Cynulliad Cenedlaethol Cymru

Good morning, everyone. Welcome to the Children, Young People and Education Committee. We've received apologies for absence from Julie Morgan, and I'm very pleased to welcome David Rees, who is substituting for her today. Can I ask Members whether there are any declarations of interest, please? No. Okay. Thank you very much.

Item 2 this morning, then, is a session with the Minister for Children and Social Care on the Welsh Government's childcare offer. So, I'm very pleased to welcome Huw Irranca-Davies, Minister for Children and Social Care, also Jo-Anne Daniels, director for communities and tackling poverty, and Owain Lloyd, deputy director for childcare, play and early years. So, thank you, all, for your attendance. If you're happy, we'll go straight into questions from Members, and the first questions come from Hefin David.

Good morning, Minister. How has it gone in the early implementer local authority areas, and is it something of a mixed bag?

It's gone well, but I'm glad we've done it through this process of early implementer, actually piloting it, because we're learning lessons as we go along. It has gone well. It's been encouraging, to the extent that we're at the point where we're expanding—we've made announcements on expanding some of the early implementer areas so we can learn more lessons. But, in terms of what we're learning, one is the bureaucracy around the current approach that we're taking, because it's being done on the seven early implementers. So, we're asking parents to come in, provide their wage slips, provide the birth certificates, and so on. You're dealing sometimes with parents and families with complex issues and complex backgrounds, so it's difficult. And the burden of administration on that is falling to each pilot area. In one case, it's a whole authority, but it's only one—that's in Blaenau Gwent. In others, it's smaller areas. So, we're also hitting those—.

The other big challenge we're hitting is communication. So, we're having parents, generally, who are outside the areas entirely saying, 'Why haven't we got this yet? Can we please get into it?', which is encouraging. But the other thing we're having is people who are within pilot authorities, where it doesn't extend to the whole authority, saying, 'Well, hold on now, we think we qualify for something under universal care, we think we qualify for something on tax credits. Why don't we qualify for this?' 'Well, you're not in the pilot area.' So, we're learning about these things, but the biggest one, I have to say, is the administrative burden, and I think that's interesting in how we take this forward for a wider roll-out.

What is the administrative burden? What specifically is that?

It is that sheer burden on each local authority, and each pilot area, to administer a scheme where we are asking parents to prove eligibility, to bring in documents to prove their eligibility, to make adjustments as it goes forward based on what their changing work patterns are, what their salary slips say. It's incredibly bureaucratic. So, yesterday, when we made the statement following the announcement of the introduction of the Childcare Funding (Wales) Bill, we made clear that our preferred option, as put within that framework Bill, is actually to build on, and to learn from the lessons as well, the model of the HM Revenue and Customs type of model, where you actually have—and this, by the way, is supported by local authority providers out there—one system that is a centralised system, where there is clarity, that is handled, that has elements of information sharing between Government departments, such as the Department for Work and Pensions, and so on, so that the work is done for the parents, and the work is done for the local authorities; much cleaner, much simpler.

How confident are you that you can achieve that by 2020?

We are very confident. But, as I say, I'm more confident in the fact that we're actually piloting it, and phasing this in, because I think we've learned from some of the experiences elsewhere, including just over the border in England, where they have a different version of a childcare offer, but they've gone for it in a big-bang approach. And it has led to technical issues, it's led to volume issues, where their anticipation of how many people would buy into it was overwhelmed by the numbers who actually then came forward for it, and the complexity, I have to say, of individual family situations, whereas what we are doing, Hefin, is taking this forward very, very carefully. Each roll-out, each expansion that we're doing of the pilot is not—and I know this has caused some people to come back and say, 'Why can't we all have it now?' It's because we're only rolling out to areas where we now need to learn a lesson about whether it's rurality or, as it will be within densely urban areas, where the cost might be slightly higher, and that's allowing us to have the confidence that we'll have it.

We've expanded the whole offer across Gwynedd—the whole of Gwynedd, Anglesey and Caerphilly. Flintshire now have a cross-authority offer. Rhondda Cynon Taf is anticipating doing this by September. Swansea is planning to do it, they tell us, in due course—in short order—as well. So, we have the confidence now that, with that learning going on from different pilot areas, we'll have the full roll-out by 2020.

Is it true to say that, in the early adopter areas, the intensity of demand for the services is not spread evenly across?

Absolutely.

And why is that? Is that going to cause a problem across Wales?

No, it won't cause a problem. If we were doing this tomorrow, it would cause a problem, but what we're learning is that there are some economic issues and then there are some cultural issues. So ,there are issues to do with—. It's not capacity, by the way. We're not finding a problem here with capacity, whether it's in English language provision or whether it's in Welsh language provision, whether it's in children with complex needs, we're not finding that as an issue. But what we are finding is, for example, one of the well-known ones—and I've spoken about this before—is that, in some of the south Wales Valleys constituencies, there is a family tradition of doing childcare within the families. I've done it myself. Grandparents, aunts, uncles and so on provide free, unregistered, unlicensed childcare of a sort. Now that isn't what the scheme is about, by the way, I have to say. So, some of the aspects are cultural, but what we're also doing alongside this, whilst looking at the capacity and looking at how we learnt from the pilot roll-out, is that communication with parents and providers and local authorities as well. So, we have a whole programme running alongside it. It's about communicating what the offer is, how simple it is to get invovled in this and where they go to, and, critically, I think, how we do that national roll-out would be important as well.

So, given the point you've made about grandparents and family, wouldn't it be sensible, then, to offer a subsidy to grandparents to provide this kind of care?

Unregistered grandparents?

Well, through some kind of analysis of that.

Well, we don't think so and there are good reasons behind this.

Is it because you say that they wouldn't be registered as carers for their own family member?

Yes, but there's a deeper reason behind that registration as well. The childcare offer isn't only to just provide childcare; it's the wider aspects that come with this. This childcare offer ties into the foundation years offer. There's an element of education linked to the childcare offer—there's that 10 hours of the early education foundation years as well. The two tie together. So, there's an issue here with quality, about socialisation and how children learn in an environment, as opposed to purely—as great as all our grandparents and aunts and uncles are—simply child-minding. That's one important distinction. So, the focus of this scheme is very much on registered licensed providers, which could be, by the way—because we do have them, and we're discussing this at the moment internally and with the Professional Association for Childcare and Early Years and others—grandparents who are actually registered and inspected by the care inspectorate? We're having those discussions.

