The next item is item 6, a statement by the Deputy Minister for Health and Social Services—delivery of the childcare offer for Wales. And I call on the Deputy Minister for Health and Social Services, Julie Morgan. 

Thank you, diolch, acting Presiding Officer. And thank you very much for the opportunity to update the Assembly on the progress in delivering our childcare offer for Wales. 

Members will be aware that, when this Government was elected, one of the key commitments we made was to provide 30 hours of early education and childcare to the working parents of three and four-year-olds across Wales for 48 weeks per year. And, in developing this offer, many of the families we've talked to have told us about the pressures that they face over meeting ever-increasing household costs, particularly during this period of austerity. For these families, the costs of childcare directly affect whether or not the parents, and particularly the mothers, can work and, if they can, where they work and what sorts of jobs they can take; it depends on them being able to get childcare.

So, we began testing our offer in parts of Wales in 2017. We were often asked why the offer wasn't available everywhere, and why we were phasing the roll-out. I was particularly asked that in my constituency in Cardiff North, which was one of the last places to join the roll-out. The phased approach was important to ensure that the offer was properly tested and worked as we had intended. I’m delighted that it has been so successful, and I would like to pay tribute and express my heartfelt thanks to our partners, to the local authorities and the childcare providers who have been absolutely essential to the process, and have helped us to achieve so much. Because of the work we have done together, testing the administration and accessibility of the childcare offer, I'm delighted to tell Assembly Members that our offer has been available across the whole of Wales since April, over a year earlier than originally planned. 

At the end of July, we had almost 16,000 three and four-year-old children accessing Government-funded childcare, and 29 per cent of these were doing so through the medium of Welsh or bilingually. When we evaluated the offer at the end of the first year of implementation, the majority of parents reported a real increase in their disposable income because of the offer. A typical parent whose child is benefiting from 20 hours of childcare per week is getting the equivalent of an extra £90 per week in their pockets—money that they would not otherwise have had. A high percentage of parents also told us that the offer had given them more flexibility in the types of jobs they could do, or gave them more opportunities for training. And in the first year of roll-out, 60 per cent of all parents using the offer earned the equivalent or less than the median population earnings in Wales, benefiting low and middle-income families most. So, I am sure you will join me in paying tribute to both the 2,000 childcare providers currently delivering the offer, and to our local authorities, who have played an integral role in ensuring families can access this support.

It is also important to remember that the childcare sector is a significant employer in its own right. Across Wales, there are over 3,600 childcare settings employing around 17,000 people. Parents using childcare go on to contribute over £1.2 billion to the economy of Wales. We are taking steps to support the sector in a number of ways, for example through the 100 per cent rate relief, and through working with key stakeholders to professionalise the childcare workforce. The new suite of qualifications introduced earlier this month will offer better progression routes and wider career opportunities, and in the autumn we will be piloting a business support approach for the sector to support long-term growth.

Given our success to date, I am keen to look at how we can extend this vital support. So, as set out in the First Minister’s leadership manifesto, we are now considering the feasibility of expanding the offer to support parents in education and training, or on the point of returning to work. The offer is one of a suite of programmes aimed at supporting parents, many of which also support families with the costs of childcare. However, it has become clear that there are some gaps between these programmes. This was an area of particular interest to the Children, Young People and Education Committee when they considered the now Childcare Funding (Wales) Act 2019. I think it's important we look at this, and ensure we are doing all we can to support parents into work. I expect the review to report in early 2020.

I am also pleased to be able to announce that we will be working with local authorities across Wales to develop long-term delivery arrangements for the offer, building on some of the systems and services they already have in place. Local authorities have done an excellent job administering the offer, and are well placed to carry on with this important work, particularly given their local knowledge and the close relationships they have built over many years with providers and parents in their areas. Working with local authorities, I'm confident that we can deliver a national service to administer the offer—a national service that also adds real value at the local level. The WLGA welcome this ongoing role for local authorities and we will be working with them and others as we develop detailed proposals.

