Diolch, Dirprwy Lywydd. I'm pleased to speak in this debate today on behalf of the Finance Committee on the financial implications of the Childcare Funding (Wales) Bill. Firstly, it's worth noting that our scrutiny of the Bill has been limited to the financial information provided in the regulatory impact assessment, which sets out the costings for administering the scheme, and not the cost of delivering the childcare offer itself.

The RIA includes four options for administering a national system for processing applications and making eligibility checks, with the Welsh Government's preferred option being to adapt HMRC's current English service to meet Welsh needs. The RIA explains that this requirement is not clearly defined. The figures provided are early-stage general approximations, rather than detailed cost estimates. We therefore welcome the Minister's commitment to regularly review and update costs as the financial impacts are established further, and acknowledge the Welsh Government's engagement with HMRC and the work undertaken by the early implementer local authorities in developing these costs. In his formal response, the Minister has indicated a change to the delivery arrangements for the second year of early implementation, with one local authority accepting and processing applications, and making relevant payments on behalf of other authorities. We welcome this approach and the Minister's assurance that this will be reflected as a new option in the RIA during Stage 2.

The main area of concern highlighted in our report relates to the high-level estimates provided by HMRC. We accept that the Welsh Government has applied an optimism bias uplift to these estimates, to account for the relative level of uncertainty associated with outsourcing the system. However, we have recently seen HMRC costs escalate in relation to the implementation of devolved taxes, and we are concerned this may happen again.

Indeed, the letter from the Chief Secretary to the Treasury, shared with the committee on 9 July, makes it clear that estimates are subject to change once delivery begins, and that

'any changes to the operation of the 30 hours childcare scheme or eligibility criteria would generate further costs and will affect the timelines for delivery.'

Therefore we have recommended that the Welsh Government provides an update on the costs of developing and delivering the Welsh childcare offer within HMRC's existing platform as the proposal moves forward, which the Minister has accepted.

The Minister's response to recommendation 29 of the Children, Young People and Education Committee's report, which signals that a change to the proposed earnings threshold could attract an initial one-off cost in the region of £1 million, and a delay of between 12 to 18 months, clearly demonstrates the volatility of both the costs and timescales. Whilst acknowledging the Welsh Government's rationale for using HMRC as the delivery agent, we did question whether HMRC staff in Wales would carry out the service. We were told that it had not yet been discussed in any detail, and we concluded that the Welsh Government, as part of its negotiations with HMRC, should demand that the Welsh service operates in Wales in order to secure Welsh jobs and support Welsh-language standards. We are pleased that the Minister agrees with this conclusion and will be encouraging HMRC to operate aspects of the Welsh childcare offer from one of its offices in Wales.

In the same vein, we welcome the potential that the Bill provides for developing a bespoke Welsh service as this would ensure that Welsh Ministers have control over service delivery and the creation and retention of Welsh jobs. With this in mind, we concluded that the Welsh Revenue Authority should have oversight of the HMRC-operated model in order to build expertise and experience in the Welsh context, should the Welsh Government decide to develop its own system in the future. The Minister has provided assurances that close working between officials and the WRA is in place, such as involvement in the testing of the application and eligibility checking system, and representation on the official-level project board. The Minister's response also explains that new legislation would be required to enable the WRA to administer Wales's childcare offer. However, during evidence to both the Finance Committee and the Children, Young People and Education Committee, he indicated that there is scope within the Bill to develop a bespoke model. We would be grateful for clarification on this point. Diolch.