How many of them are there?

We don't think there is a huge number, but we're trying to bottom this out at the moment. We haven't got the exact number, but we don't think they are huge numbers, but there are, in our constituencies, registered, licensed, inspected grandparents who look after other people's children in a little group of four or five or six or seven, but also their own grandchildren.

So, they're a kind of grandparents club.

Yes. Now that, I would say to you—and I know that Darren raised this on the floor yesterday as well—is markedly different in the nature of it, because it's registered and licensed, than simply informal grandparents or aunts or uncles. I say that as well because we also get people who will say to us, 'I don't want to be paid for looking after my grandchildren; I look after my grandchildren because I look after them'.

And what about the view, given that you said that capacity wasn't an issue, of the National Day Nurseries Association, which says that Wales has the most fragile childcare sector in Great Britain?

I don't agree we have the most fragile, but the childcare offer gives us an opportunity to make it more resilient and more robust. We know from the early piloting, and as we roll it out, that there is the immense diversity within the childcare sector, and we're talking about everything from those very small terraced homes that have been licensed and registered to take six or seven children, to large, complex environments that perhaps are on maintained premises within school premises, provided by a voluntary or third sector organisation. So, there's immense complexity and we know that that differs across Wales, and we also know there's immense regional variation in the scale and the type of childcare offer. What the roll-out allows us to do, backed by £60 million of capital money behind it, in terms of capital development of childcare facilities, backed by a 10-year workforce development plan for childcare—and bear in mind this is bolted in as part of our foundational economy approach as well—that means, by 2020, we get to the point where we're putting the money into the capital development but also to the workforce development, because in some areas we're finding it's not to do with lack of provision and facilities, it's to do with lack of staff. In other areas, we're finding there are plenty of staff but not the adequate facilities. We've got to get it right.

That's fair enough, but is it realistic to think that there's going to be capacity growth in the next two to three years to deliver the product? Is that realistic to think that that foundational sector can provide that level of staffing?

Yes, I think it is, absolutely, because, again, what we're finding is we've got several things going on at once in terms of how we monitor and assess the development of this roll-out. One is the work that we're doing on the ground with the phased roll-out, so we're literally learning live time, and I have pretty much weekly or fortnightly updates on how things are going, but also there is a termly update as well. We've also commissioned additional work from Arad to look at this first phase of the roll-out that we've done to see what that tells us as well.

But the feedback that we're getting from the childcare providers themselves, on the basis that we're now identifying where either the gaps in the workforce or the physical facilities are, is that, 'Yes, we can do this', because we're putting the money in, we have the strategy for the workforce development, and it's not going to be the same in all parts of Wales. It's not as if what we're saying is, 'Here's what we're going to do all of a sudden—flick a switch and we have a universality of the same type of provision everywhere.'

So, let me give you one key example. Alongside this, alongside the £60 million capital fund, alongside the workforce development, we've also identified a separate strain of money into cylch meithrin. We know that there is a shortage in parts of Wales for Welsh language childcare development. We're specifically putting money into developing that, and, in fact, the first one of those will be, from that new tranche of money, opening up, I think, in September. They anticipate, as part of our big strategy with Welsh language development, we'll have an additional 40 of those by—

Thirty.

It's an additional 30 by 2020, and an additional doubling of that in the 10 years after that. We can't take this for granted, Hefin. This is difficult. This is hard work, but we have everything in place to make it happen.

The last thing from me: the £4.50 single national rate—is there a danger that we might be creating a kind of EasyJet-style nursery provision where you get the basics but the wealthier parents are going to be able to pay for better care within those settings because of the add-ons?

We really mulled over this a lot and discussed it, I have to say, not only internally but with childcare providers out there and with parents as well and with local authorities. The first thing to say is the £4.50 rate that we've set has been welcomed, and it's been welcomed because it's unlike the much more complex offer that's in England, where there's a variable rate and there are lots of determining factors on it and it's added complexity and confusion.

Can I just ask there, it's been welcomed perhaps in Blaenau Gwent, but has it been equally welcomed in Cardiff?

No, because we haven't rolled it out in Cardiff yet, and that is a salient point.

Okay, fair enough. But will it be, then?

Yes, it will be. Some of the more expensive areas like Cardiff and Newport are knocking on our door saying, 'Please can we have this offer?', and we are keen to give it to them. But, as I say—

But do you anticipate a capacity problem with the £4.50 in those areas, compared to, say, the Cynon valley?

We can't anticipate it yet, Hefin, but that's exactly the reason for going into that area and then assessing how it works. We're reasonably confident that the £4.50—. We're reasonably assured by the feedback that we're having that the £4.50 might work as a universal amount. But if we learn, when we roll it out in Cardiff and Newport, that there needs to be some variation, we can look at that, because we're not doing a big-bang approach. So, that is part of why we will move to roll it out within Cardiff and Newport and other more expensive areas and learn from it, but at the moment, I have to say, the £4.50 amount has been welcomed—it's appropriate.

You touched on the other aspect, though, of the wider aspects of beyond the £4.50, because the £4.50 doesn't cover everything. The £4.50 is a contribution towards the wraparound childcare element but it doesn't cover—and we agonised over this—the issues of things like transport out on trips or food or snacks and things like this. Now, we did agonise a number of things that brought us to the conclusion where we are. I have to say, this hasn't been ivory-tower stuff; it's been in discussion with the providers but also parents. One: parents are quite used to—with childcare settings and play care settings and so on—the idea that providers are quite different. Some providers charge a fee that does everything in one; others provide simply the childcare element but they tell the parents—and I'm used to this as a parent myself, although mine are older now—'Mr Irranca-Davies, when you sign on, just to be aware, if we do take your kids down to St Fagans, there's going to be a little bit of a charge for that' and so on.

That's fair enough, but it would be the lowest-income working families who would be most unduly affected by that, because the higher income families would be able to afford those add-ons, the lower income ones won't. Isn't that a concern? 

If money was absolutely no object, then I think you'd be looking at quite a different offer, but it has to be affordable within what we've got as well. The fact that parents, including those who are on lower incomes, are used to currently discriminating between providers, not only with childcare settings but also within school settings as well, where very often schools now will say, 'We're doing something extra'—

That may be the case, but it's not fair, is it?