Members will be aware that we had planned to work with HMRC on a national approach to applications and eligibility checks. This would have seen us using their childcare services platform, which administers both the English 30-hour offer and tax-free childcare. A discovery impact assessment completed before the summer suggested the costs of developing and then running the service for five years could be in the region of £16 million. Given what was involved, these costs are not unreasonable, but they are higher than those outlined in the regulatory impact assessment for the Act. In part, this is because they include some costs not available at the time the RIA was completed. Also, given that we're reviewing the eligibility criteria for the offer, and in light of these costs, I determined it would be more sensible for us to suspend the work with HMRC at this time. But I would, however, like to thank them for the time they spent with us to date in considering all of our options. 

This change has led to a delay in bringing forward the secondary legislation under the Childcare Funding (Wales) Act. I want to make sure that legislation meets the needs of the service we are developing with local authorities, and I feel it's important to take the time needed to get it right. In the next months, we will continue to refine the offer based on our experience and further evidence from our ongoing evaluation programme. Acting Presiding Officer, this Government is committed to tackling the causes of poverty, and in particular in-work poverty, and our childcare offer is a key part of that commitment, helping working parents with those costs. I'm delighted at the success it has been so far. 

I thank the Deputy Minister for bringing forward this statement. As Welsh Conservatives, we are delighted, actually, that the Welsh Government is now implementing the Welsh Conservative policy of providing 30 hours a week of Government-funded childcare for working parents, and we will join with you in paying tribute to the 2,000 childcare providers currently delivering the offer and to our local authorities who are having to implement this. On considering your statement, however, I was struck by the lack of some attention given to the situation some service providers have found themselves in and a little perplexed that you've described the offer as being so successful.

The National Day Nurseries Association is warning that the offer is actually putting a strain on nurseries as it is rolled out across Wales. Really, this is becoming a nursery nightmare as the services are reporting that they're struggling to recruit enough qualified staff to meet the extra demand. So, I hope you don't mind, I have got four questions. Given that properly functioning nurseries are central to the success of the offer, will you clarify what immediate steps you're able to take to make sure that more people are choosing to train to become nursery workers and that those already in the sector actually choose to stay? We're seeing far too many leave this profession. 

Question 2: having considered the results of a recent survey of 118 early-years settings that are responsible for employing over 1,350 members of staff and delivering places to more than 8,000 children, I was struck by the fact that only around 5 per cent of the workforce is made up of men. So, I believe that there is great potential for increasing the number of men in the profession and for this to be one way through which the lack of staff could be addressed. So, therefore, will you explain what steps are being taken to ensure that the childcare sector is seen as being open to both men and women?

Question 3: as always, finance is a major consideration for any profession, but in this instance, many of the 17,000 people working in childcare across Wales are on minimum wage. Now, I know that a Welsh Government spokesperson has advised that you'll be reviewing the rate you pay for the childcare offer, including an assessment of the impact of changes to the national living wage. Therefore, will you provide an update on this work and explain what consideration you have given to aligning the rates paid through the foundation phase and childcare offer?

And finally, I was unsurprised to read in your statement that you are now considering the feasibility of expanding the offer to support parents in education and training or on the point of returning to work, because I think you'll be aware that, certainly, myself and my colleague Suzy Davies AM did raise concerns about this previously. We know that the sector is struggling with the offer as it stands, so I'm clear that Wales has not yet reached the point where an expansion of eligibility can be implemented now. The obvious question for me, now, is: will you clarify by when you expect eligibility to be expanded, and how the sector is going to accommodate the increase in demand that this will inevitably cause? Thank you.

I'd like to thank Janet Finch-Saunders for her statements and questions. I suppose when I say it's very successful, I'm basing it on the fact that it's a year early and 16,000 children are benefiting from it. And I don't think we can query the fact that is a great success.

