Cynulliad Cenedlaethol Cymru

Good morning, everyone, and welcome to the Children, Young People and Education Committee. We've received apologies for absence from Darren Millar, and there's no substitute. Can I ask for any declarations of interest, please? None. Okay, thank you.

Item 2 this morning is our first evidence session on the Childcare Funding (Wales) Bill. I'm very pleased to welcome Huw Irranca-Davies AM, Minister for Children and Social Care, and his officials. Can I ask whether you could introduce your officials for the record?

Yes, indeed. Thank you, Chair. I'm delighted to be here with you. Between the three of us, Tracy Hull leads on the legal aspects of the Bill for us, and Owain Lloyd on the policy implications. So, if I can't answer any questions, we should be able to between the three of us.

Okay. Well, thank you all for your attendance this morning. We'll go straight into questions then, and the first questions are from Hefin David.

Thank you. Can you place on record for us the reason that this legislation is needed and the one main purpose of this Bill?

Yes, Hefin. This is, as you know, quite a narrow and technical Bill. The purpose of this Bill is actually to enact the offer. So, it's essentially to set up, through Her Majesty's Revenue and Customs, integrating with their childcare service to give us one single national uniform system for delivering the offer. But within the explanatory memorandum, if I can draw your attention to some of the sections—. So, for example, section 3.1 in the explanatory memorandum refers to—if I can just dig it out here:

'This Bill is intended to facilitate the delivery of a key commitment in the Welsh Labour manifesto...to provide 30 hours per week of government funded early education and childcare to the working parents of three and four year olds in Wales'.

But if you put that alongside the explanatory memorandum, which goes into some depth there, with 3.18, which is the purpose of the legislation, which

'is to confer a power on the Welsh Ministers to provide funding for childcare for qualifying children of working parents.'

So, the Bill is actually quite a narrow technical one to do with administering this offer, putting the mechanism in place, but the offer, of course, is broader. So, we refer to that in the explanatory memorandum as well to make it clear.

So, why is the explanatory memorandum so broad yet the Bill is technical? There seems to be a bit of a divide between those two things that could be confusing.

Yes, I understand that. We're trying to be very open and frank about what the offer is, and the offer is very clear and it stems from that manifesto commitment, but the explanatory memorandum also makes very clear that this Bill is actually narrow and technical in order to put in place the HMRC offer—the HMRC mechanism—that will facilitate the wider childcare offer.

But shouldn't an explanatory memorandum reflect the technical nature of the Bill rather than be a broad aspirational note?

It does. So, if you look, for example, within the explanatory memorandum, which includes the regulatory impact assessments as well, it goes into detail on how the technical aspects work—so, the qualifying criteria, the penalties, et cetera, the appeals system and all of that. So, it very much focuses, Hefin, on the technical matters of this Bill. But you can’t do it in absence of the fact that this is enabling the wider offer.

Okay. So, it puts it in context is what you’re saying.

It puts it into context, yes.

So, explanatory memorandum says that,

'The primary purpose of this Bill is to support the Welsh economy, by helping parents, particularly mothers, to return to work'.

How can you demonstrate evidence for this, when there's no detail on the face of the Bill as to how that primary purpose will be delivered by legislation?

This is very much a framework Bill; it is. A lot within the Bill allows us to—. Depending on the results, the analysis we're doing, the evaluation of the first year of the pilots, which we'll have in the autumn, it allows us to tweak and refine. So, there's a deliberate reason why we are taking a model in this Bill—similar, actually, to the English model—so that, as we learn lessons, we can tweak and refine and adjust. But within that, we know already—. It’s interesting, for example, the findings of the national survey that was commissioned. One of the things that that survey did support was our basic premise that childcare costs—we're repeatedly told by parents—are one of the main barriers to re-entering work and employment. Even the feedback that we have now from the early implementer schemes shows that that is having an effect by allowing people more flexibility. And I know we’ve said this before in terms of this committee: we're having parents telling us, with the early implementers, that they now have the freedom to adjust hours, to expand their hours, or to spend more time with their families, and releasing money into their family, as well, in disposable income.

So, why aren’t those kinds of issues reflected on the face of the Bill?

Because we're still in the first year of the early implementers, and there is a roll-out of this by 2019-20 for the full roll-out. We're deliberately staging that in a phased way in order to learn the lessons. So, as we learn those lessons, and as we have the evaluation this autumn, we will incorporate those lessons into the regulations, but we'll also incorporate those lessons beyond the regulations then into the actual administrative scheme that underpins this—the even granular detail of it. So, it gives flexibility. What this Bill does is, whilst it sets up the mechanisms with HMRC, it allows us to come back and tweak. So, for example, qualifying criteria, appeals, penalties et cetera. It allows, through lessons learned within this, not to come back to primary legislation, but actually to come back and adjust through secondary legislation, but using the affirmative procedure. But we come back to your first question: the premise here is that this Bill is to put that national mechanism in place. We were asked the other day, by the way, in front of a different committee, 'Well, why do you need to do this now? Why can’t you leave this for a couple of years?', and the answer is very straightforward: if we don’t do it now, this will not be in place in time, with the detailed discussion we need with HMRC to allow the full roll-out in 2019-20. So, this part has to be done now in advance of the pilots, the lessons learned and so on.

Okay. I won't go into subordinate legislation because I’m sure other committee members will want to raise those issues. The explanatory memorandum sets out the consultation that the Welsh Government has undertaken on the childcare offer, rather than what's on the face of the Bill. It says that it's not appropriate to undertake consultation on a draft Bill, given the technical nature of the Bill and its limited appeal to the wider public. But how, then, can you be confident that the variety of stakeholders who might want to have an input into the Bill will have that opportunity?

It comes back to the nature of what this Bill is, and what it seeks to do. So, as we’ve said already, the explanatory memorandum sets it in its wider context, but it makes clear that this is a technical Bill. So, on that technical Bill, we know already exactly what will need to be delivered. For example, at the moment—and I know we’ve discussed this with the committee before—in the early implementer authorities, where it’s been done local authority by local authority, a welter of information has to be provided by parents—birth certificates, records of employment—and modifying that as the offer goes on. But we know that what this Bill intends to do is set this on a national footprint, using HMRC as an agent, although it allows us, by the way, to change that in future, if we wanted to do it through the WRA—the Welsh Revenue Authority—in future, if it was fit, or set up a separate one. But it’s very, very technical in that regard. So, we didn’t need to consult any further on the technical aspects of what we need to do to set this up with HMRC, which is what this Bill is. What we do need to do is learn the lessons, and we did consult on the wider offer, but learn the lessons on the wider offer as they come through. But it doesn't affect, curiously, this technical Bill.

But the manifesto commitment is very clear and precise. So, why would you need scope to change that?

Because of things like eligibility criteria for parents. If a Minister decided in future—. If, in future, you or Julie or Mark or Llyr were sitting in this place and said, 'Actually, we've learnt some lessons around this, we haven't quite got the eligibility criteria correct', if we didn't have the flexibility on this Bill to come back and do that through affirmative procedure with secondary regulations—so, there'll be an opportunity to vote on it—it would mean coming back to look for the opportunity for primary legislation, and we all know what a challenge that can often be.

So, this is designed to give that flexibility on things like that, or penalties or appeals procedures and so on. So, we feel it's quite an effective—. It's always difficult to get the balance right on a Bill, but we think the balance is right here, because I'm almost saying to you, 'We anticipate we will learn lessons.' There will be modification, even as we roll it out, because that's what these seven authorities—which will go up to another seven in the autumn, which will be further expanded. As we learn the lessons, we can modify this technical Bill.

Are you confident the arrangements in the Bill for administrating and operating the funding will be acceptable to providers and parents?

Yes, indeed. That has been part of the lessons we've already learnt, which have informed us in going for this particular option, because there were other options on the table. We could have ignored this, frankly. There is, in fact, a default position; if this were not to go ahead, we could continue to go on in the way that we are currently—individual local authorities, a welter of information being provided by parents, complexity of appeals situations, who is a special case, et cetera. We could do it in that way. But, it's complex, it's bureaucratic. The feedback we're having from both parents but also from providers and local authorities is, 'We're doing it and we're learning, but can you give us a clearer, simpler, national way to do this?' 

So, we've already learnt that, in terms of the feedback on the administration of the scheme, there is a real preference to get to an all-Wales national approach that will take away the complexity and bureaucracy. That will allow us, for example, within this scheme as well, to set up not simply the more straightforward approaches of data sharing and data collection to deal with the largest bulk of parents and children who qualify, but also the exceptions. So, a separate hotline can be developed where you can actually deal with those people who fall just outside but need a bit of discretion. It's within this scheme, but it's national.

So, we know already that the preference of our providers, the parents and the local authorities is, 'Please move us a way towards something that looks more like this on a national basis.' Simpler, cleaner, less bureaucratic, real-time information so that parents don't have to constantly scrabble for last month's pay slips, or parents who can't find the birth certificate—this deals with it. 

Okay, Llyr, on this.

Yes, I'm not sure that we've ever seen a Bill that empowers Ministers through regulation as much with so little policy constraint on the face of the Bill before, as an Assembly. You keep referring to, 'This Bill is about enacting the offer.' We know what the offer is, but of course the reality is it's about enacting an offer. There's no guarantee, is there?

