exactly what in-kind support will be. It will be over and above the £3 million that they are spending at the moment, but we are not certain what the exact figure will be. We think that £500,000 is a reasonable assumption. It will be between 17 and 20 per cent above what they are spending at the moment.

You are not sure about the figure of £500,000, but the £3 million is what will be carried forward for slightly different responsibilities.

Yes.

We wanted, where possible, to base the financial memorandum on the evidence that we had, and the only evidence that we have is what local authorities are currently spending. We could have guessed what the future spending would be, but it would have been only guesswork. Our intention was to roll that figure forward on the basis that we know that that is what they are spending. Local authorities will make their own decisions on how they want to spend their budgets.

I will address the enforcement costs first. The bill provides for an ability to force a local authority to carry out its duty to implement the decision of a hearing. That enforcement provision is already in force under current legislation, but the bill changes the situation somewhat. Currently, if a panel wants to place an enforcement order on a local authority, it suggests that to the principal reporter and the principal reporter has discretion in deciding whether to go ahead with that. The bill proposes that if a hearing, in reviewing a case, is concerned that a local authority has not implemented a decision, it can require the national convener to place an enforcement order on that local authority. The bill removes the discretion that is available to the chief officer in placing the enforcement order. We do not expect that to result in additional cost to the local authority.

We do not expect any additional burden, apart from the feedback loop, to be placed on local authorities. Therefore, no additional costs are reflected in the financial memorandum.

Yes.

The key thing, as I mentioned earlier, is that there have already been unsuccessful attempts to change culture and practice within the current system in order to standardise and make consistent approaches throughout the country. We tried to do that at the local level, through local authority approaches, but it did not work. That is why ministers have taken the view that a national body is required to set national standards and monitor the performance of the local areas in meeting those national standards.

Time and again, we hear from the Government that the number of public bodies will be reduced by 25 per cent; we received evidence to that effect just this week. The bill is the mechanism for bringing about such a reduction. Can you confirm that it will involve a net increase in costs to the taxpayer?

However, whenever we hear from the Government that the number of public bodies will go down by 25 per cent, we should be aware that that will be at an increased cost to the taxpayer.

As I said—

Is that true or not?

Not in committee.

In that case, I will interrogate the officials on the matters for which they have responsibility.

Normally we are presented with information from COSLA that asks us to support legislation or to consider particular aspects of it. I am struck by the strength of the wording of COSLA’s submission, which you will have seen. On the second page, it states:

“The memorandum itself appears to suffer from some internal inconsistency. As it stands the proposals for Part 1, Schedule 1 and 2 of the Bill are so underdeveloped that it makes it very difficult to accurately assess the financial implications of this legislation.”

Is the committee able properly to assess the financial implications of the legislation?

The financial information that is contained in the financial memorandum is based on the evidence that is available to us. We have gathered from local authorities information on the existing costs of the system; the assessment of current costs primarily reflects that information. As I said in response to Mr Chisholm’s questions, the bill enables local authorities to continue to play a substantial role in supporting the children’s hearings system in the future. Local authorities have asked for that, and the bill provides for it. We have not yet bottomed out exactly what local authorities’ role will be; that may lie behind COSLA’s suggestion that some matters are not well thought through. Once the national convener is in post, he or she will have a view on the issue.

We have already given a lot of thought to the role of local authorities. We have established an implementation group, which will meet again on 27 April and will spend a whole day looking at exactly how local arrangements will work. COSLA is part of that discussion. Three million pounds will remain with local authorities. Mr Chisholm suggested that it looks like they will get money for things that they will not do in the future. We need to discuss the matter with them, but we believe that, overall, allowing them to retain that money gives them the flexibility to work with us to put in place arrangements for the future.

I am afraid that I must labour the point about costs and COSLA’s reaction, which is pretty strong. If we consider COSLA’s relationship with the Government over the past two years, the comments in its response are fairly unprecedented. It states that

“the new system will cost £2.51 million more”,

£1.4 million of which will result from additional bureaucracy. In addition, there is the £3 million to support the system that you have mentioned.