In a pure argument about equity, and if funding was no object and if the burdens of austerity were released and we were told we had money—'You can do what you want'—I think you'd be looking at a very different approach. But within what we have, I think this works very, very well indeed, because it's very transparent for parents who are used to making these decisions. It says, 'Here you have 10 hours of the foundation education offer. You have the additional hours here provided with the childcare offer. But within those additional hours, you may be with a local provider in the middle of Powys that actually says, "Within that we provide everything"; you may be with a provider that says, "Well, actually, we do a whistles and bells thing and we take them out on trips, but it's up to you if you want to come, and here's the additional cost—".'

Parents are used to making that decision and realistically, in terms of what we can do with this offer, this is actually—the arguments around this have been well rehearsed both with providers and with parents and we're not getting any concerns that this is going to unnecessarily disadvantage. In a total fairness argument, would you make it universal and with no additional charges? Well, possibly you would. But we work within the realistic—

Or have a lower top-end income limit. 

Depending on how the Bill progresses in the main Chamber and when it goes through committee, there's that flexibility built into the Bill that those things can be looked at over time and adjusted. For the moment, I think there is an attraction, in terms of the upper limit, of saying: one—'Let's try not to add additional complexity, let's go with a scheme that's already working its way through the system, which is, if you like, what they're doing in England, and not add additional complexity. But, secondly, there is an appeal to universality, curiously, in saying to all parents—and I say this regardless of political hues across the committee here—there's an attraction when you say, 'Let's make an offer focused on working parents as it is', as universal to those working parents as possible, and avoid the administrative costs of saying, 'Well, let's take the upper limit down to £80 or £60 or £55.' There's always the question of how much additional cost is incurred in actually doing that tweak of complexity. We have looked at it. 

Darren on this. 

Just to ask, I mean, the labour market costs are changing, aren't they? You've got the national living wage increasing—[Inaudible.]—that's going to have a bearing, isn't it, on the affordability of this project in terms of the childcare offer and the suitability of the £4.50 per hour regime? By the time it's fully rolled out, of course, that £4.50 rate is going to be a number of years old, for example. Do you have plans to review that? Where is it headed? Because it's certainly not going to be enough in the future. 

It depends how far in the future you're looking. I have to say, the feedback that we're having at the moment from organisations like the Professional Association for Childcare and Early Years and from the National Day Nurseries Association Wales and others is that this is the right rate and it's suitable not only today but for the foreseeable future of rolling this out.

But they've raised concerns about the national living wage implications, haven't they, as well?

Of course, and I think it's incumbent on us as well to not—

So, it's not fair to say that they haven't raised concerns about the rate.

Yes, but what they're not arguing for at the moment is for this rate to be raised.

But they have suggested that in meetings—

That in future—

Absolutely.

Well, of course, in future, any Minister, any committee, will want to come back and look at—is the hourly rate, as one element of the scheme, appropriate to the current financial challenges for the sector, and not least, by the way, as we try not only to develop the workforce, but to develop the career pathways through this as well? And I think that's the right discussion to be had, live time, as this is taken forward. But at this moment in time, we're not getting people saying within this part of the roll-out that we need to adjust this amount.

So, have you forecasted for any adjustment in the rate going forward in terms of affordability of the project? Because you've still got this £100 million price tag on it, haven't you?

Similar to the point that was raised with Hefin about Cardiff and Newport, if we identify that the rate is not appropriate, if it's—. I don't think anybody's going to come back to us and say that it's too little. But do bear in mind that it's above where the average England rate is, even though there's this complex variability within the English rate that has caused some confusion there, which is why the universal rate with us has been welcomed. If we find, as we pilot it, or if we find because there are more expensive areas for it to be delivered in, there needs to be adjustment, then we'll be back in front of the committee arguing why that needs to be the case.

But that won't put the project at risk in terms of its finances?

No, no. We are still very confident, looking forward, on the best projections we have, fed by the live input that's coming in from the pilot, which will be fed again in the autumn—the Arad report coming forward—that we have not only the capacity to actually deliver this—challenging as this is, we have the capacity to deliver it—but also that the funding that's available, on our best estimate—the estimate we've stood by, that broad ball park of that £100 million figure—it's deliverable within that. But if it changes, we will come back. And if it changes, I'll have to be sitting down with my boss, Vaughan Gething, and with Mark Drakeford, to argue the case on it. But at this moment, we have confidence and we've run the rule across this repeatedly. But that rate, combined with the other elements of this childcare offer—there is sufficient there allocated to actually deliver the whole roll-out. 

Mark on this.

Minister, as a parent who's been researching childcare options, it's obvious to me that in Cardiff, and to a degree in Newport and Monmouthshire, costs are substantially higher than this, and I haven't been able to find anywhere that has a six-hour day for £27, which is implied by your rate. Isn't it the case that rents and wages are higher and therefore you're going to need a higher rate to make it work? Isn't that already obvious? Why are you postponing coming back and looking at this until some point in the future?

Chair, my biggest fear is a parent who's actually involved in this area already, but, having been one myself—. Mark, you may be right, that's exactly why we're piloting it and that's why when we pilot in Cardiff and Newport, we know we have lessons to learn over the affordability and the £4.50 per hour rate.

But you're not piloting it in any of the high-cost areas that I've referred to.

No. We will be. We are going to be.

When are you starting?

Cardiff and Newport—September.

This September.

This September?

Yes. So, we're not missing any of these learning experiences and we know that—. The reason we've gone for the other areas first, by the way—please take this back to any authorities affected—is simply because we've done deep dives into areas that vary from very rural areas in mid Wales, areas in north Wales, areas around Welsh language provision, areas in deep valleys, understanding the cultural and the economic impacts. So, we've held back a little bit from going into what we know is an obvious challenge within the more expensive areas of provision. But it's coming, it's imminent, and we'll learn the lessons from it. And do you know, you may be right? And if you are right, that it's more expensive, and we need a higher rate within those areas, then we're going to have to come back and discuss it with the committee. But let's go in and learn it first of all, rather than assume it necessarily.

Just before I bring David in on the issue that Hefin raised about the chargeable items, your paper says that providers can charge up to £7.50 a day for food, snacks, transport and consumables such as nappies. Now, that's £37.50 a week, which is a lot of money for parents, and I just wondered if you wanted to comment on that figure? But also, do you think there's a risk that providers who maybe aren't charging at the moment may start charging because of any new pressures that arise because of this scheme?