The thing that helps us in this, Llyr, that does make it different, is we're not starting from a blank sheet on this. We can actually see (1) the manifesto commitment, which was very clear, and I think—crikey, I've got to remember where we refer to it—but, I think it may be right at the beginning in section 1 of the explanatory memorandum where it says exactly where this has come from and what it intends to do. But, in addition to that and the other clarity through the explanatory memorandum, it sets clearly the context of what this Bill is enabling us to do with the wider offer. We also have the statement of policy intent, which we brought forward in order to give additional clarity to it.

But, that has no legal status at all.

No, indeed, but in addition to that of course we also have the third pillar, which is we have the early implementers running and they are clear and categoric in that it is to do with that 30 hours a week, 48 weeks a year offer to parents—tweaking, modifying, adjusting, learning as we go. There is nothing of this scheme that suggests it's going to be anything else than this scheme designed towards working parents, to enable them to come back into the workforce, adjust their hours, expand their hours, boost the economic impact, both within the household and within the community. It's clearly designed to do it. So, we're not starting from a blank sheet. 

I understand that. I'm picking up on the point you made earlier about people questioning why you have tabled this now, because you're still learning. Surely you should do the testing and the piloting first, and then bring legislation forward that does include more detail in terms of the policy intent.

Indeed. I mean—

Surely it's more important to get it right than to do it quickly.

Well, the assurance I can give you is—and I think, by the way, we'll be learning because of our pilots, up to the moment we do the full roll-out—we'll be learning, we'll be refining. And that's a good thing, by the way, not a bad thing. Because in England, they had some glitches because they stepped over the bridge and just did it. Now, they're ironing those glitches out, but they're ironing it out whilst impacting, then, on the providers or on the parents and so on. What we've decided to do is learn from then, and that, by the way, is why we have confidence that this will work, because those glitches are being ironed out now with HMRC.

But this is a Welsh offer, and it is slightly different. So, if we decide in Wales that we want to tweak and adjust this as this goes forward, then I think it's right that we give flexibility for future Ministers to be able to do that, albeit within the paradigms of the Bill as we've set. But we've already learnt a lot from these early implementers, even in the first year. That's why, actually, we've come forward with a scheme. We could have gone with the current measure, we could have looked at other Wales-only solutions, or set up a new quango—not the WRA, but a new body—not a quango, a new body—to administer it. But, actually, the evidence suggests, based on feedback already, that this is the right technical mechanism to put in place.

But you don't receive the evaluation until the autumn. 

Yes, full evaluation in the autumn, and that evaluation, however, will not be to do with this mechanism within the Bill. That evaluation will be more to do with the issues over, 'Have we got it right on eligibility?' We've mentioned it in the committee before, actually, that there are other groups out there who are saying, 'Well, could we be involved?' There are other potential providers out there saying, 'Could we be involved?' I think Darren Millar, here, before, who isn't here today, unfortunately, mentioned, 'What about grandparents, and this, that and the other?' Now we're quite firm on this offer—the offer is clear—whilst this is childcare, it builds on some of the early years education. This is not simply to do with child minding—this is child development, this is socialisation and so on, and we have to get that right. So, we focused very much on registered, inspected providers because of that. But if we decided, two years down the line, five years down the line, that we wanted to adjust that, then I think we've got flexibility to do it. But this Bill isn't to do with it—this Bill is to do with eligibility and so on. It's setting the mechanism up that allows us to do it. And why do we need to do it now? It's precisely that: if we don't do this now, we won't be in a position, because of the very complex dialogue that has to go on, not only with HMRC, but also the consensus with the Treasury—. The gateway sharing of access of information with the Department for Work and Pensions and Treasury and so on allows us to get to a simplified system where parents don't have to provide all the information—the data is safely shared and provided, so we know, live time, what's happening. We have to do that now in order to be ready for 2019-20. If we leave it another six months, or another year, the risk is significant that we wouldn't be ready. And it's great to see that we have the consensus from the Treasury to work with HMRC on it. So, we're moving ahead on a tight, challenging timescale, but doing it now, so that we can manage.

Thank you. John.

In terms of the central mechanism for administering the offer, do you have any evidence that you could point the committee towards in terms of delivery through the HMRC as being the best option?

Yes, I think we do. I mentioned the fact that initially they had some glitches, but I think they now have—. How many thousands?

It's 380,000.

They have 380,000 children now within their system and those glitches are being ironed out—they've been ironed out. So, it's working well. We thoroughly considered the different options, as I alluded to already, John, and we came firmly down on the decision that, in terms of providing that national, simplified approach, this was the right one. But it was also based, I have to say—and I draw your attention to the RIAs, as the most cost-effective option as well, which carries the least risk, as long as we proceed on time with it. If we leave it too long, it increases the risk of not being able to deliver this. It doesn't, by the way, mean that we've ruled out other options in future, as I mentioned earlier. It does allow us the flexibility within this Bill to actually change the option if we wanted a different delivery mechanism. But it's been running for almost a year—the HMRC childcare service. It already exists. It can be expanded now, we know, to incorporate the Welsh offer quickly and cost-effectively, so we feel, John, that based on the knowledge of what is now working with the HMRC model, we've got good confidence that this will work for us, that it can be done on time, and it won't involve us spending huge amounts of money, although there is a cost to this. We're using HMRC as an agent, of course, but it is more cost-effective than setting up our own administrative scheme to do it. 

In terms of England, though, the explanatory memorandum states that HMRC is considering feedback on the application process that they're administering, which seems to suggest that there hasn't been any meaningful evaluation to date. So, it's not really possible to draw anything from their involvement to date in terms of actual hard evidence, is it? 

The engagement that we've had, and it's been quite intense with officials, has been, I have to say, quite frank and honest as well, because one of our considerations in taking the HMRC model as our basis, their childcare service, was, 'Could we have the confidence that the glitches that they'd had in the early phase, one, were being overcome, and would be certainly overcome by the time that we were in position to be rolling out our offer?', and we've had those assurances. But, Owain, I don't know if you could add to that. 

Just to add that I think the childcare service when HMRC were setting it up was subject to rigorous testing during its development, and that included running tests with members of the public to ensure that it was simple and easy to use, and they use a number of what I think they call in the industry 'personas' to check that out. I think, as the Minister said, the service is now performing well. They do look at parent satisfaction, in terms of feedback, and I think that is now above 80 per cent since early 2018, so things are improving. But I think HMRC, like anybody else that's running a digital platform, continues to look at ways it can improve the customer journey and so on. That will certainly be part of our work as we enter into more detailed discussions with HMRC in terms of how they implement and design what we need for the Welsh offer. 

But we are glad, John, that they are doing this feedback loop, because we'd like to see that satisfaction level raised and, when it comes to our Welsh offer, being higher. 

Okay. I know, Chair, we've covered some of the issues around what's on the face of the Bill, but I don't know whether there's any—

Just before you go on to that, can I just ask: you've referred to the feedback on the way it's working in England, but there's been no consultation on the mechanism in Wales—why is that? 

My apologies, Chair, if I wasn't clear earlier on. We haven't done a consultation on it, because whilst the offer that we're working through for the early implementers is in place, and we're doing feedback and evaluation on the offer, the mechanism has been very much designed to implement the offer, so the definition and the eligibility of working parents, the clearest, most cost-effective way of doing it, the feedback that we have had from the early implementers over the bureaucracy and the complexity of the current system, and that has been very strong to say, 'We do not want to provide it in this way on an ongoing basis'—to have 22 local authorities are all doing a version of administration—bureaucracy, complexity for the parents, which is part of the RIA assessment—. That has led us—it's not to do the wider offer, but it's led us to that position. 

But just to clarify, then: the feedback on the mechanism has been informal feedback, rather than any consultation on whether people want to see this implemented in this way via HMRC. 

Absolutely. We haven't, Chair, done a formal consultation on, 'What mechanism would you like to see to do it?', but it has been based on clear feedback that the current complexity and bureaucratic system that we have is not the preferred one. The preference has been for a national system in Wales—one size for Wales across the piece—and one that would take the complexity away, not only from front-line providers, but from parents, with many of these families being in quite complex situations—some of them struggling to actually provide the documentation that's needed. 

Okay, thank you. 

I just want to add one thing. I think the other important thing to remember is that parents in Wales are already using this childcare service when it comes to tax-free childcare. So, I think there is a question as well in terms of the longer term. If we were to set up a different system, and, actually, parents having to go one way for TFC and another way for a Welsh offer is something we need to keep in mind as well. 

Thank you. John. 

We've touched on what's on the face of the Bill already, Minister, haven't we? But in England, of course, on the face of their legislation, their childcare Act, there is that provision for the 30 hours a week, 38 weeks of the year, childcare for working parents on the face of their legislation. I heard what you said about some matters being of a nature that requires flexibility, making them more suitable to be dealt with through secondary legislation, such as eligibility criteria, for example. But in terms of the basics, if you like, 30 hours a week, 48 weeks of the year, for three and four-year-old children of working parents—why is that not suitable to be included on the face of the legislation?

I can be very frank and honest with the committee. The offer is the offer. It is that 30 hours a week, 48 weeks of the year, for working parents, along with the criteria that will come forward, and so on and so forth. But, John, it may well be that in future, a future Minister says, 'Well, actually, we've learnt that there could be a different offer, an improved offer, something different, something that will reach further.' Now, I'm not giving that commitment now today, but I think it's interesting to bring forward a technical Bill, in the context of the wider offer, that allows that freedom, albeit with votes here on the floor of the Assembly, under affirmative motions, that could say 'Well, we'll come back with something that we have learnt, but could actually have an even greater impact on working families, which could do more.'