I absolutely agree with her that nurseries are central to the offer. When I've been going around the country visiting nurseries and seeing what the effect has been on them, they have been invariably positive because they see it as a great opportunity for them, and they said they've been able to increase the numbers and increase the staff. But, obviously, I think she makes a very important point about the workforce, and one of the things we want to do is to encourage the workforce to professionalise the workshop. As I said, we are encouraging qualifications and we are working very hard to make sure that this sort of work is seen as an attractive job and as an important job, because what could be more important than looking after very small children and bringing them up?

So, that's what we want to do, and we have had a campaign—a successful campaign, a campaign called the We Care campaign—which has been run by the Government, which has been very successful. And in fact, when I visited Scotland a couple of weeks ago, they are actually using that campaign to help inform themselves. So, we are looking at that.

In terms of the amount of money paid for the childcare offer, the £4.50 per hour, on our latest evaluation, the childcare providers have not expressed any great concern about that; in fact, I think they've been generally accepting. I am aware that in England, the offer is regionalised and does change, but what we will be doing next year is we will be reviewing that and we will be looking at the amount.

In terms of when the eligibility will be expanded, we are planning to have this review report next year, and then we hope we'll be able to expand it then. Thank you.

Thank you very much. There's no doubt that the childcare funding legislation was very contentious from the outset, for the reason that it didn't include every child. Children whose parents were in education or training or who were unemployed didn't qualify. Therefore, Plaid Cymru voted against the legislation. We felt that it was entirely unfair that families earning up to £200,000 per annum could access free childcare whilst our poorest children living in workless households are being excluded from the clear benefits that will emerge from early years education and childcare. But the Minister at the time was determined to proceed with a proposal that was entirely deficient, despite the concerns of the children's commissioner and children's organisations, the concerns of the Children, Young People and Education Committee, and the concerns of Plaid Cymru, which were voiced time and again in this Chamber.

Therefore, the Government in the summer did announce that it had made a u-turn, and I am pleased that at last this Government has recognised that it made an utter Horlicks of its first attempt to introduce its first free 30-hour childcare offer. But your statement today does concern me. You are now considering expanding the offer to support parents in education and training, and I agree entirely with that. But unfortunately you're not going far enough, because you are considering expanding it to parents who are on the point of returning to work. So, even under your revised plan, there will be some children who still will not be eligible for this childcare, including some of the children in greatest need in Wales. This is a mistake. Plaid Cymru in Government would offer this opportunity for all children to benefit from free childcare.

Can you explain, therefore, what your definition is of parents on the point of returning to work? Can you explain why you're not going to include every child in reforming this offer? Why aren't you going to include households where parents are unemployed? Why are you discriminating against some children? Doesn't every child deserve the best possible start in life? I very much hope that you can explain the rationale behind your new proposal.

As you are suspending the work with the Treasury, will you explain what's changed, therefore, in terms of the views of local government? Have you sought the views of the Welsh Local Government Association on the implications of this u-turn? Do they now believe, to the contrary of what they believed when the legislation was going through this Senedd, that the system isn't too complex and bureaucratic, and that they are content to administer it? I don't know what has changed between the time when the legislation went through and this current period.

You state that you are delighted that the pilot period has been so successful and I do hear that very many families in my area are taking advantage of this scheme. But, I'm also aware that this is creating some funding problems for councils, and I do understand that additional funding has been allocated to some county councils, but that that is far from being sufficient to meet the demand. So, can you explain how you intend to close the gap between demand and the funding that's currently available, please?

I thank Siân Gwenllian very much for all those points that she made, and I take her point that this does not include every child. I am very pleased that we are now reviewing extending the offer to parents who are in education and training or moving towards education and training, which we're thinking of in terms of actually having taster courses or going to interviews, so we want to stretch it as far as we can. I know that when the Children, Young People and Education Committee looked at this—I was on the committee at the time, so I'm aware of the concern—one of the specific recommendations and one of the areas that the committee felt most strongly about was education and training. So, I'm sure that she's pleased that we've responded to that and we are extending it to education and training.