I think they're the right areas to flag up, and if I thought that was going to happen I'd be concerned as we take this forward and design this scheme. I think part of the evaluation from Arad will also show us that—whether or not, within the pilot areas that we are already in, which are quite diverse, that is happening. We're only one term into learning the lessons, by the way, but I would want to make sure that we design a scheme where we are not heaping on disadvantage or where there was exploitation of disadvantaged families. So, the early evaluation, I think, will give us good feedback on that.

I think also, by the way, that providers know that this is a collaborative effort to do this here. It's not in their interests, I have to say, as the umbrella bodies or individual providers, to see this as some way that they can unduly rake in additional income from this on the backs of poorer families. This is about providing opportunities for all working families. But especially, I have to say, the early evaluation that we've seen already suggests that the greatest proportion of those who are taking advantage of this scheme in the early parts—in the early evaluation—are those who are below the average working wage within in Wales. That's by far the greatest number of people who are doing it, and we don't want them then being priced out because of add-ons. So, there has to be some pragmatism, I have to say, and some open partnership working here with the sector, and we do have that.

John on this.

I want to come back to the £4.50 rate, but in terms of working with the sector, briefly, if I might, Chair, I just wonder, Huw, in terms of that £4.50 figure and understanding the sector in Wales, to what extent are we talking about a market rate and to what extent are we talking about the increase in demand that will come from the scheme and how that relates to economies of scale and capacity? Is it purely a market rate or is there a conversation with the sector in terms of the benefits that will come from this scheme and how they should be recognised in terms of setting the rate?

This has been a very open dialogue with the sector around affordability, around the hourly rate and around what might happen in future as well. This is not a pure hard data-driven analysis that says, 'Here we've calculated everything and this is the rate that will satisfy it', because we recognise that there's great diversity in provision out there, and we also recognise that things will change over time. It's not only the geographical diversity—it's the diversity of the sector itself. I think we need to, as we take this scheme forward and look at the full roll-out, continue in that very open dialogue with the sector not about what is purely a market-driven amount but actually what is also affordable for the Welsh Government within the constraints that we have.

Just to flag up one issue, it's right that we're focusing on those elements that aren't included within it, to some extent as well, and the effect of that on more disadvantaged families, but that has to be balanced with the pocket of affordability for this scheme as well. Let me give you a clear illustration: some of our calculations have suggested that if we included free food within this offer as well, it would add something like in the region of 50p to that £4.50 rate. That would have, at this moment, impacts on the affordability of this and the roll-out of it. I would need to be going back to my seniors and arguing the case now, okay? 

But, it's that open dialogue with the sector that says, 'There's one thing about what you're saying you demand as a market; there's another thing about what we're saying that we have affordability from taxpayers' money to actually put into this'. They also understand, John, that as well as an enabling policy—and we're seeing the evidence, by the way; I can cite it—of individuals who are being helped into more flexible options to get back into work, increase their hours and so on, this is also about building capacity in a fundamental foundation sector that is in every single part of Wales. The stuff that's being debated ad nauseam here within the Assembly about foundational sectors—. The sector itself understands that if we boost the childcare offer in all its diversity, including, by the way, not just the independent sector but social enterprises and third-sector organisations, such as exist in Neath and elsewhere that I was involved in 20 or 30-odd years ago setting up—that has an economic impact that goes beyond that immediate family who are receiving the provision to the wider communities as well. They know that. They know there is job creation within this and there's economic impact for that. So, it's an open dialogue on what the rate should be rather than purely, 'Our wonks have crunched the numbers and we've come up with £4.50.' 

David, you had a question on the pilots.

Yes, just to finish that section off, if I may, Chair. Before I go to my question, I want to come back to Mark Reckless's question and the answer you gave. I got the impression that if there is a need to look at different rates because of the higher-end areas, you may therefore have different sets of rates and not a universal rate. Is that also on the cards?

David, it's possible. I think our preference would be, I have to say, to stick with the universal rate, because we know it's—. There's real simplicity and it's been welcomed in the sector. But the sector, also, are quite pragmatic about this. One of the defining hallmarks of the way that we've taken this scheme forward is learning in live time as we pilot and expand the pilots into different areas and different types of provision. If we learn lessons from that that suggest we need to come back and look at a differential in more-expensive-to-provide areas, then we'll have to look at that, but there might be other ways of splicing it. But first of all, I think we have to go in and see how does this work. We might find, Mark, we might find, David, that we go in and when everything is tallied up, the £4.50 per hour works in supporting provision there.

Okay. In your answer to John, you talked about affordability, which I totally understand. If I can now remind you: I don't remember the word 'affordability' coming in the manifesto pledge of the Government. It was 'we will offer childcare facilities'. So, I just want to put a reminder to you there.

Ministers always look at affordability.

Well, voters don't.

In the situation regarding Welsh-medium, you answered that a little bit earlier, but I have concerns about capacity. Workforce capacity you've mentioned. To actually be registered you need staff who are qualified. There's clearly a need to get more staff, because in your own paper you say that the report in 2016 said you do not have the childcare capacity in Wales at the moment. Do you believe that you can actually deliver the workforce to meet that capacity, first of all through the English medium, but secondly through the Welsh medium as well? Because there's a clear need to look at it. You talk about 30 by 2020. By the way, 30 is nothing big when you consider the whole of Wales. Do you actually think you've got that workforce capacity set up before this is fully rolled out? 

I hope, Chair, you'll appreciate that in our submission to you we've been very open. This is challenging. This is. To get to where we want to go is a huge challenge. Can we do it? Yes we can. And I don't say that glibly. Let me suggest some of the ways why. We have confidence that we can do this if everybody is working together across the sector, across the local authorities. Let me talk broadly about capacity, first of all, including English and Welsh-medium provision for children with complex needs, provision for children with disabilities—all of this.

First of all, this is being—. The work that we're doing to increase both capacity in terms of trained staff and qualified staff: we have the 10-year plan that I mentioned, which has already been announced. We're working through it. We're working through it with the sector. So, we're identifying not only broadly at a national level where we need to develop those qualifications, but also at a regional, geographic level as well, and that's being taken forward. We've engaged with the 22 authorities—not just the pilot areas as well on this. So, beyond the pilot areas, we also have intense engagement. As you can see from what I've said before, it's rolling out progressively, but with all 22 authorities we're working with them on their childcare sufficiency assessments to identify where their shortages are.