Minister, it's also possible that a future Minister might decide that it's not possible to do as much as you're currently setting out due to affordability of delivery. [Laughter.]

So, you're talking about a de minimis level. [Laughter.] All I can say to you on that basis is: we've made clear repeatedly our commitment, not only to fund this and the fact that we have confidence in the funding we've set aside, but to make sure that the funding is there for this full roll-out. I think it's advantageous, different from the England Bill, which is now prescribed on the face of primary legislation—that is it, that's what you've got—that actually we could come back here and actually decide in Wales we want to do something different and even better. And I do not make any commitment to that today. I don't, because we know what the constraints are and so on. But I know this committee has equally been interested in what further we could do, where we could go in future, and it's the right thing that any policy makers or policy shapers should be thinking, 'Well, where next, then?' And I would say this Bill offers that degree of flexibility.

I understand what you're saying about de minimis, but all I can say is, from this Government's perspective, and from the Assembly who've supported this, the commitment is absolutely clear, and the commitment and the funding is absolutely clear to deliver this offer, but it does allow that flexibility in future, should we decide to do something different, with the support of the Assembly. This can't be done by Ministers on their own. This would require coming back under affirmative resolutions and seeking the support of the Assembly to do it. And that applies as well, by the way, if a future Minister of any political party came back and said, 'We've had enough of this; we're going to cut it to five hours a week.' They'd have to put it through this Assembly first, John.

Thank you. Llyr.

But that's not necessarily the case, though, is it, because a future Minister might want to expand it beyond working parents? But you say explicitly 'on the face of the Bill'. So, it's through primary legislation, it's not through regulation, that we can take out that the provision of childcare is for qualifying children of working parents. Now, one suggestion made by the children's commissioner is that you actually remove the words of 'working parents' so that it does allow the flexibility that you're clearly wanting to promote in terms of freeing the hands of future Ministers and Governments to expand it. 

If we took out the words 'working parents', then you do get into the situation where this particular childcare Bill, with the HMRC mechanism underpinning it, could be a Bill that would deliver any childcare offer. Now, of course, under the Wales Act 2017, it's an interesting discussion—whether we have the ability to do that regardless of a technical Bill that is using an HMRC mechanism to deliver a working parents childcare offer. This Bill is to deliver a working parents—. It has flexibility, but the reason we're using the HMRC mechanism—and the data sharing and the data collection—is because it's designed for working parents very specifically. If there were, in future, an aspiration to do something wider, it may fall within some of the scope of this Bill, but this is designed for working parents. It may fall outwith this Bill entirely.

So, that's a 'no' then, is it, in terms of taking those words out?

Indeed. It's not something that the Welsh Government can support because this is clearly focused on working parents. I know there's—

So the suggestion is that it would be beyond the competence of the Assembly to propose a wider offer. Is that what you're suggesting, or have I misunderstood?

No, no, it's actually the—. You'd have to look, and I'm sure the committee will want to look at this in future, at wider offers. Actually, the specificity of this Bill is very much to use that HMRC mechanism, with the data sharing and so on, to enable a working parents offer. The other aspect of a wider offer—a universal offer and so on—doesn't require this Bill to actually do it.

So, when you say that future Ministers could come back and change it, it's a very qualified—

Within the definition of working parents. This is a working parents offer—. Sorry; this is a Bill enabling the mechanisms that we've put in place to provide an offer for working parents, within the definitions that we can then bring forward in secondary regulations.

Okay. We'll go on to that now, then, because I'm interested, really, in the evidence base around your stated aim of encouraging parents to return to work, particularly mothers et cetera, and particularly this offer that targets three to four-year-olds, of course, which is your stated aim, although we'll have to wait for the regulations for confirmation.

The Government's own national childcare survey for Wales, which was published this year, says that

'Requirement for childcare is highest between the age of 1 and 3.'

For children aged nought to two, parents found it more difficult to afford childcare—over half of those—than for those with children aged three to four, where around a third said they couldn't afford it.

I've also raised with you previously the Public Policy Institute for Wales's work, which was commissioned by the Government, which looked at the proposed policy, and concluded that it—and I quote again—

'Would not have 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.'

So, I'm just struggling a little bit with finding that evidence that this is the right offer to achieve your own stated aim.

I think you're arguing here for the flexibility that's within the Bill, Llyr.

Well, no, because you say it's for working parents, and I need to understand why.

It's limited to working parents, but one of the things you were citing there was the aspect of working parents at a younger age—two-year-olds or even within the first year and so on. It's a good discussion to have, it's an interesting discussion. It's beyond the offer that was in this manifesto commitment, which is what we are delivering within this offer. But let's be absolutely clear that in extending this offer, in addition to the early-years education offer—the foundation phase offer—what we are doing is taking it a year earlier to those three-year-olds. But it doesn't take it all of the way down to years two and one. The costings that we've done for this, and the manifesto commitments, are very clear—it's around this particular offer. I think I'm right in recollecting that, to the best of my recollection, most of both the UK and the Welsh manifesto offers were also shaped around three and four-year-olds—that's what they were doing. So, curiously, we're not out of kilter on this.

It may be in future that this committee—that the Assembly as an entity—wants to look at extending offers, but it isn't what this offer is to do. I know we're talking beyond the technicalities of the Bill here, but it isn't what this manifesto offer is designed to do. But, we are bringing it a year earlier to three-year-olds on top of the foundation phase, and that is a big step forward.

Okay, despite the evidence suggesting that, maybe—. It's a substantial investment, isn't it, £100 million, estimated. To get the biggest bang for your buck, some evidence might suggest that, actually, it should be targeted at slightly different groups.

We're aware of the evidence that you refer to. We're aware of the national survey for Wales as well, which was published back earlier this year. But one of the things that they did flag up was, of course, that this barrier to working through absence of state-supported, funded childcare was a significant barrier. Well, that is a barrier for three-year-olds as well. So, this is a big step forward, and it does reflect broadly where the political parties were as well before the last election. So, it is a step forward, but, as I say, in that wider debate going forward it's not something that we close our ears to—it genuinely isn't. And we have funding constraints. We have an offer on the table now, and it is funded and it is deliverable, but in that wider debate going forward about, actually, where would the evidence take it, we're interested in listening to that—we are. And it is interesting in having a Bill designed around working parents that gives us the flexibility to go further should we want to and should funding allow in future. Now, that isn't, though, Llyr—. I'm being perfectly honest what this offer is about: this is a manifesto commitment. But I've always been a big supporter of saying, 'Let's see where the evidence takes us'.

Okay. Could you confirm to me, then, that a couple, parents, earning between them £199,000 a year would be eligible for free childcare under this offer?

Technically, yes. 

And, of course, the most disadvantaged from workless households would not. Is that fair, really?

Okay. Well, first of all, we do have some knowledge of what's going on already. Even though we won't have the full evaluation until the autumn, we have been monitoring what parents, what families are actually taking up this offer. In technical terms, in theoretical terms—. Not in theoretical terms. In technical, practical terms, you're absolutely right in your analysis of the wealthier families who could take advantage of this, and there are all the questions around how universal do you want to make an offer for working parents. But, interestingly, around 60 per cent of those parents who have accessed the offer so far are earning less than £26,000. So, that's the average salary for Wales. It's no more than 5 per cent—one in 20 of the parents—who are earning more than £52,000. So, the evidence we have at the moment is that, actually, this is really going towards, in shovel loads, those who need it most.

Now, there will be more affluent families, I suspect, who will take this up, of course there will, and there will be a debate around—. I mean, we've chosen, for example, to go where the current cap is, and there is an issue on this to do with speed and efficiency and necessity and engaging with HMRC on saying, 'Can we move to a system where you're willing to do the system for us?' The more complexity we add into it at this situation, the more it increases the risk on delivery on time, but it does allow the flexibility if we need it to come back in the future and say, 'Well, we want to adjust the cap on this' and whatever. If, Llyr, it also shows that, first, the evidence says it's worth doing it, and secondly, the cost-benefit analysis is right—. Because there would be a cost in adjusting a system to deliver a lower cap to £80,000 or £60,000 or £40,000 or whatever. We have run some of the figures past this, and at the moment, both in terms of delivering the offer as it currently is, of getting in to the HMRC in a very fast, slipstream way to deliver this commitment—we can do that now, but some of that flexibility I was talking about is enabled within the Bill that if we thought, based on the evidence, 'Well, it's going disproportionately, unfairly, to higher earning families' we could look at that in future.

Julie, on this point.

Just on that particular point, and bearing in mind the limited nature of the manifesto commitment and despite the fact that it's an easier way of going into HMRC, wouldn't you say that there were some advantages in having universal provision within those limits?

Julie, you're tempting me to stray beyond the manifesto offer once again.

No, no, but what you were saying in response was that we can look at it again and look at a cap, and all this sort of thing. I was just saying: would you see there were some advantages in saying that it's for a wide range of working parents?

Julie, I'm tasked with delivering our clear manifesto commitment. However, we'd be interested in the deliberations of this committee on wider offers, more universal offers, and how they could be provided and how they could be funded.