In financial terms, that is pretty stinging criticism. On the issue of what the new system is supposed to achieve, the submission from COSLA—which ultimately represents those with experience of running the children’s hearings system over a long period of time—goes on to say:

“We do not believe that this additional expenditure is a justifiable use of resource and neither do we believe that it facilitates the strengthening and improvement of the Children’s Hearings System.”

That is pretty stinging stuff. How did we get to a position where, given what you have said over the past few minutes, there is such a divergence of view between the Government and local government?

I do not think that there is a huge divergence between Government and local government on the way forward for the children’s hearings system. In our discussions with COSLA and individual local authorities, there has been a great deal of agreement on where we should be heading. In its written evidence to the Education, Lifelong Learning and Culture Committee on the substance of the bill, rather than its evidence on just the financial memorandum, COSLA supports many of the bill’s provisions.

There are areas of difference. Over the past six to nine months, we have had a lot of discussion with COSLA about what should be in the bill. The vast majority of that discussion was very amicable, with support from COSLA for what we are looking to do. Where we have ultimately run into a difficulty is that COSLA does not agree with the Government on the provision of local support. That is the key area on which COSLA does not support what we are looking to do.

Yes, I have been given an answer, which is fine. Whether the answer is right or wrong is another matter.

I am looking back to table 2. Before I make my substantive point, I should point out that there is probably a slight error under “Scottish Government” as there is nothing under the training line. Is that right—has the figure just slipped? I presume that there is an error.

Okay, but that encapsulates the main problem with the financial memorandum, which is table 2. I accept that table 3 is based on the evidence that you have received from local government, but it seems odd to propose a major change to the way in which the children’s hearings system works in Scotland and present in the financial memorandum identical costs for the existing functions. That does not seem to make any logical sense. As far as local government is concerned, you have produced a financial memorandum for the status quo rather than the new system. There seems to be an oddity in process.

My final point is about COSLA. Given the changes that are to take place, why did you do a regulatory impact assessment not for the whole bill but for just one part that relates to your costs rather than to COSLA’s?

I can add a little to that answer. A lot of what the bill proposes is not a change in functions but the moving around of responsibility for the same functions. There is not the absolute overhaul of the system that might be expected—in the main we have moved functions and responsibilities for those functions from local government and the Scottish Government to the new national body. There has been more of a redistribution of functions and responsibilities than a complete overhaul, but we have taken the opportunity to make required changes to the processes that are currently in place.

As we have outlined in paragraph 398 of the explanatory notes, for all topics in the bill consideration was given to whether a regulatory impact assessment was required. The committee will know that the purpose of an RIA is to capture the financial impact of legislation on business, charities and voluntary organisations, and it is my understanding that local authorities do not fall under any of those categories. We have published an RIA on the administration of the legal representation scheme, which the committee has seen, but we did not think that an RIA was appropriate for COSLA and local authorities.

I have a couple of questions. One regards the establishment of children’s hearings Scotland. The clarification in answer to Malcolm Chisholm was helpful, confirming that the figures in the table are in the wrong places. It is helpful for that to be in the Official Report, because it is unhelpful that they are in the wrong places in the Government’s paper.

I am looking at paragraph 407, which states:

“In 2011-12, funding for Children’s Hearings Scotland will be met from the existing Scottish Government budget for policy support to the Children’s Hearings system”.

That means that administration and set-up costs will come out of what would have been a budget line for hearings system support. What is being cut from that line to pay for the setting up of children’s hearings Scotland?

I add that when the draft bill was published in June, the intention was that hearings advisers would be provided to support panel members at every hearing. The extremely strong feedback that we got from panel members was that they did not think it appropriate to have another adult in the room along with panel members. They thought that that would be unnecessary. The documents that accompany the bill, particularly the policy memorandum, discuss the dilemma that we faced and the careful balance that we had to strike in putting together the independent advice provision that might be available to panel members at hearings. Even if it were the intention to have a hearings adviser at every hearing, that would not be well received by panel members. Given that there are more than 40,000 hearings a year, we would have needed to invest in quite a substantial number of people.

We will have to hope that you are right.