What have the pilot programmes actually shown you about this, and how are you going to move this forward?

Well, it's precisely that. So, within the pilot areas, we have a greater depth of analysis now of where both the workforce and the physical provisions are. Whether those are maintained or non-maintained or third sector or school facilities or whatever, we've got a much deeper granulation of identifying where that is, and we're working, then, with those authorities, with the capital moneys that we've allocated to this and the workforce development, and with local colleges, to develop the workforce and the physical constraints. But we're also doing that with the other 22, with all the 22 authorities as well, in anticipation of the wider roll-out. They're not being left out of this. And by the way, it's not only the Cardiffs and the Newports; it's all the other ones where there isn't full roll-out. We're engaged with them deeply at the moment with that analysis on their childcare sufficiency assessments, both in terms of workforce, but also physical provision. So, we're doing that already.

We are looking as well, as this is rolled out, around the issue of co-location. Now, co-location is a fruitful way to look at future development. It doesn't mean, by the way, that we exclude the third sector or social enterprise approach, or the independent sector, but co-location could be key to the roll-out of this in the right areas where it can be done, because then we avoid any fracture between the education hours and the childcare hours: the physical transportation of children from one location to another. So, we're engaged with the 22 authorities on that: where could that be developed, who would be the providers that would do it and do they have the workforce to scale up to do it? If not, how do they talk to local colleges to do that? So, we're doing that at the moment. I mentioned we've put the £1 million additional funding into the meithrin over the next two years, targeting 40 new Welsh-medium groups by 2021, which pretty much coincides with the full roll-out of this. It's part of the aim of an additional 150 over the next decade of meithrin. So, all of those things, David, give us a confidence that we're going to be in the right place.

But in particular, take the Welsh language—I understand Gwynedd, and I won't ask another question on that for obvious reasons at this point in time—but in some of the other areas where you've piloted, you've gone partial in some areas. When there's Welsh language education, and the three to five-year-olds go to schools, they go from all areas of the council, basically. They don't actually go necessarily from the local area, and therefore you're getting a different picture. Have you been able to assess the actual impact, properly, upon the Welsh-medium side of things? Because, for example, my grandchildren will go from my area, which may not be in one of the considerations, to a school that may be in that consideration, and that happens regularly.

Absolutely. We know that historically we've got, across the country, a shortage of Welsh-language childcare provision—meithrin and so on—but we have not only a strategy in place, but the fact that we've got local authorities now doing their own assessments within their area, across the piste of childcare, but also in terms of Welsh language, that means then that we can start filling those gaps with the money we've put to it, and that includes in all parts of Wales, including those areas within south Wales and others that are less deep in their tradition of speaking Welsh over recent history, anyway, but where the demand for it is massive. So, local authorities are tasked with doing their own assessments of childcare sufficiency for this childcare offer. They're identifying the gaps, David, and we will work with them and with providers to fill those gaps, and that includes with the umbrella organisations for Welsh language childcare provision. 

And that's the same for those children with physical disabilities or learning disabilities.

Absolutely the same. Absolutely the same. And this does mean, Chair, that it will be different, as it currently is in different areas: the type of provision, where the provision is located. But the provision should be there. This offer won't happen unless the provision is there for those children with complex needs, children with disabilities, Welsh language provision, as well as more generic provision as well, but it will be diverse in its provision around areas. 

I do want to move on now, John, so if I can come back to your question. Llyr. 

I would like to pick up on the last point, if I may. 

Okay.

Thank you. The investment in meithrin, of course, is one that we all welcome. A question from me though, the wider question, is: how do we mainstream Welsh medium into childcare? Because, clearly, leaving it to meithrin is one way of doing it, but there's a lot of existing infrastructure out there that we need to upskill in terms of the provision of Welsh medium. So, it's not a question as such, but I'm sure you recognise that—that there is a challenge there. Because if we are to get to where we want to get to, it isn't about growing meithrin, or Mudiad Ysgolion Meithrin; it's about mainstreaming Welsh-medium provision within the wider sector. So, it wasn't a question after all. 

So, looking at the manifesto commitment that was made in 2016, clearly the main or the principal aim of this policy is around removing some of the barriers to secure employment for parents, albeit with very positive outcomes for the children themselves, and we don't ignore or neglect that at any cost. But I'm just wondering: how would you then reconcile that with the findings of the Public Policy Institute for Wales report, which I mentioned to you yesterday, which was commissioned by the Government to look at policy options in this context, which concluded that there will be no

'substantial impacts on net income, poverty or work behaviour for families with children'

and that

'the impact on work participation and work hours for mothers in families with a child of target age is extremely small'? 

Well, the first thing I would say is that what we're learning from the pilots is that it is having real-life impacts on parents, including in disadvantaged families, and we're having this fed back from real-life situations on the ground, where parents are making different choices in the areas where it's being piloted.

So, the types of different choices they're making could be to expand the number of hours that they're in work, because they now have a choice, they're not constrained to certain hours or whatever, they have a wider choice, with a wider number of providers, and they're making that decision and they're able to expand their hours. Some, by the way, Llyr, I have to say—and, again, these are real-life situations—are saying, 'What we're doing is not expanding our hours, but, because of the increased provision of childcare and the increased offer, we are now able to actually spend more time with our children, because we're adjusting our hours of work, based on the childcare provision offer.' That in itself, I have to say, is a worthy aim.

But I would say what we found out, in real-life examples—I'm not saying that in direct contrast to what that paper was saying—

That's what I was going to ask; it sounds as if you're saying they were wrong.

But what we have is the advantage of this phased roll-out, where we are learning, live time, and I think the Arad report in October—we're hoping to see the final report in October—will help put some flesh on this as well. It is already having an effect: the majority of parents who are taking advantage of this are actually in those groups that are below the average wage, they are making positive choices to get into this offer and to either expand, take more hours, adjust their own lifestyles around it or more. So, it's having a positive effect.

I can cite to you examples, because I've asked my own officials on this, of families who tell us they're saving up to £250 a week on the basis of this offer within the pilot areas, who've increased their hours of employment, who've changed their working patterns to suit their work life, but also to suit their families. Now, that's real stuff, as opposed to—yes.