Okay. Thank you.

Llyr.

You're constantly telling us that this is about delivering your manifesto commitment, and I respect that. But, for me, there's a question about whether that commitment should have been tested a bit better before becoming a commitment, because clearly you're testing it retrospectively, to a large extent, in telling us that you're learning as you go along, and this, that and the other. I'll just read to you, if I may, very briefly, a few comments from the children's commissioner's evidence to us as a committee, in response to this Bill:

'Not only is this Bill likely to disadvantage children from non-working households disproportionately',

she says,

'it is also unlikely to achieve its main aim'.

She's unconvinced that this investment is evidence based or well targeted, and she does not believe that the policy behind this Bill shows that the scheme will be suitable for the long term. How do you respond to that?

I respond to that by saying that this Bill is a significant step forward in terms of the target group that we are aiming at, but it doesn't stand on its own, and I know that the children's commissioner will appreciate this. The wider range of support that we have, not only for employment, back into work, through things like the European social fund-funded PaCE programme, but also through the early intervention stuff—the Families First, the children's zones, the Flying Start programme, the Healthy Child Wales programme—all of those are actually designed to give support to families in the round, to drive literacy and numeracy and social skills and so on, which also will help in supporting the families, and give them the offer.

Now, let me draw your attention to one really fascinating example, and this is where we ought to see the future learning from this particular offer. In Gwynedd, there's a very good example of where the existing team-around-the-family approach—which I'm sure committee members are familiar with—that is a really joined-up, holistic approach, of all the services wrapping around the family. So, where they see a family with complex needs, that is being used to dovetail into the childcare offer for working parents as well. So, the same parents who are having the support from the team around the family, at the appropriate time, they're being then signposted to say, 'We think you're ready now, we think we can help you, support you, into part-time work; you're also, by the way, qualified for this'—and we're in business.

So, my response to the children's commissioner is that I don't dismiss her concerns about the fact that this really puts the focus onto working families, working parents, children within those families, and we think it will have an effect, materially, within those families, as well as extending their options within employment. We're hearing first hand from people who are saying, 'This is enabling us to have around about £200, £250 a week directly back into disposable income in the family.' But I think, if we can dovetail it with the other programmes that are already out there, this is not standalone—Welsh Government is doing a lot more in this. The programmes that we have out there have been supported by this Assembly, by this committee—it's not on its own. If we look at it on its own, yes, I'd agree entirely with the children's commissioner, but it isn't on its own.

So, you don't accept that there is a risk that's inherent in this offer that the school-readiness gap for the most disadvantaged, who will not have access to this particular offer, risks being widened because of it?

The bit that I'm really interested in—and we'll continue working with the children's commissioner and the committee and others on this—is that, on that school-readiness gap, this offer stands alongside things like Flying Start, which I know this committee has looked at recently, and the committee made the observation that 45 per cent of children were outside of Flying Start areas. But I equally push back and say look at the impacts within those Flying Start areas, where the gap in attainment between children who receive Flying Start provision and those who don't has been narrowed significantly when they move into primary school, secondary school and so on. If we get those schemes right—and we'll be responding in due course to the committee's report on Flying Start—if we get those, and the Families First, and the children's zones right, then there is no reason why this has to have a disproportionately imbalanced effect on one targeted group. This is a targeted offer. But we can also do the lifting up of the family opportunities of those families who are outside of this offer as well. And of course there are issues around resources, about how we do that, and we're always struggling with that—I'm frank with you. But we are doing our damnedest to make sure that those programmes as well, in all parts of Wales, also give the children and the families those opportunities.

So, I would really—. I'm hoping to be visiting shortly the Gwynedd team around the family model, because I think that shows a very clear way of how you don't have stand-alone programmes—you dovetail things, and that's one of the lessons of our early years programmes over the last few years. We've done some tremendous stuff; I think we are well ahead of our neighbouring nations in what we're doing, but one of the things we can do better is make them a bit more seamless, bring them together in what they're trying to achieve. And that seamlessness of getting people into work, well, there are clear opportunities here. So, it doesn't have to be as the children's commissioner is saying, but I accept her challenge about what we have to do outside.

Thank you.

Okay, thank you. Just before we move on to Michelle, if I could ask, Minister, if we could have a note on the figures that you gave around family incomes of the people using the pilots, I think the committee would find that helpful. 

I'd be really happy to. 

Michelle. 

Thank you. Good morning, Minister.

Good morning.

Could you explain to us why it's appropriate for what you refer to in the statement of policy intent as the core details of the scheme to be in the administrative scheme and not on the face of the Bill?

Yes. So, if this Bill is purely the technical primary legislation that allows us to set up the gateways and so on and so forth, that will then be followed with the regulations, all subject to affirmative procedure, with one exception, which is the actual starting date, the commencement date, because that is clear. We've said when we're going to do it; we're going to do it. But then, below that, there is a raft of other areas below that regulatory structure as well, and those are to do with some of the detailed operation.

So, let me see if I can just give you some examples of that. So, these are to do with a range of issues to do with actually running the scheme on the ground. So, for example, what does an applicant do when they receive a code under this system to confirm that they're eligible for childcare funding? What do they do? What's our advice to them? What's our guidance to them? Where do they go for support if they find that they are ineligible? What do we say to them? How do we design that? What's the information we put out there? When and where can they take up the offer? Who can deliver the offer? So, for providers, it's the clarity under that administrative scheme of who can actually offer this. One other aspect: how does the childcare element align with the universal entitlement to early education? So, the scheme will cover all the other issues relating to the running of the scheme that are not covered in the Bill and the regulations. So, regulations might well look at eligibility issues and so on and so forth, but it's the detailed running of the scheme on the ground.

So, it doesn't have a legal standing, in the way that primary legislation or secondary legislation does, but it follows through to how we implement it on the ground.

I think, really, the point is that you've got these three tiers: you've got the Bill, you've got the regulations, you've got the administrative scheme. There is so much key detail to be decided in the regulations that is subject to a lower level of Assembly scrutiny than the Bill, and the administrative scheme apparently isn't going to have any Assembly scrutiny whatsoever. Things like who is able to provide the childcare—surely that's something that should be liable to be scrutinised by the Assembly and it's not appropriate to put certain of those key details, which would be of concern to the Assembly, in an administrative scheme or even regulations, which are still subject to a lower level of scrutiny by the Assembly.

So, the details of who can provide the scheme, which parents are eligible et cetera will be in secondary regulations, but what we're talking about then is the clarity on the ground of actually translating those regulations into, 'Now, here you are: this is what you now need to get on with.' So, the administrative scheme—. All of the things you mentioned there will be set out in regulations; they'll be here for the Assembly Members to consider and vote on.

It's still a lower level of scrutiny though, isn't it? It doesn't have a fully fledged procedure as you would with a Bill.

It doesn't have the same level of scrutiny as it would have if you bolted it onto the face of primary legislation, but I would say that this is similar to the approach that was taken in the England Bill as well in terms of giving it a framework so that Ministers could come back at the appropriate level and seek approval for changes to the primary legislation. Now, there is always a question of balance, I have to say, of how much you put on the face of any Bill and how much you put within secondary regulations, but the administrative scheme—all of the criteria, the eligibility, who can provide it, who is eligible for it—they’ll be in secondary regulations. So, they will come back here, and they're all under affirmative procedure, apart from the commencement date. We did mull over, 'Well, some of these are really technical. They could be really technical details. Should they be under negative?', but we've actually gone for an entirely affirmative procedure. We had this discussion with the Constitutional and Legislative Affairs Committee on Monday as well. It will be interesting to see what they come forward with, with their thoughts, because we had an interesting discussion around, if there were much more substantive changes that came forward, would that merit other approaches—superaffirmative, although that’s an evolving concept in itself, but a superaffirmative approach, where there was more debate leading to a vote. So, we'll be interested to see what they come up with.

But the administrative scheme is purely that. It is an administrative scheme. It explains what we’ve put into the primary and secondary regulations in order for the operators on the ground then to have clarity, in straightforward layperson’s terms, away from the face of the Bill, away from the complexities of secondary regulation—here's what the scheme will do; this is how we expect you to administer it.

You have taken quite an extreme—in my view—approach to this. There are framework Bills and there are framework Bills. This is a framework Bill that gives you pretty much carte blanche to do whatever you choose, essentially, and with not a great deal of scrutiny by the Assembly.

I think the Minister’s answered that. I want to bring Julie in now.

Yes, well, just to confirm that the administrative scheme has no legal status.

Correct. Correct. It's underpinned by—is it section 1?

Yes. 

It's underpinned by section 1 of the primary legislation, but, of itself, it has no legal status.

Right. So, would you be able to make a draft of this scheme available to the committee—and the draft regulations—so that that would help us to scrutinise the Bill?

We won't be able to do that before we have, Julie, the full evaluation, which will be in the autumn. So, realistically, we can’t bring forward the administrative scheme before, probably, spring—

Yes, spring next year.

Spring of next year. So, it won't be. But what we can draw on is actually the fact that we have seven pilots out there—it will be 14 by the autumn, and more—that can actually see how this scheme is working on the ground. So, it’s not like a normal one where, in a Bill, a Minister says, 'Trust me; I'll show you what it looks like afterwards'. I’m saying, 'Trust me; you can see, on the ground, around the country, exactly how it’s working and how it’s being administered'.