In terms of the financial situation, obviously, because of the large number of children who've taken it up a year early, that does mean that we are spending more money this year than we expected to do so. So, in 2018-19, we spent £19.6 million on childcare and the budget for 2019-20 is £40 million, and that should be enough to cover next year, and any additional funding needed will form part of the normal in-year budget process, so the local authorities will not have to worry; they will be getting the money.

In terms of administering it and the WLGA, I think local authorities have changed their minds, because I think when they first took it on, they did feel that this was going to be an onerous task and that it was going to be difficult to do, and I think they made those views known, but they have changed their minds and they are very happy to continue with the task. And that is what we are being fed back from the local authorities—that they are very positive about doing it and would like to continue doing it. And in view of the fact that, I think, they're also seen as being the most successful people to do it, because they are close to the ground, close to the families and close to the children, I think that that is the best solution. So, they have changed their minds, and they are now much more positive about carrying on with administering the scheme.

May I congratulate Welsh Government for what it's doing with the childcare offer? I've made some quite strong comments about areas such as respecting the referendum result or building an M4 relief road, where Labour hasn't followed its manifesto, but on this you have—indeed, getting it done a year early. I congratulate you on that.

I also noted that the pre-existing offer was quite a lot more focused on public sector provision through schools in Wales, compared to what had developed in England. I really note that the way you've rolled this out seems to be fair to the private and public sectors, and allows them to compete or, where appropriate, work together on equal terms. So, again, I'd like to credit Welsh Government in that respect.

You said you were delighted to tell Assembly Members that the offer had been available across the whole of Wales since April. I just wonder why you are only telling us about it now. Why didn't we have an official announcement in April? I hope he won't mind me saying, I had to rely on the previous Minister Huw Irranca-Davies, who I asked, and he said, 'Oh no, we're doing this. It's all happening across Wales in April,' and no-one seemed to know. I don't understand why you've been hiding your light under a bushel on this issue. I think I actually asked Huw, and Huw said I was allowed to talk about it and it wasn't confidential, it just hadn't been announced.

The roll-out. Sixty per cent of all parents using the offer are below median income; I think that's quite significant. People often seem to have some idea that it's disproportionately the well-off who are benefiting from this. I wonder, Minister, how much of that reflects a cohort, demographic issue that young parents are below their peak earning years, still, quite often. And also, I think we need to recognise that changes in the tax and benefits system at the UK level have tended to penalise this group, relative at least to pensioners, over the last decade or so. It's good to see you're taking up some of the ideas from the Children, Young People and Education Committee. I think, particularly where parents are studying or about to get a job, it is good to give further support.

I wonder in terms of the HMRC versus local authority, firstly, Minister, you and I and a few select colleagues spent quite a lot of time on a Bill committee giving powers to HMRC to share data and to do this work. I just wonder whether our work on that was in vain, and how much, also, has been spent already on that interaction with HMRC that's not being taken forward. I also wonder what the implications are in terms of the application and enforcement of the eligibility requirements. It may be you're more relaxed about the eligibility requirements than you were, and don't mind so much, but it seems to me that HMRC have got this data, and for our tax-free childcare we have to go in every three months and confirm we're still eligible according to the various criteria. Do the local authorities really have the same capabilities as HMRC to know what the earnings are and to enforce if people don't, anymore, meet the eligibility criteria?

Finally, could I just again emphasise the importance of the tax-free childcare? A lot of parents who are taking up this offer will be paying for additional childcare, and I fear that very large numbers of them aren't benefiting from the UK tax-free childcare scheme. I thought one positive of working with HMRC was that people would set up an account and the barrier to them then taking the tax-free childcare as well would be less. That's money that's coming from UK Government that would come into Wales to support the sector, to boost people's incomes that they could then spend within Wales. I just ask the Minister: could you as Welsh Government to do more to promote and make people aware of the availability of this scheme, and that if they set up an account with HMRC, for every £8 they put in it will be topped up and they can pay for £10 of childcare, on top of the offer they're getting from Welsh Government?