So, in effect, you are saying that the PPIW report got it wrong, basically.

No, I'm not saying that they got it wrong and it's wholly wrong, but it is interesting, within that report, that it did identify that there were a range of factors here that play upon this. It's not only the childcare; it is the transport, it's the training and education, it's the employment support and all of those. And we agree with that, but we do think, and what we're seeing, live time, at the moment—maybe at some point, somebody else will produce a report beyond the Arad report in October that will say, 'Well, actually, the way this is designed, that they've done it in Wales, is having a material effect on those families, particularly the most disadvantaged families.'

But you're asking us to support a Bill here, albeit a framework Bill, to achieve a policy aim where you're giving us anecdotal evidence that it's having an impact, contrary to research that's previously been done, albeit with promises that, maybe, an evaluation sometime in the autumn might tell us a different story.

We know, and we are constantly told—I'm sure this is commonplace in constituency surgeries, as well—by parents who say that the biggest mitigating factor for them, actually, either going into work at an earlier opportunity or expanding their hours is purely the cost of childcare in front of them. We are picking up, even from the early term of the analysis—. I think our further reports, both Arad and as we go forward with the pilots, will substantiate this more. It'll go beyond the anecdotal, it will show that parents are having an enhanced opportunity to balance their work life, to make better choices, either in terms of expanding the number of hours they're working and increasing their disposable income within their families, or actually making it simply better for them in their family situation, where they don't currently have that offer.

So, I get the fact that we have one report out there, but it's one report. It's a report, and we're not dismissing it entirely, but what we are saying is: we are now working with real-life piloting of an offer, and we are seeing the benefits coming through. As we roll this out, we'll be back in front of this committee saying, 'Well, this is now what we're finding. We can go beyond the real-life stories that I'm relating to you now, and we can say, "Well, here's some hard data that goes with this, as well."'

Okay. You reference in your paper, as well, another report, which is the Organisation for Economic Co-operation and Development report, 'Starting Strong 2017', and it highlights countries that have, maybe, the most similar childcare offer to what's being proposed here in Wales. I'm just wondering what assessment you've made of those similarities, because, clearly, there'll be different economic contexts in different countries and different levels of public expenditure, et cetera.

We haven't done really detailed analysis of comparisons with other countries far from Wales, but we will be doing work that will be doing some benchmarking against, where we can find similar models, where appropriate—do some appropriate benchmarking. What we have been doing is looking at what's been happening across the border in England and trying to learn from the lessons there, and also the offer in Scotland as well, which are both close to hand. They're in quite similar contexts. But we will do some work, Llyr, around benchmarking against good comparative international examples, where appropriate.

Yes, there we are, because one of my concerns was that the focus in a number of the countries in the OECD report are for nought to three-year-olds, whereas, of course, the policy focus here is for a slightly older age group.

Yes, and I fully get that, but again, and I know it can be said, 'Well, this is an example' but it's real-life examples. We are having people who are telling us that they're now making the choice to go to work earlier because this is extended to three-year-olds, but they would have delayed. There is a direct outcome there if this childcare offer enables somebody to say, 'Well, I'm going to go a year earlier back into work and bring income into the family.'

Okay. So, moving on, then, to the impact on the child and this whole question around school readiness, of course, which is an important one to address. Clearly, one of the main outcomes of this policy will be the academic performance of children, hopefully, later on in life. I want to come back to this point that the Children's Commissioner for Wales and others have raised: the concern that, actually, the most disadvantaged—those from workless households—are being excluded from this policy. Isn't there therefore a risk that they'll be left even further behind?

I've had long, detailed and positive discussions with the children's commissioner on this, and I know the children's commissioner would want a more universal offer, but I make two points on that: one is, that was not what the commitment in the manifesto was, and it's not the offer that's being taken forward now. It is a different thing, a universal offer, and there are issues around that with complexity, and also affordability. But it isn't the offer that we took forward into Government; this is what we're taking forward.

But it is interesting in terms of that aspect of families then who lose out. I'd say two significant things on it: one is, this doesn't stand alone purely as 30 hours of childcare. Within this, there are 10 hours of the foundation years, educational input, which is there for everybody. But before that, particularly for those disadvantaged families, before we even get to that stage, you have schemes such as Flying Start, and I know this committee has looked in detail at Flying Start and has said that it would like to see it rolled out everywhere. If I had all the money under the sun, I would really do that, Chair; I would really do it. But I don't have all the money under the sun.

But you do have the ability to target the money.

Yes, but the fact that Flying Start, we know, is leading to those outcomes where those children, in quite challenged circumstances very often, are more ready to step up to the foundation year, are more ready, then, to step through into mainstream education in later years—those things tie together. So, there are the 10 hours of education provision that sits here for every family, by the way, within this offer, let alone the childcare. That doesn't mean that everybody's excluded, but it does mean, yes, that this offer is focused on working parents. And we don't think that that's a bad thing. In fact, it does overlap with other offers that other political parties were taking forward into the last election, which was focusing on how we support the biggest thing that we often have in our constituency mailbags, which is, 'I can't afford to go back to work because I can't afford the childcare. Don't tell me to go back to work, I can't afford it.'

The majority of disadvantaged children don't live in Flying Start areas, do they? 

Yes, indeed.

So, there's a missing cohort there that can't access one or the other, and the school readiness gap is growing, and, really, are we focusing our resources in the right place here?

Well, yes, in terms of this scheme, but it doesn't sit alone as this scheme—it's the wider plethora of, I have to say, progressive and advanced initiatives that we have in Wales that take different forms. It's not only Flying Start that provides that other support for parents, and readiness not only for the parents and for their children, but also the support into work. So, if, for example, you look at the Parents, Childcare and Employment programme, which is separate from this, there is support there for every parent in terms of helping them get supported into work from disadvantaged families. If you look at the support for the children, we've got the 10 hours that sits within the sphere of the education, but we've also got all the other family intervention programmes that help with socialisation, education and so on and so forth.