So, you have no draft, Minister, of the scheme at the moment.

We will draft it. The deliberate intent here is to learn from the evaluation that will be—. The full evaluation will be coming through in the autumn. Based on that evaluation, we will then actually draft the administrative scheme that'll underpin it, and some of the regulations as well, and that’s a deliberate purpose. That's part of the reason, by the way, Michelle, why we have this in a framework, in order that we can learn from that evaluation and then bring it forward. But it won’t be, as Ministers are often prone to do—'I'll draft something up so you can see it before we get past stage 1, stage 2'. It will be properly considered in the autumn. Owain, did you—?

Yes. I was just going to say, the pilots that the Minister's referred to that are happening at the moment in the seven local authorities and we're looking to expand, there is clear guidance already in place—it's on the Welsh Government website. I think it’s around 25 to 30 pages, which deal with the exact kinds of nuts and bolts issues that the Minister talked about. So, that's available.

Can we share that with the committee?

We can share that with the committee. It's publicly available. There’s no problem in doing that.

Can I just clarify as well? It says that who can deliver the childcare for the purposes of the scheme is covered by the administrative scheme, but you’ve also just said that that will be covered by the regulations. Which is it?

It will be in the scheme.

In terms of who can, in terms of providers—so, as the Minister said, registered providers with CIW, that will be in the scheme and not in the regs. That’s currently very clear in the guidance that is out there, that only registered providers with CIW can provide the childcare.

And Ofsted.

And Ofsted, yes. Thank you.

Okay. Thank you.

But what we can do, if it’s helpful, Julie, is that we can share with the committee the guidance that's already out there.

Yes. I think it would be good for us to have a look at that.

I think we've got that, haven't we? Julie, did you want to finish?

Yes, well, the affirmative stuff, I think we’ve covered that, basically. So, have you identified any unintended consequences and potential barriers to the effective operation of the Bill?

In terms of this Bill, no. I've mentioned the fact that we're bringing it forward at this stage, because of the necessity with the timescale milestones to do this now and get it in place so we can start that complex dialogue with data sharing and building the platform, because, within this platform as well, there are things such as Welsh language aspects and so on. So, we need to do that now. 

The unintended consequence, curiously, would be that, if we didn't do this now, we would—it'd heighten the risk significantly of falling behind in the ability to deliver it. There might be some other issues around unintended consequences. We've considered, for example, the aspects of families with more complex circumstances, the self-employed, and part of this is built on what we're learning now as well. So, we know that for families with more complex circumstances, sometimes they will fall—some of them—just outside. So, we are, as part of this scheme, looking at setting up not only a helpline so that we can deal with that, but, actually, a process whereby people who fall just outside, but say, 'Well, look I'm working' and so on and so on—. And, similarly, with the self-employed, we're looking at the way in which we can make sure that those who are self-employed, particularly people who are starting up new businesses, where, very often, they do not have, within the first year, that stability of income week by week, can be provided for within this scheme as well—so, some sort of way that we can recognise the instability of that within this scheme. So, we're trying to think through those possible consequences.

Others—we can't see any other—. Unless there's something specific that—.

No, we wanted to know if you'd come across any.

We're considering aspects here to do with children with special educational needs and how they are provided for. We're looking at the consequences for children in foster care situations, how they will be provided for within the scheme. We’re looking at aspects of those people who are digitally excluded, hence the parallel helplines and the person-to-person support, if you like, as well.

We are looking at those impacts that have been alluded to already around non-working parents: where is the joined-up support and the support that dovetails into this as well? We hope to encourage parents who fall outside of this into employment as well, when the situation is right and appropriate and they have the other wraparound support.

The final part, and I know we've discussed it previously on this committee, I suspect, is around the issue of the rate—the £4.50 an hour—which falls outwith this particular Bill, this technical Bill. But, as we roll it out again, we're looking at—as we take it to different areas, including Cardiff and Swansea, for example—does that work there. We've had really positive feedback on the £4.50 rate—the fact that it's a uniform rate, the fact that it gives clarity, it seems to work—but what will happen when we go to different areas? But all of those things we're actively thinking through, day by day, minute to minute, and making adjustments as needs be. That's why, curiously—. I know that Michelle and others have said, 'Well, this is a framework Bill'. It is a framework Bill, but actually I think, based on the fact that we have stuff out there now that's actually working in the field and we are learning in live time things, this is a good reason, actually, to have a framework Bill, so that we can do proper positive tweaks and adjustments and not say, 'Here it is; this is what it's going to be—no change'. We think we can improve this.

Thank you.

Thank you. Just before we move on to Mark, then, on the issue of affirmative versus superaffirmative, given how much of a framework Bill this is, why have the Government chosen to go for affirmative rather than superaffirmative?

We think, Chair, we've got the balance right because the affirmative allows, on some technical matters as well as more substantive matters, the ability to come back here and for the Assembly to say, 'No, we don't agree with you.' But we're not closed in our mind that—. That was the interesting discussion at the Constitutional and Legislative Affairs Committee the other day: what would determine a more substantive change, and whatever? How would you define then what sort of superaffirmative model it would be? Because superaffirmative approaches themselves are a developing field within this Assembly—they're probably more developed here than they are in Westminster, I suspect. So, we're interested in what they come back with. We're not of closed mind on this, but I don't think what we would want—. Where there are real technical issues on here that are to do with delivering this offer and getting it in place, it would be heartbreaking to think that we put in place potential impediments to simply the technical nuts and bolts by developing a more complex series of debate after debate after debate, but if there was something much more substantial, well, we're not of closed mind and we're waiting to see what the Constitutional and Legislative Affairs Committee and yourselves suggest on this. But we are interested in, 'Well, how do you then define what is a more substantive one?'. Everything in here, bar the commencement date—everything—is subject to the affirmative procedure. It'll have to come back for a vote.

Very briefly, you do accept that affirmative resolutions are a take-it-or-leave-it proposal— it's, 'You can't amend; you have to accept what's on the table or you reject it all.'

Yes, which is why we'd have to be pretty confident, as Ministers, in bringing something back, that it would meet the will of the Assembly, and, if there was something more substantive, why we'd properly have to road test that before we brought it back, and it would have to be based on the evidence that we're hearing and so on, to say, 'We didn't expect this. We're coming back and suggesting that we need to make an amendment in 2021', or whatever. 

Thank you. Mark.

Minister, do the costs included in the regulatory impact assessment present a full and accurate picture, particularly given the very limited nature of the detail included on the face of the Bill?

Yes, Mark, they do. And they're in line with the Green Book procedures fully, so they're very robust. And, of course, as you're probably aware, they also take into account the issue of burdens, as well, including on parents and families. So, we're confident that these are robust. They've been well worked through, all the options within it.

Okay. To what extent are you satisfied that the Bill, as currently drafted, enables the appropriate level of financial scrutiny by this committee? The costs in the explanatory memorandum refer to the administration of the scheme and not to the implementation of the offer. Overall, are we really going to see the appropriate level of financial scrutiny?

Yes. And, I think you've rightly put the split there between the wider offer, which we've discussed previously—and I know we'll have more opportunity to come back and discuss the wider offer—and actually this Bill, this Bill being a technical Bill to set up the HMRC relationship and the data sharing and everything else described within it—this very short and narrow Bill. The costs provided within the RIA, within the explanatory memorandum, relate to the Bill, not the wider offer. Now, financial scrutiny of the offer itself could indeed be taken through wider avenues and further discussions, and we'd welcome that. But actually, for the Bill itself, the delivery of this Bill, it's robust, it goes by the Green Book and we have confidence in the figures that we have in here.

You referred to the burdens on parents, including the compliance and one-off set-up costs for them, but what about the benefits? If the parents have this HMRC set-up with that, it's a small further step for opening an account to benefit from the UK tax-free childcare. Isn't this likely to increase participation in that and to benefit parents courtesy of the UK taxpayer? Have you taken that into account?

It's not taken into account within the RIA.

I don't think so specifically, but—

But the benefit is there, absolutely. And there's the issue of signposting through this scheme to actually flag up the potential, then, for those families who want to and who can to also utilise the tax-free childcare offer. This scheme helps us, because we can signpost them to that, as well.

And will you undertake to ensure that such parents are signposted, particularly as many may be paying for top-up hours at the same provider?

Absolutely, Mark. It's been part of our discussions already. We don't want this just to be a stand-alone in any way. We want it to be used, then, to signpost parents to what other support is potentially out there in terms of childcare, but also wider family support as well.

You were referring earlier to some difficulties in the English scheme, and I think it was suggested that that's because it was done quickly, and contrasting that with your piloting approach. But, having learned that the biggest difficulty has been with the tax-free part, wasn't that, actually, significantly delayed because of a legal challenge?

Yes, it was. And you're right that the main problems were around the tax-free element, but they also had platform glitches that have been overcome now. But I think the combination of the two and the speed at which they did it probably caused them to exacerbate the challenge with the difficulties that they had at a moment in time. But this far on, now, they seem to be well overcoming those difficulties, including with the tax-free childcare element, which gives us, actually—. And it was a discussion that we had amongst our team: could we have that confidence now that it was in good shape, and increasingly good shape, and that the levels of satisfaction were rising? We are in that greater degree of confidence now.

