Milk and Healthy Snack Scheme (Scotland) Regulations 2021: business and regulatory impact assessment

Options

In considering the outcome of the consultation, it was clear that to meet the policy ambitions of Scottish Ministers the Scheme needed to:

• Include the provision of a healthy snack item (a portion of fresh fruit or vegetables)
• Be aligned with ELC provision
• Include all children attending pre-school settings, including those who had turned 5
• Be available universally, and regardless of whether day care was provided via funded ELC provision or unfunded providers

On this premise, two options for delivery of the Scheme were considered.

Option 1: Delivery of funding for milk and snack to registered pre-school day care providers and childminders via a procured third party or prepaid smartcard

This option would ensure that the milk provision continued to be funded for those Scottish pre-school day care providers and childminders currently claiming from the UK NMS via the NMRU but using an independent contractor to deliver funding directly and with an upfront payment model instead of the current claims and reimbursement model. This approach would reduce the associated administrative burdens of the UK NMS placed on childcare settings and create more incentive to participate in the new Scheme.

While procuring an independent contractor similar to that of the UK NMS (Wider Plan) and moving to an upfront funding model would reduce the administrative burdens for settings, this option would have higher administrative costs for the Scottish Government and would create an additional funding line for the majority of childcare settings which already have a financial relationship with their local authority.

Providing funding through a smartcard or voucher was also considered but this approach would incur significant overhead costs including production costs for the actual card itself, administration associated with maintaining a card system in regards to replacing lost or stolen cards and increased governance required for Scottish Government and retailers to ensure that cards are being used to purchase milk. This approach would add a level of responsibility for day care providers and childminders to ensure the smartcard or vouchers are not damaged, lost or stolen. There would also be a risk of payment cards or vouchers not being issued or funded in time due to technical issues which would mean settings would not have access to funding.

It was concluded that this option was not viable as it would potentially re-create administration for the significant number of settings already on local authority financial systems. It was also contrary to the proposal in the consultation that provision would align with ELC funded provision, and delivery would be discussed with local authorities. The associated overhead costs for delivering funding via a prepaid smartcard in addition to the required governance did not seem an effective or accessible approach to promote uptake of the Scheme's provisions. Therefore option 1 was not recommended.

Option 2: Offer of upfront funding to registered pre-school day care providers and childminders directly via local authorities in line with existing funding streams (preferred option)

This option, in line with what was proposed in the 2018 consultation, would see a revised Scheme delivered by local authorities to registered day care providers and childminders who provide pre-school childcare for children 5 years and under in Scotland.

This option would maintain ownership of the purchase of milk with day care and childminder settings as with the current Scheme, with the additional responsibility of purchasing a healthy snack (although it is recognised that many settings already do this). Such a Scheme would not dictate how purchase or procurement should take place. The key focus of the Scheme would be to route the funding for these purchases directly to the childcare setting, as opposed to requiring them to claim back costs.

In terms of routing funding through local authorities, feedback from stakeholders during and after the consultation indicated that this option would be most welcomed across the childcare sector as it aligns with the consultation proposal that funding could be re-routed via the ELC arrangements (i.e. local authorities) for those day care providers who facilitate funded ELC places (approx. 80% of providers). Reducing the administrative burdens that are in place for the UK NMS were seen as a driver and incentive for settings to participate in the new Scheme which would in turn increase uptake of fresh milk, fruit and vegetables.

Scottish Government did receive feedback however from some members of the milk industry who were concerned that the new Scheme might disrupt existing contracts and allow day care providers and childminders to use funding outwith its intended purpose, and suggested that a robust monitoring procedure be put in place to mitigate against this.

Stakeholders and local authorities also noted that additional work would be required to ensure that appropriate arrangements could be put in place for "unfunded" ELC settings, which would not have existing funding relationships with local government. On present available figures, this constitutes around 28% of day care settings, and 93% of childminders.

Scottish Government took this feedback on board as the proposal was developed.

Option 3: Do nothing

A third option of 'Do nothing' was also considered. This would mean continuing as part of the UK-wide NMS under its current terms. Under this option, no snack could be provided; there could be no change to scope or eligibility; and milk would continue to be provided under the current arrangements with the existing claims and reimbursement model in place. This option would have no cost implications or impact on businesses, public bodies or Scottish Government as it would be maintaining the status quo.

However, it would not deliver the policy intention and would be contrary to the views of the majority of those who responded to the consultation. It would also be contingent on the UK Government maintaining the status quo for the UK-wide NMS and remaining content for the Scottish Government to continue part of any future UK-wide NMS.

As such it was not considered a suitable alternative to the proposed policy.