If you look at this solely on its own and say, 'Well, there is nothing else there; the rest of Wales is a desert and there's no support for parents, for getting parents back into work or for those parents who are not seeking to go back into work but also need the support and for their children in education', I'd be worried. But, actually, this fits as part of the jigsaw that we have in Wales, where I think we are well ahead of the other nations. Yes, we could do more, and I always say, Llyr; I always say, Chair, that if I had—I don't have a chequebook at all, because it's not in my gift—if I had a blank cheque I'd do a lot more, but we don't. But what we can do is get the right schemes in place, and if this helps drive more choices for working parents, including, by the way—. There are niceties within this as well; it doesn't have to be that both parents are working. You could have a parent who is on incapacity benefit. You could have a parent who is a registered carer. They would qualify for the scheme. Those will be some of those most disadvantaged families that we both have those concerns about. So, there is some flexibility within this scheme as well to deal with some of those disadvantaged families.

Darren on this.

I am surprised by the answer there, particularly given that one of the ambitions of the Government is to close this attainment gap later in life when schoolchildren get to their examinations, when they're 16 years old. Yet this appears to be driving a bigger wedge in terms of development, which could, of course, lead to a perverse outcome later on in life, but I don't want to ask you about that. If I can just very quickly ask you: has consideration been given to making free childcare available to parents where they're in 16 hours or more of education each week? So, they may not be entering the labour market, but, of course, one of those barriers to them getting back into the labour market could well be their education, so what arrangements are in place there?

Darren, we have considered it, and we haven't included it within the scheme because this is designed to enable parents to go into work, not into training to enable them to get into work. There are other forms of support available for parents in terms of college and so on and so forth, but it's not this scheme.

But it's not prescribed support, is it? You know, it's not universally available to people who might be wanting to get back into the labour market over that barrier. You must have done some costings, then, if you've considered it, and you must have tried to identify numbers.

I'm looking to my left and my right.

Not at this point.

We haven't—

So, you haven't considered it that much, have you?

We have actually considered—. We consider it from the point of, 'What is this scheme set up to do?' It's very clear. When we ran, in the manifesto on this point—

I understand that. I don't want you to repeat yourself because I know we are against the clock. But, very specifically, when you say you've considered it, what you mean is you thought about it but you've not costed it, you've not identified the numbers that might be involved—

Absolutely, absolutely.

And therefore you've not considered whether it might be affordable in addition to the policy objective that this is trying to meet.

No, Darren, you're right: we haven't considered affordability because we've considered it on first principles to do with what this offer is trying to do. It doesn't fit within the offer so, as such, why would we do the costings?

Perhaps I can frame my question in another way. Are you prepared to consider it if you're able to identify the numbers and potential cost?

Ah, right, okay. We'd be interested in your thoughts as a committee, but it doesn't actually fit within the first principles of what the scheme is designed to do. Darren, can I just pick up on your point, in case you misinterpreted what I was saying to Llyr? I drew attention in my answer to Llyr to schemes such as the PaCE scheme. In Gwynedd, one of our pilot areas, they are combining the Team Around the Family with this childcare offer. So, what they are doing is wrapping the support around. It is not the case, as you've suggested then, that there is somehow more disadvantage being heaped on other families. What this does is tie in in those pilot areas with the existing provision, and that's the way we want to see it work. So, I wouldn't want you to be under any misapprehension that this makes conditions worse for families. Those families who have a registered carer in them where one parent works, and those families who have somebody on incapacity benefit will qualify for the scheme. All families will qualify for the 10 hours of education. In Gwynedd, they're wrapping the Team Around the Family with this offer—

But on the other hand, Minister, you've also suggested that this will accelerate child development for those kids who are able to access it, and yet not all kids will be able to access it, particularly those from disadvantaged backgrounds.

But all children can access the 10 hours, and they can access Flying Start—

But 10 hours is very different to 30 hours, is it not?

Yes, but they can access Flying Start or they can access the Team Around the Family—

If they're in a Flying Start area.

—or they can be in a children's zone area or they can—

If they're in those areas.

Right, I've got John and then David, and the questions and answers are going to have to be brief, please.

Yes, certainly, Chair. In terms of child development and how this fits with wider Welsh Government strategy, Huw, I'd be interested in what you'd have to say about the quality of childcare. We're talking a lot about quantity, but obviously we want to up quality, and that's recognised by Welsh Government. They've talked about increasing the qualifications within the workforce, and the quality. I just wonder how that sits within the £4.50, because there could be pressures in the opposite direction there, and some tension between wanting to up the qualifications and quality of workforce whilst keeping affordability in place.

John, you're absolutely right, and two things on that: I visited one of the facilities in the Valleys the other day that was taking this forward—a very good independent sector-run childcare provision, with Welsh language and English language running alongside each other, and I asked the point about the integration, curiously, but what they were doing was—. Their standard of staff was an exemplar of what we'd want to see: not only very well-qualified childcare staff who were qualified within not simply the child-minding but the wider child development aspects—. So, it was hard to differentiate, in some ways, what was happening there from what would be happening in a child development educational surrounding, and including the nutritional stuff and all of that. Now, that is the model we need to see, and the £4.50 seems to work, at the moment, for that. It'll be interesting, as we discussed previously, as it goes forward—. We need to look at whether that works, going forward. But the quality, I think, is key, and that's why we're focused very much on registered inspected providers, as opposed to every Tom, Dick and Harriet.

If we want to increase salary levels, though, which I think is a necessary part of this picture of improving quality, then obviously that might impact on the £4.50 rate.

Yes, indeed, and we are cognisant—. It's interesting that we focus on whether the £4.50 is affordable, but the £4.50—you know, we're having an interesting discussion internally about how that £4.50 offer per hour sits alongside others, such as the foundation phase offer, and it's more generous. So, I think it's: how do we align, as time goes by, the child development aspects of the whole early years stuff? Now, we're doing some fascinating work that I think I've referred to on this committee before about aligning the early years development entirely. Now, this is an evolving piece of work, but I think the childcare offer should ultimately fit within that. How do you make sure that every offer that is Government-funded works on child development? It's not simply childcare.

Okay. Thank you.

Right. The next questions are from Mark.

In terms of child development and not accentuating disadvantage, another area where this may apply is the kids who are born in the summer term, compared to those who are born in Michaelmas. There's a lot of evidence to suggest that they start with a disadvantage at school and often don't make that up, even as they go through school. What is the rationale for providing the older children with five terms of this, compared to three terms for the younger children who already have the relative disadvantage?