Good. As a user, Minister, I can confirm that I'm belatedly now satisfied with it. [Laughter.]

You're one of them.

I know that you're familiar with article 3 of the United Nations Convention on the Rights of the Child, but, for the record, it states that,

'in all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration'.

In what way does this Bill take account of the best interests of children from non-working families who will not be able to participate?

It takes us back to, in some ways, the earlier discussion with Llyr in particular, but others as well. If this was stand-alone—. This is a step forward. In terms of the targeted group here, this is a significant step forward. If we didn't have the wider policies that wrap around children and families in Wales, then I would have quite significant concerns, but we do. We're in good shape here in Wales. We need to do more, but we're in good shape.

I mentioned earlier the example within Gwynedd, which I would highly recommend. We'll try and share some information with the committee around this and other models that we've seen working, where they combine with that team-around-the-family approach to build into this and where they're not purely focusing on the working families but they're looking at those families who may at some point be ready to move into working. Part of this offer is built around the understanding within 'Prosperity for All', within our national strategy, that work is a good way out of poverty as well. So, that's why we are where we are.

We also have, by the way, some exceptions within what we bring forward in this offer, what we're learning already. So, for example, even though it's predicated on the two parents or the lone parent being at work, if there is one parent that is receiving, for example, incapacity benefit, or one parent who is a carer, then this Bill can accommodate that. So it's not all to do with two working parents. So, I think there is a range of ways beyond this offer, but also dovetailing with this offer, in which we can incorporate the needs under article 3 not of the target group, but of those families outside of working families as well, and we're intent on doing that.

And would you be able to justify to other taxpayers paying for the childcare offer for parents who choose not to go out to work and otherwise might appreciate the extra free time to pursue other, potentially leisure, interests if their child was cared for and paid for by the state? Would that be a good use of taxpayers' money?

Yes, I think we can justify it, and it's partly within the explanatory memorandum and partly in what we have in 'Prosperity for All' as well. It is this recognition that, when you look at the broader context, there are several positive implications of this targeted offer. One of them is directly on the families involved, and the releasing, potentially, of disposable income within that family that could be used for other purposes. If you look at the near 60 per cent of these families who are below the average wage in Wales that are currently within the first-year offer and we already know are the ones who are benefitting from it, it means that those families below the average wage are releasing money back in that could go to things that are for their children that have a real impact on relative poverty within Wales, within those families, within the community, and so on.

The second thing is the economic drivers. Sorry, I know we're off the Bill and into the wider context, but the economic drivers behind this have recognised that one of the best routes out of poverty is through work. It needs to be fair work, it needs to be decently paid work, it needs to have the flexibility that parents can actually change their hours and expand their hours. But that's what this does, and that's what we're hearing from some parents already. For the first time, because of this offer in some of the pilot areas, they've been able to say to their employer, 'I am now free to actually take up those five hours that you've been offering me for the last few years. I can now do it'.

So it's to allow parents to go out to work to bring more money into the household. That's a positive aim of the scheme, but you wouldn't justify it in the same way if a parent were simply enjoying the extra leisure time, having been freed up from childcare.

We have had feedback that it is a positive benefit for a family where parents are able, through this offer, to actually say, 'I've not expanded my days, but what I've done is I've changed the hours that I work because I now have the access to childcare with alternative providers under this offer, Government supported, in order to do it, and I'm now able to spend more time with my family at the time when the family are there.' And we know, as representatives, that challenge. But that's been one of the—I'm not going to say 'unintended consequences' because it was an anticipated consequence, but it allows parents more flexibility, within this offer, to spend more time at the right time with their families, and that has to be good, in terms of social skills and development and the child's relationship with parents and keeping families together and so on. So, this might be quite a narrow, targeted offer, but it has benefits that expand beyond the purely working parents, I think. 

Thank you. Just to go back, then, to finish, to the issue of eligible providers, this is potentially a contentious issue, as you know, because there are a lot of calls out there for people like nannies and others to be included—grandparents. Why is it that you are dealing with the issue of eligible providers under the administrative scheme rather than regulations, which are at least subject to a level of scrutiny?

I think again, Chair, it comes back to the aspect of flexibility if this did want to change in future and not having to come back to primary legislation, and so on. But why under the administrative scheme? Because I think we are still open to discussions, and we are involved with discussions with various providers at the moment around this and we will continue to learn on it. We are focused, I have to say, on the fact that this is an offer that is shaped around quality of childcare and child development. It is not purely child minding, and it fits into the foundation phase work as well. So, it's an aspect of trying to find the right balance and flexibility on this, but, Owain, I don't know if you want to add to that.

Just to say that I think Ministers have been clear from the start that this is about registered providers because, obviously, of the quality of care provided, because of the registration process they have go through—they're inspected, they have to deliver a standard of quality, and if they don't meet that, then Care Inspectorate Wales take action accordingly. I think there has always been some nervousness around a scheme to deal with unregistered providers, because this also is around the quality of care that's provided to them. 

But we recognise that there are registered, inspected child minders, some of whom care for children of friends or neighbours, but in a registered, inspected premise, and who provide great childcare and child development as well. So, we can encompass them within the scheme. But what we do not want to do and what we will not do is dilute the intention of this, which is that it is not purely child minding. This is the wider context of that child being in a situation where they are in a good developmental context as well, with people who understand and are trained to do that, and are inspected to do that as well. It's part of that early years joined-upness rather than saying, 'It's purely child minding.'

Okay, thank you. Well, we've come to the end of our time, so can I thank you all for attending and for answering our questions. You will be sent a transcript as usual to check for accuracy, following the meeting. Thank you very much. 

Thank you very much. 

The committee will now break until 11, but can Members not rush off please?

Welcome back, everyone. Our second evidence session this morning on the Childcare Funding (Wales) Bill is next, and I'm very pleased to welcome Dr Sally Holland, the Children's Commissioner for Wales, and Rachel Thomas, head of policy and public affairs. Thank you both for attending. We'll go straight into questions, and I've got questions from Llyr first. 

Bore da. I'm just wondering—we had confirmation from the Minister that parents earning £199,000 a year would be eligible, as a couple, for accessing the free childcare offer. You say in your written evidence that it isn't being targeted to assist the country's least well-off families and their children, and you suggest or encourage the Government to consider taking out the words 'working parents' from the face of the Bill. I'm just wondering whether you could expand a little bit on that. I don't know if you heard what the Minister said in response to that—

I didn't have a chance to. It wasn't working through there, but we were trying to get it. 

Okay. He was reticent to do that, and he was coming back also to the fact that it was a manifesto commitment of theirs. 

Yes, I understand that. Okay. So, just to start, really, we know that the majority of children who are living in poverty have at least one working parent, and the childcare costs can be exorbitant for those families. So, I do welcome a reduction in childcare costs for those working families on low incomes. But overall, as you know from my written evidence, I think the policy intent behind this Bill means that this large investment has been misdirected in the way it's currently shaped, and that the same investment could be focused differently to increase the benefits for children—which, of course, has got to be my focus, and is my focus—benefits for children in their early years and reducing inequalities. 

The Government's overarching policy document, 'Prosperity for All', has a section on early years, and in that it talks about the importance of reducing adverse childhood experiences for children, which we know are particularly concentrated amongst those children in the lowest income households. It talks about the benefits for children of investing in their early years, and the importance for the Government of reducing inequalities in the early years. 

Of course, I agree with all those intentions; I think they're really important targets for the Government to be focusing on, yet in 'Prosperity for All' there are lots of broad policy intentions listed under that, such as improving support for parenting and that kind of thing. There are only two very specific promises in that section, one of which is to take away the defence for reasonable punishment, which, as you know, I agree with as a policy intent. The other one is this childcare offer. Now, I don't think that this investment, the way it is currently shaped, will achieve those aims that the Government has to reduce inequalities in the early years, and to mitigate against the impact of adverse childhood experiences in the early years. 

I think it concentrates too much on one potential benefit, maternal employment, for which the evidence suggests the impact of this investment is likely to be modest—very modest, indeed—whilst paying minimal attention to the benefits for children, for which there's much stronger evidence that investment put in the right place for these years and, in fact, before age three, we know can have a really strong impact on the prospects of children, their experiences at the time, and their longer term prospects. 

So, as you know, that is my key concern—that the policy intent behind the Bill means that, as stated as it is now, this large investment will not meet the Government's own aims. 

Because the Minister did list a number of positive outcomes he was hoping that would be achieved. Clearly, the main thrust is the one in relation to the economic activity of parents, but there was reference to child development, socialisation, and I think the explanatory memorandum talks about improving the social well-being of children, but there's no detail on the face of the Bill. So, would you like to see a greater emphasis on those aspects on the face of the Bill, or would you be content, given that the Minister was asserting that there is flexibility within the primary legislation, for some of that to come in amendments, in explanatory memorandums, the statement of policy intent and other associated documents? 

I welcome the fact that the Government's currently piloting this offer and has indicated that it would be willing to look again at the offer in the future, and including in the light of the pilot. I think that if we continue to have, as a qualifier, 'working parents' written on the face of the Bill, then, as you know, that's going to be much more complicated to change than if it was in secondary legislation. Now, I understand Members' general concerns that if we have too little detail in primary legislation, and we have too much in secondary legislation, it can be less available for scrutiny. But, obviously, there are ways that secondary legislation can be laid out that can make it more open to scrutiny, such as the superaffirmative process, and that could well be appropriate here, when we seem to have an evolving policy intent behind this. I understand the Government wants to respond to its manifesto commitment, but it is indicating that it could be open to change. I hope it will be looking very closely at the evidence, at the impact on children of the pilot studies, and therefore will be prepared to look at changing this offer, so that this investment can be better directed to achieve its overall policy aims for early childhood.

