Education (Scotland) Bill: business and regulatory impact assessment

Costs

Qualifications Scotland

SQA’s forecast costs for the 25/26 financial year (the anticipated year in which Qualifications Scotland will be established in Autumn) across both resource and capital is currently £58.336m. This figure assumes a flat cash allocation for operational costs with uplifts for staff pay. This figure is directly relevant to options 1, 2 and 4. It would be assumed that these costs would form part of the costs associated with option 3.

Option 1 – Do nothing.

This option presents no new implementation costs, and it would see current

levels of funding being maintained.

By doing nothing, the non-monetary cost of not replacing or reforming the SQA is that concerns identified within the system would not be addressed. These include low trust in Scotland’s national qualifications body; lack of opportunities to involve learners, teachers and wider stakeholders in governance of the organisation; and the wider cultural concerns associated with the organisation and across the education and skills system. There would be limited opportunities to improve areas and services that impact the different businesses and organisations that work with the SQA.

Option 2 - Reforming the SQA without replacing it.

This option would see current levels of funding maintained for the delivery of SQA’s existing functions. The extent of any additional financial cost would be dependent on the prioritisation of specific reform activity being taken forward and the implementation of these as part of the reform programme. This may require new funding to support reform and/or activity supported by a re-prioritisation of the SQA’s current funding.

Alongside the financial costs associated with this option, there are non-monetary costs of not replacing the SQA. These include the opportunity to strengthen the body’s governance through robust legislation – particularly in respect of ensuring independent decision making between awarding and accreditation functions. This particular aspect risks the confidence and trust of businesses and awarding bodies in relation to the integrity of decisions taken across the two different functions.

It also means the identified concerns – such as reputational damage and a lack of trust in the SQA brand from certain stakeholders – would not be sufficiently addressed in the absence of strengthened governance arrangements underpinned by legislation. There is a risk that any alternative reform would be perceived as weaker and fail to improve trust, service delivery and stakeholder engagement. This would be amplified by the risk, and associated perception, that SQA is effectively reforming itself – a concern already expressed by the public and the Scottish Parliament.

Option 3 - New Curriculum and Assessment Agency.

From the initial appraisal of the benefits and non-financial costs of Muir’s option, it was concluded that this option would not be pursued, and so the financial costs were not assessed in detail. However, it was anticipated that costs associated with this option would be higher than for all the other options.

For example, greater one-off programme costs, and a significantly longer programme of design and reform, would be needed to create a new body with a completely different remit to the predecessor bodies. Additional resource, including financial costs would be required to design new structures, facilitate staff and property transfers between different status organisations, develop and design products and services that aligned within the organisation’s expanded remit, as well as the creation of shared services to support the organisation’s corporate arrangements and operational delivery.

There are other non-monetary costs and risks with this approach. In his review, Muir highlighted that a single agency with a large and extensive remit may add further complexity to the national education landscape. There is a risk that it misses the opportunity to simplify the landscape as the OECD recommended. The benefit of having organisations with clearer, more focused roles and responsibilities that address the current needs of the system outweighed the benefits of a single body.

Finally, there were some potential governance and accountability risks with this option. For some parts of the organisation, such as qualifications and accreditation of qualifications, a public body with a closer relationship with Ministers would not have been appropriate. Similarly, parts of the organisation that need to align closely with Scottish Government policy development and Ministers, such as curriculum design, may have been negatively impacted if that relationship was weakened in a different type of public body.

Option 4 - SQA replaced with a new and refocused qualifications body.

This option would see the SQA replaced by Qualifications Scotland. The costs are set out in detail in the Education (Scotland) Bill Financial Memorandum. In summary:

• Qualifications Scotland’s costs for 2025-26, including savings from the cessation of the SQA, are estimated to be between -£0.268 and £1.555 million. This reflects total savings of between £30.268-35.366 million against £30.000 - 36.921 total costs:
• One-off costs on staffing (£0.514 - £0.629 million), branding/website (£0.325 - £0.458 million) and costs associated with staff transfer, such as the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) (£0.200 - £0.400 million) amounting to between £1.039 - £1.487 million; and
• Recurring costs on staffing (£29.310 - £34.263 million) operational (£24.827 - £31.941 million), and estates (£2.409 - £2.944 million) minus recurring income (£27.584 - £33.713 million). Amounting to £28.961 - £35.434 million.
• Savings from the cessation of SQA on staffing (£29.310 - £34.195 million), operational costs (£26.133 - £31.941 million), and estates (£2.409 - £2.944 million) - minus a loss of income (£27.584 - £33.713 million) - amounting to £30.268 - £35.366 million.

There are also non-monetary considerations for this option. Implementation of reform becomes linked to legislative timescales and may impact on the timeline for the benefits of reform to be realised. These impacts go beyond the education and skills sector and include improved experiences or outcomes for relevant businesses and organisations that use related qualifications, assessment and accreditation services.

Furthermore, positive perceptions of the SQA brand – particularly evident within the employer, industry, training provider and awarding body sectors – would need to be carefully managed in the transition to the new organisation, whilst also ensuring the creation of a new and distinct brand and identity for Qualifications Scotland.

Office of HM Chief Inspector of Education in Scotland

Option 1

This option (do nothing) would see the inspectorate function remaining within Education Scotland. This option presents no implementation costs and would see current levels of funding continue.

However, not creating a new independent inspectorate would result in having the inspectorate function within the same body charged with supporting improvement, which could lead to an actual or perceived conflict of interest that devalues education in Scotland. Such an approach was therefore discounted.

Option 2

This option would see the inspectorate function moving to a new separate Executive Agency.

The cost of this option would be broadly equivalent to the cost associated with Option 3 to establish a new officeholder which would have responsibility for inspecting education provision in Scotland and lead the operations of the new Inspectorate. This assumes that shared services and staffing arrangements would remain.

However, as with option 1, a new separate Executive Agency was not considered to be a sufficiently viable approach. Whilst offering a non-regulatory option, it would not reach the full independent nature being sought for the inspectorate function.

Option 3

This option would establish a completely new and independent inspectorate. The costs are set out in detail in the Education (Scotland) Bill Financial Memorandum, in summary:

• The new inspectorate costs for 2025-26, including savings from cessation, are estimated to be between £1.744 - £2.864 million. This reflects total savings of between £8.380 - £10.242 million against £10.124 - £13.106 total costs:
• One-off costs on staffing (£0.334 - £0.408 million), estates (£0.000 - £0.212 million), branding/ website (£0.325 - £0.458 million) and staff transfer, such as TUPE (£0.000 - £0.282 million). Amounting to between £0.659 - £1.360 million; and
• Recurring costs on staffing (£7.147 - £8.735 million), operational (£1.959 - £2.394 million), and estates (£0.359 - £0.617 million). Amounting to between £9.465 - 11.746 million.
• Savings from moving the inspectorate function from away from Education Scotland on staffing (£6.198 - £7.576 million) and operational costs (£2.181 - £2.666 million), amounting to £8.380 - £10.242 million.