I'm looking to my colleagues here and—

Well, the criteria for eligibility for the offer are the term after the child's third birthday, which is equivalent to the eligibility criteria for the foundation phase early education offer. Clearly, then, the number of terms that a child is able to, or parents are able to, access the childcare offer will be influenced by when the child is born, but I think you may be referring to a sort of parallel question, which is about whether—. There have been questions raised about whether children who are summer-born should, in fact, start school in the term after they turn four, or whether actually they should be allowed the flexibility to start school at a later age, which I know is something that has been tested in England, and there is some mixed evidence about school starting age and the birth month of children.

Well, they do have flexibility. You don't have to start your kids until the term following when they're five. That's the compulsory school—

Well, that's the legal position, but, obviously, in practice, most children will start school in the term after they're four.

So, given the disadvantage we know that the younger children born in the summer have, relative to the older ones, why accentuate that by giving the older kids five terms of this project, which you tell us will have such positive effects on their child development, but the summer kids only get three? Doesn't that make the situation worse?

I'm not 100 per cent sure I understand the question. So, children will stop being in receipt of the childcare offer once they become eligible for a full-time school place, and most children will become eligible for a full-time school place in the term after their fourth birthday.

But the older kids become eligible for this five terms before they start school, where the younger kids, who're already disadvantaged, become eligible for it only three terms before, accentuating the problem, surely. Could more thought be given to this issue?

We'll take that away. It's confused us a little bit, but we'll take that away. We might need to come back to you and—. Yes.

If you could write to us about that, that would be helpful.

Yes.

Thank you. Minister, you got, or Welsh Government, really, got the Public Policy Institute for Wales to study this proposed policy and they concluded that it would have no substantial impacts on net income, poverty or work behaviour for families with children, and that the impact on work participation and work hours for mothers and families with a child of target age is extremely small. What do you say to that?

Well, Mark, I can only refer to what I said earlier. Our real-life evidence that is accumulating now is showing us examples of where people are making savings and increasing disposable income—as I mentioned earlier, up to £250 per week within some poorer households; so, real-life examples—but also where it's enabling them to make much better choices about when they work because there's more childcare offer available, or, alternatively, to work their childcare provision and their working hours around being able to spend more time with their children, which they currently can't do.

And I don't want to go back over Llyr's questions.

I understand. That's not my focus. I just wondered about the quality of this PPIW piece of work. They said if you had a work requirement, as you do, it would cost £61 million a year on their numbers, substantially less than you're saying, and then they said it would cost £144 million without a work requirement. Now, that implies to me that 57 per cent of the parents wouldn't be working and would continue not working even if there is this available with a work requirement. I mean, are those numbers really credible from PPIW?

It's not quite comparing like with like. Just to draw your attention, Mark, and the committee's attention to that the PPIW analysis was looking at a provision of 38 weeks. Ours is a 48-week option. And the fact that we are having parents already saying to us that their ability to actually extend that into the 48 weeks—beyond the term time and so on—carries advantages that are not picked up in that report.

And what is your early assessment of the income levels of families who are finding this offer most attractive?

I think, from recollection, we're one term in, so we're one term into the assessment, and I mentioned earlier that the majority of parents are below the average income of £26,000 in Wales— it's around about 60 per cent of families are those. We're finding very few families are those who are on higher incomes. It's disproportionately towards those below the average income, and many of them amongst the most disadvantaged families are opting in to this offer where it is being offered. So, clearly, they're seeing the benefits of it.

And what consideration have you given to integrating this Welsh Government offer with the UK Government offer of tax-free childcare that's applicable across the UK?

Well, that offer, as you rightly say, is available across the UK and still is. The fact that it's more integrated within their scheme within England—the tax offer is more integrated—has caused them some problems in complexity and in the administration of this and the digital platforms that they've had. That offer is still available in Wales and it might well be that parents who opt in to that say, 'Well, we do want to buy additional hours beyond the 30 hours', but this 30 hours is there for every—

I wonder, Minister, whether what you're doing, in a very good way, to promote your project—people will see that as the childcare offer and, at least in my experience, very few parents are aware of the tax-free childcare on a UK basis.

You're right—sorry. That's absolutely one of the lessons we've learnt from even this early stage of the early implementers, because there are elements of a childcare offer within the tax offer, within universal credit, within working tax credit. There are little bits of different ones and it does cause confusion. So, one of the lessons that we've learnt from the Talk Childcare communication strategy alongside this is the importance of communicating to parents and providers who the parents go to what is best for them to access, how they access it easily, and we'll learn more as these pilots roll by.

So, as you go into the Her Majesty's Revenue and Customs criteria—you have a £100,000 cap, as well as the £6,000 minimum wage cap, and you're getting HMRC to say whether people are eligible, which requires them to set up that account with HMRC—will you assure this committee that you will make sure that parents who are doing that are aware of the UK tax-free childcare offer, and that their providers also are? Because we've been looking, say, at the £7.50 extra per day, but, if someone's eligible for this offer, they should also be eligible for the UK tax-free childcare offer and have set up the account to do that. So, will you make sure that those parents know to pay their provider out of tax-free funds, rather than paying them the fully taxed amounts, which might otherwise happen?

Yes, absolutely. And I think, if it's okay, Owain would like to add something as well.

Yes, just to say, as I understand how things currently work with the English offer and TFC, when a parent applies, that automatically happens in terms of, on the one hand, they're given a 'yes' or 'no' in terms of their eligibility for the 30-hours offer in England, but they will also be told in terms of the parental account that's set up under TFC. So, that is integrated in the offer, and we'll be looking to do the same in terms of the Welsh offer. But, obviously, what we're not looking at doing in terms of the 30-hours offer is the setting up of the parental account to make the payment; the payment currently is very much between local government and the provider directly, rather than the TFC model, where the parent pays the provider.

Thank you.

Thank you. Okay. Well, we have come to—well, we've run over, actually. So, we've come to the end of our time. Can I thank the Minister and the officials for attending? You are, of course, back with us on 16 May for Stage 1 of the Bill, so we will look forward to seeing you then. You will be sent a transcript to check for accuracy, as is usual practice. But thank you again, all of you.

Lovely. Thank you—diolch yn fawr.

Okay, item 3 then is papers to note. As Members can see, there are 11 papers to note. So, if Members are content, I'd suggest that we note all of them in a block, if that's okay. Yes, okay. Thank you.

Item 4, then. Can I propose, in accordance with Standing Order 17.42, that the committee resolves to meet in private for the remainder of the meeting? Are Members content? Okay. Thank you.