So, sorry, just to get back to where things are, I would like to see that particular change there. In terms of impact on children, clearly, I welcome the Government wanting to improve children's experiences of early childcare and I welcome the commitment to quality. But my overall point is that the children who need that most, and who we know from research evidence benefit most from high-quality early years childhood, are missing from this offer, and they are children from the most deprived backgrounds.

So, would you like the face of the Bill to be more explicit, for example, to say that it's for three to four-year-olds, as the legislation has done in England, or do you think that actually leaving that to regs is sufficient?

Well, again, I think, in terms of the evidence, we know that, actually, from age two children from the most disadvantaged backgrounds benefit from that input. So, again, I suppose I would be anxious about tying down too much any future shaping of the offer in terms of age group.

Well, that's where I was going to go next, actually. So, do you feel that, actually, three to four isn't the best age in terms of the level of investment, potentially, here? Do you think that earlier ages, or other groups, could be targeted more effectively?

Purely looking at the evidence of what works best for children, we know that for every month after the age of two, children from disadvantaged backgrounds who have high-quality childcare input, and that can be part-time—there's the same impact if it's part-time or full time, I must say—it has a greater impact on their longer term outcomes.

And that would be a greater focus for you than—

That could be more targeted on children from disadvantaged backgrounds with a more universal offer from age three. Of course, we do have that in the Flying Start provision, but we know that that doesn't reach all children from disadvantaged backgrounds.

So, your main focus would be on the longer term impact, because there is evidence that shows, in terms of affordability as well for parents, that it's parents of those between nought and two who find it least affordable, as opposed to those from three to four, for example. So, the longer term development of the child would be your main focus.

Yes, the quality of experience, at the time, for children, and what we know about the longer term impact. And we know that high-quality childcare, publicly funded, seems to be the childcare that—. The evidence in the UK has been, over the years, and still continues to be, that the best-quality childcare does have a really good levelling effect on children. It doesn't completely level children's outcomes—we know that—but it does have an impact, a good impact, particularly on children from disadvantaged backgrounds.

I can't find the quotes now, but in your evidence, you are quite—well, you're very critical of the lack of the evidence base, you're not convinced that it will achieve the stated aim in terms of Government policy. And you don't think that—well, clearly you've made the point very forcefully about the risk of widening the school-readiness gap for the most disadvantaged, and you question the longer term sustainability of the proposal in the policy. So, if the Bill is not amended in certain ways, would your advice to committee be to not support its progress beyond Stage 1?

I'm not in favour of the Bill going forward with the words 'working parents' on the face of it, because I would like to see the Government build on that flexibility, to look at the evidence and to shape their offer to give the best prospects for the wider population of children.

Thank you.

And I should have addressed you as Professor Holland, when you first came in—

That's okay; I don't mind at all.

Hefin.

Can I take a step back from the arguments for and against the efficacy of the Bill, and just reflect on the Welsh Labour manifesto commitment, which very clearly read:

'30 hours a week free child care, 48 weeks of the year for working parents of 3 and 4 year olds'.

The emphasis is on 'working parents of 3 and 4 year olds'—page 9 of the manifesto. Can I ask you to reflect, notwithstanding those arguments for and against, upon the constitutional position you have in directly challenging the wording of a manifesto commitment?

Constitutional, in terms of—?

Well, a democratically elected Government, on a very specific wording, which was in a manifesto on which they were elected—you are now challenging the wording of that. So, you've got a role to play in the day-to-day running of Government, and on the fact of what they do right and wrong in the process of care for children, but this is a very specific wording that says 'working parents of 3 and 4 year olds'. Are you comfortable about challenging that manifesto commitment?

I've expressed my concerns about this to Government since the election. They're not required to do a children's rights impact assessment on the manifesto, but they are required to pay due regard to children's rights to any policy decisions brought in as a Government. It's my role as children's commissioner to scrutinise all of the Government's policy intentions, as expressed in myriad forms, including in Bills, as to whether they pay due regard to children's rights. So, that's what I'm doing now.

I appreciate that, but this issue of the wording of the specific commitment—'working parents'—you're directly challenging that. Is that appropriate?

I think it is in my role. I think it's my role to scrutinise whether the Government's paying due regard to children's rights.

And the Minister's own evidence has been quite strong on the occasions he's been before this committee about learning lessons from the pilot. So, we would see this as part of learning the lessons, and even with the very specific commitment, if that's not achieving the policy aims that are set out, then it's important to reflect on that, particularly with such a large-scale investment, to make sure that it's targeted appropriately.

But I don't get any impression the Minister's going to change the 'working parents' aspect of it, given that he's also reflected the manifesto commitment. I again press you: is it therefore appropriate to challenge that aspect?

I can see the dilemma for Government in having made this commitment that it's very difficult to change from that. My suggestion would be, as I put in my written evidence, that the Government considers a lower universal offer with a top-up to working parents on low incomes. That would be one way of meeting much of that—

But you've got—

Hefin, I want to bring Mark in on this now to ask his questions.

Wouldn't it be more useful for you to have explained your view at the time of the manifesto, rather than ex post, when the Government's been elected and is bound democratically to deliver its manifesto?

There's not really a role for me to—. There's not really a place for me to do that. I did have discussions with all of the parties that took up my offer about their manifesto commitments in general before the election, but I don't have a formal role in scrutinising those. But as early as autumn 2016—so, soon after the election—I attended a cross-Cabinet meeting with four Ministers present, which actually the future generations commissioner had convened, to discuss the future generations aspect of this offer, this specific offer, and in that meeting, that early on, I expressed, in private, my concerns about the potential impact of this offer on children from the most disadvantaged backgrounds. So, I've been expressing this all along. It should be no surprise to the Government that I'm concerned about it, and I think it's entirely my role to make these points.

Did the Labour Party take—

Mark, I don't want to—I think we've asked about this now, so can you ask your question, because we're not here to scrutinise the children's commissioner at the moment? We're doing—

I think there's one very relevant point. It'll be a very short question: the children's commissioner said that she met with parties that took up her offer and I just wonder, in the circumstances, whether the Labour Party took up that offer.

I don't recall. I think all the parties except UKIP did. That's my memory, but I would have to check that.

What needs to change on the face of the Bill to deal with your concerns, from the legislative perspective of this committee?

My main change that I'm looking for is to remove the term 'working parents'. I understand why the Government needs to bring forward a mechanism to be able to pay parents or to pay for childcare in the most efficient way, but I would like to see the potential for flexibility going forward in terms of looking at the evidence from the pilots and considering whether they can change the offer to make it available to more children, especially those who would have the most advantage from it.

Did I understand, from what you said before, that you are not quite sure whether you would recommend that this should be on the face of the Bill or whether it should just be what the Government should do afterwards? Are you proposing a universal offer, but then allowing working parents to have more of that than non-working parents? Wouldn't that play into the very concerns that you've been raising?

The 48 weeks a year, 30 hours a week is very generous and is a lot of childcare. Almost inevitably, where two parents are working full time, they will need to purchase more alternative care for their children than parents where only one is working or none are working. So, I would expect people to often have to have more childcare than others. But we know that once you get over a certain level, the amount of hours has less of an impact on children than a certain level of part-time, but whether it's part-time or full-time has less of an impact, but I think that 10 hours at the moment is a very small offer to children and more would have more of an impact.

In pressing your view, are you looking at and learning from the pilots as they go on? Because we've heard from the Minister, at least anecdotally—I look forward to seeing what he has consequently to back this up—suggestions that the programme is leading to much better results in terms of getting people into work than perhaps what seemed the relatively low levels that we were looking at in the Organisation for Economic Co-operation and Development study. His feedback to this committee has been significantly more positive. Is that something that might make you reconsider your position?

Getting parents into work and getting mothers into work, which is in reality often the impact of offering childcare, is good for families and is good for children, in terms of reducing poverty and in all sorts of other ways: role models for children and the mental health of mothers. So, that would be a very welcome development from these, but I suppose my main point today is that that's only one policy intent and not enough attention is being paid to the experiences of children here.

In terms of other lessons—and again it's anecdotal from the evidence until we see the phase 1 report—we've heard that the take-up is lower than has been expected, and so we would want that to be explored as well to see whether there's any ability to flex the policy, and whether that's to make it a more universal offer or to change the number of hours, but it's certainly not been the take-up that's been expected on the—

The Minister has been saying that the take-up has been a lot higher amongst lower income families, and speaking in terms of equalities, but isn't it actually those better off parents, perhaps where one is earning a high salary, who aren't eligible to benefit from this offer, but are relatively well-off in any event and are happy to run their family budget on one salary?

Sorry, I didn't quite follow the question.

Well, if there's one parent who's earning a good sum of money, you know £80,000 is a good example, and the other parent is staying at home to look after the child, they're not eligible for this offer and the take-up is reduced by that. The implication of that is that the resources are going disproportionately to lower income families rather than those higher income families where a well-off single earner can't have their child benefit because the other parent stays at home to look after them. Why would it be in the taxpayer's interest to pay for that child instead to be in childcare?

