Early learning and childcare expansion

Presiding Officer, I am delighted to update Parliament this afternoon on the agreement this Government has reached with COSLA Leaders to fully fund the expansion of early learning and childcare entitlement to 1140 hours from August 2020.

This landmark agreement is the culmination of more than two years of hard work by the Scottish Government and local authorities to establish a robust shared understanding of the costs attached to the expansion. It is evidence of real partnership working to deliver a shared ambition to give all of our children the best start in life.

Responding to the agreement on behalf of COSLA, Councillor Gail Macgregor, who joined me for a fantastic visit to Cameron House Nursery in Edinburgh this morning, said:

"Local government is fully committed to early learning and childcare expansion to 1140 hours. COSLA and Scotland's Council Leaders are fully behind the policy. [This] agreement by Council Leaders in agreeing the multi-year funding deal is a culmination of months of hard work, negotiation and real partnership working behind the scenes. We needed to get this policy right from the start, together with the level of funding. I think we have achieved this by working together."

Under this agreement, the Scottish Government has committed to provide local authorities with revenue funding of an additional £567 million per year by 2021-22, the first full financial year of the expansion. This will bring annual public spend on early learning and childcare to £990 million.

In addition, the Scottish Government has committed to provide local authorities with total capital funding of £476 million over four years to support buildings projects to create new indoor and outdoor capacity to deliver the expansion.

These funding allocations will of course be subject to parliamentary approval of the Scottish Budget for the respective years, but I hope that members across the Chamber can support this truly transformative investment in Scotland's children.

The agreed funding package is the product of extensive work by the Scottish Government and local authorities to prepare robust cost estimates for the expansion.

Local authorities submitted their initial expansion plans to the Scottish Government in September 2017. Following a period of engagement, dialogue, challenge and refinement, building on the learning from an initial review of expansion plans, local authorities submitted refreshed financial estimates in March 2018.

It is these March 2018 estimates that form the basis of the package agreed on Friday. I am grateful to all those in local authorities who have worked tirelessly behind the scenes to prepare estimates and refine plans.

Scottish Ministers and COSLA Leaders considered the robustness of these estimates, and through negotiation, reached agreement on adjustments to be made to revenue and capital initial estimates in order to arrive at reasonable and evidence-based funding national totals. I am confident that the joint review process, and the compromises made by both parties, will deliver value for money.

The agreed revenue funding package is the product of an intense period of local authorities refining demand and supply estimates, and associated service delivery models, which have combined to reduce local authority estimates of the workforce requirements of the expansion.

This funding package ensures that a sustainable hourly rate will be paid to funded providers across Scotland delivering the funded entitlement to early learning and childcare. This landmark deal not only secures sustainable funding for local authorities, but also for early learning and childcare providers across the private and third sectors, including childminders. This is a critical component of our new Funding Follows the Child model.

In particular, this bears out our commitment to provide sufficient funding to ensure that all childcare workers delivering the funded entitlement will be paid at least the Scottish Living Wage from August 2020. We recognise the valuable role that our early years practitioners play in shaping our children's development, and I am proud that the funding package recognises this.

One of the most significant ways in which the expansion will contribute to closing the poverty-related attainment gap is through increasing the uptake of entitlement for eligible 2 year olds. We know there is scope to improve upon existing levels of uptake so that more children and families can benefit from this offer.

The levels of revenue funding agreed with COSLA are sufficient to deliver a near-doubling of uptake amongst eligible 2 year olds to 64%. I very warmly welcome local authorities' commitment to put resources in place to work with families to raise awareness of the entitlement and help families to access services.

We recognise that the funding package agreed last week represents our collective best estimate of the costs arising from the expansion at this point in time. It is therefore incumbent upon all of us to continue to keep these estimates under review to ensure that we maximise the value for Scotland's children and families from this investment.

The Scottish Government and COSLA have agreed to put in place proportionate annual review arrangements – to provide assurance to all parties that the funding package reflects the costs of delivery and actual uptake of the offer.

This annual review will provide us with an evidence base to consider whether this policy is fully funded – and to take action if it appears to be over- or under-funded.

The expansion planning process that we undertook with local authorities was underpinned by a primary planning principle – that authorities should make best use of existing resources, then consider purchasing capacity from the private and third sectors, then finally, if there was no alternative, build new capacity. Local authorities have applied this principle in deriving their capital requirements for the expansion.

In order to promote equity and fairness in the funding provided to local authorities, we agreed with COSLA Leaders to apply standard reference rates to local authority capital cost estimates. These reference rates reflect acknowledge the impact of rurality.

Once these reference rates have been applied, the multi-year capital funding requirement for the expansion is £476 million, which will be distributed over four financial years from 2017-18 to 2020-21. This investment will deliver around 900 capital investment projects across Scotland, including more than 100 new nursery facilities.

I was personally delighted to see that authorities are planning to make significant use of outdoor facilities as part of their expansion plans, enriching the early learning and childcare experience for our children.

As I outlined to Parliament in March, such ambitious plans always come with challenges. I have never denied that these challenges exist, and I am absolutely committed to addressing them in partnership with local authorities and other delivery partners.

One of those challenges was reaching agreement on a funding package. I am delighted that we have indeed risen to and resolved that challenge, and that has been made possible by genuine partnership working with our colleagues in local government.

Agreement of this funding package is a critical milestone in the delivery of the expansion of early learning and childcare entitlement by 2020. It marks the commencement of a delivery phase, and local authorities will now be able to progress their local expansion plans without delay.

I am in no doubt that expanding the provision of funded early learning and childcare is the right policy to give all of our children the best start in life. We must never forget that the fundamental purpose of the expansion is to improve our children's early years' experience and equip them for their lifelong learning journey. By fully funding this commitment, we will ensure that all children receive high quality early learning and childcare, in the public, private and third sectors.

I commend this landmark funding agreement to the Parliament.