Well, we know that take-up of policy offers tends to be better when it's universal than when not, so that would be one argument for making it universal. We also know that children from disadvantaged backgrounds thrive particularly well in early years provision where there are mixed socioeconomic backgrounds, so again that's another good reason for making it universal. So, those families wouldn't currently get it, yes, I agree with that, but for me, at the moment—. I'm not at all against it being—. I would like it to be universal, and when I talk about the high-income families benefiting, that's only a concern for me, really, because some children are also missing out. If it was universal, then I wouldn't have any concerns about that. 

And a final question from me around the equalities aspect—we didn't make much progress with the Minister on this point—the issue of summer children where there's evidence that, on average, they don't catch up for much of their educational career. Isn't there a danger that this policy is going to be providing five terms of this enhanced childcare for the older children within the year, but only three for those summer-born children, and won't that further accentuate the inequalities, depending on what time of year a child is born? 

I think there's a whole other debate to be had as to whether we should keep a rigid expectation for summer children to start full-time school in September. I think, for me, that is a debate to be had about equalities, but here—

But, given the current situation, should we accentuate it by giving five terms of this offer to the older children, but only three to the younger children, who are already disadvantaged by starting school sort of younger within their cohort?

I think that would be something that the pilot study could perhaps look at and get feedback from families as to the impact. 

Thank you. Julie. 

I wanted to ask you about the children's rights impact assessment. I think you were quite robust in the evidence you provided about that. So, do you think there should be a revised impact assessment published? 

We'd expect children's rights impact assessments to be dynamic documents that should be revised as new evidence comes forward or at different stages of the legislative process. We'd certainly expect it to be revised following the pilot. The first pilot study report is due in the autumn—is that right, Rachel? So, that would be an ideal point to review the children's rights impact assessment, as would the time when they're going to put forward regulations to accompany this Bill. I would expect to see a full CRIA again at that point, and really one that addresses all rights and the needs of all children, which as you know is what I feel is missing from the current one.  

Yes. And so, could you go through again your reasons for feeling that the current one is not adequate? 

Well, I'm concerned that although the CRIA does mention some general policy intent at the beginning, it then treats that policy intent very lightly in terms of saying that this is really just about the mechanism for paying parents. I'm particularly concerned that it doesn't address article 2, the right for all children to be treated equally, and one of the ways in which they shouldn't be treated unequally is on the status of their parents' employment. I'm just going to find the right page of my—. The other article I feel is glaringly unaddressed is article 29—the right to be assisted to achieve your potential. And again I feel that, by only concentrating on children who will receive this offer and not on children who will be excluded from this offer, it doesn't address the fact that it's not assisting children from the most disadvantaged backgrounds to achieve their potential.

And what about article 3?

Yes, absolutely, the Government must make decisions that meet children's needs and put those first. So, as you know, I feel this whole policy intent behind this doesn't do that for the most disadvantaged children.

There is just one line in it that says all advice to the Minister has ensured that the best interest of the children is flagged up, but there's no detail as to what that looks like and which children.

So, basically, you think it's inadequate.

It feels really thin to me in terms of looking at the whole of the impact for children of this age group.

Thank you.

We put this to the Minister in the previous session, that, actually, it's going to disadvantage some of the children that we most want to help. And his argument was that that would be the case if it were not for the fact that we have other things, like Flying Start, for those children. How do you respond to that argument?

As this committee is very familiar with, we have concerns about the reach of Flying Start and, particularly, I would be concerned about the other half of children who are living in poverty but not able to access Flying Start provision at the moment. So, I think the Government need to address that point.

Okay. Thank you. John.

Thanks, Chair. Sticking with the children's rights impact assessment, do you consider it to be sufficient in terms of the extent to which it addresses the potential impact on particular groups of children, such as Welsh-speaking children or children with a disability?

My memory of it is that it's quite light on those aspects. I felt that it could have paid more attention to both of those aspects. There is also a Welsh language impact assessment as part of this and it's got some aspects missing.

From the children's rights impact assessment, there's no assessment of different groups of children at all—it's all completely generic. But it does refer to the other impact assessments. The equalities impact assessment only refers to disability in terms of parents and whether or not they can access an online system. It doesn't talk about additional needs of children and the benefits of childcare for them. And then any other categories, such as ethnic groups—it says that there's limited data available and that this is being collected and evaluated as part of the pilot. So, that's another reason why these impact assessments are so important and that the information may not be there at the moment, which is why it then needs to feed into the development of the Bill and the regulations further down the line.  

We thought that the Welsh language impact assessment could have mentioned the extra funding that's been given to Cwlwm and Mudiad Ysgolion Meithrin in regard to expanding Welsh language provision. 

Again, that assessment only focuses on whether the system itself will be available in both languages and not on the reach or availability of Welsh language provision itself.

Okay, one further question from me in terms of the legislation generally. Do you foresee any potential difficulties arising from unintended consequences that it might throw from its enactment?

Of the Bill itself?

Yes, of the Bill itself.

I think, for me, the unintended consequences will be around the potential negative impact on children who miss out. I've already rehearsed what those arguments are. Do you have anything to add to that?

It's the increase in the school readiness gap, particularly, that we would see as an unintended consequence of that.

Okay.

Thank you. Michelle.

Thank you. Good morning. The Bill is very wide. It leaves pretty much 100 per cent of the detail to regulations. You've said that you think this is appropriate. Why do you consider that it's appropriate that so much of not just the basics of the scheme are being left to regulations instead of being placed on the face of the Bill?

I suppose because of my anxiety about the offer as it stands, in this instance I would support more going into the accompanying secondary legislation, because it would provide this Government and any future Government with the flexibility to look at the early implementation and to be more flexible, and to change the offer according to evidence. 

Leaving the detail to the regulation—. I completely understand the principle. It gives the Government a lot of flexibility, but by the same token, do you think that gives the Welsh Assembly sufficient opportunity to scrutinise what the Government are prepared to do, given the fact that the regulations are subject to a lower level of scrutiny than a fully-fledged Bill?

I suppose it would entirely depend on the status given to the secondary legislation, and if it could be made subject to superaffirmative processes then there would be an opportunity for consultation—a consultation period—and for more scrutiny by Assembly Members.

Particularly given the timing of the introduction of the Bill and the fact that there's so much yet to see from the pilot phase, and the reporting not coming until the autumn, then I think that might be a justification for using that superaffirmative procedure. There's a lot more that needs to be taken account of.

Okay, thank you.

So, just to be clear, you would like to see it subject to superaffirmative.

I think that would—. Because so much of the detail is not going to go on the face of the Bill, it feels to me like the most appropriate level for it to be set at.

Okay, thank you. Llyr.

I've got a feeling about this whole Bill that the Government is retrospectively testing its own manifesto commitment, because they're laying a piece of legislation before knowing, really, what exactly they're going to do with that legislation. Is that the right approach to legislating for this kind of offer?

It's not for me to comment on the Government's thinking behind this, but as I say, I would like to see a different offer altogether.

Yes. But do you believe that the piloting, the testing and everything, and the learning that is taken from that, should be done before legislation is tabled? Because, I made the point earlier to the Minister that it's more important to get it right than to do it quickly. Now, I understand that he feels there's a pressure to deliver on a manifesto commitment within the term of this Government. People outside of here might say that that's an example of politics getting in the way a little bit, but how do you gauge that dilemma?

Obviously, the ideal way to make legislation is to look at the evidence before the policy is developed, then to pilot, then to learn from the pilot, and then to finalise—that would be the ideal way to do things. Obviously, the timescale of the parliamentary cycle does make it difficult, often, for Governments to do things in the ideal way, but the way I've laid out would be the ideal way to do it. We do know that the early findings from the pilot will be available in the autumn, which isn't a long way off, so—.

But it may be that we will have concluded our deliberations around Stage 1 before that formal evaluation is available.

Absolutely.

Okay. Could I just—? One other point around using regulation to put content in this policy: the point was made earlier, and you've suggested yourself, that having that flexibility allows, then, maybe, us to get to a point further down the line where we would like to extend it or whatever. But, of course, the opposite is possible as well. It may be that a future Minister decides, 'Actually, we want to restrict this further or reduce the hours'. So, there's a danger in that as well, isn't there? 

Yes, I can see that is a risk. I suppose the role of this committee is particularly to look at all of the potential permutations of how the Bill is structured, and I suppose it’s my role to say what I think should be in it in terms of what would best meet the rights of children.

So, the point I’m making is that the more information we get on the face of the Bill actually gives us that certainty, and it's regrettable that, because the Government is still piloting and learning, we can’t have that certainty until potentially the decision has been made to give Ministers those powers.

Okay.

That's what I'm saying—[Inaudible.]

Yes, okay.

Okay. Thank you. Were there any other questions from Members? No? Okay, well, can I thank you both for your attendance this morning, and for answering all our questions? You will be sent a transcript to check for accuracy, following the meeting. Thank you both very much.

Okay. Item 4, then, is papers to note. Paper to note 1 is a letter to the Cabinet Secretary for Education regarding the school organisation code. Paper to note 2 is a letter to the Minister for Children and Social Care on the children and families delivery grant. Are Members happy to note them?

Item 5, 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? Thank you.