I thank Mark Reckless for those points, and I'm pleased he's recognised that we have followed our manifesto here in Wales and that we are working with the public and private sectors. One of the issues that have arisen is the difficulty, sometimes, when the care setting is a long way from the school setting, and so we have encouraged co-location where possible. We've also given grants to develop usually private sector nurseries in a way that makes them more open and more able to take more children. So, we have tried to help with the capital money as well in terms of helping nurseries to develop.

In terms of the £60,000, I think he may be making a valid point in relation to young parents, but it's interesting that, according to the Office for National Statistics figures, only 3.1 per cent of all people in Wales earn over £60,000.

Sixty per cent.

Yes. And the numbers earning over £80,000 or over £100,000 are even smaller, so there are actually not very many wealthy people in Wales in terms of those numbers.

So, we did spend a lot of time on the committee looking at the HMRC issue—a very long time—and I'd like to thank those members of the committee who did take part in it, and I was part of it as well, but it was a learning process. What we found was that not only were there some costs that we didn't anticipate, but also the period of looking at how it would work out with HMRC did show us that there could be a degree of inflexibility if, for example, we wanted to change our offer and our offer wasn't so much in line, as it is at the moment, with the English offer. And, of course, extending to education and training means that that has to be dealt with at a local level in any case. Also, we've already committed to paying foster parents and other groups, which would have to be dealt with at a local level in any case. So the decision was made, really, that it would be better to stay with the local authorities, especially as the local authorities were pleased to carry on with it. So, the decision was made, and the money that was spent in doing that wasn't wasted because it has been used in order to make a longer term decision, and the work we did with HMRC will be of great benefit longer term.

Tax-free childcare: yes, we must do all we can to advertise it, because the take-up is pitifully low.

Thank you, Deputy Minister, for your statement. It's good to know that we are making solid progress on delivering the offer that was in the manifesto. Co-location is incredibly important because otherwise there's a danger that people have to keep their child in a nursery that doesn't offer the early education that all three and four-year-olds are entitled to as well. So I'm particularly interested to pursue with you, as you refine the offer and you're in discussions with local authorities, how closely you're looking at community-focused schools and that all schools should be community-focused schools, because they are public buildings funded by the taxpayer for the service of the community, and it's a pity if schools aren't used more than just from 9 a.m. to 3.30 p.m. It won't apply to all schools, because some schools simply don't have the capacity to take on more activities, but some of the primary schools in my constituency do have a generous supply of land attached to the school, and that's absolutely fantastic, but it would be perfectly possible to put in an early years centre on those sites, which is land that the public already owns, and that would support the integration of the childcare with the nursery education that I'm sure, in the long term, we all want to see being the entitlement for all our children. So I just wondered what discussions are being had as you conduct this review as to whether we're going to be able to take forward that agenda.

I thank Jenny Rathbone for that comment. Yes, I agree with her about community schools, and I certainly agree about co-location. This is a discussion we have been having. As she says, there are many schools where you would be able to develop childcare provision on site, or you can help add to something that's already on site, and we have done quite a bit of that already with the capital grants that I mentioned. We have been giving a large number of capital grants, and the education Minister is well aware of this. I think that one of the bigger advantages of actually having co-location on the site, which can be a voluntary or independent nursery, is that it does decrease the amount of travelling between the care setting and the school, and I think that is really important, because we've talked about our carbon footprint, and also, for the children, if you have to travel too far I think it is disruptive. So, I think we are well advanced in those discussions and I think she makes a very valid point. 

It's lovely to have this statement and see the progress of this going so well and also to see that the Welsh Government is indeed listening and is modifying the offer as it goes forward. That's signs of a good Government, I have to say. But I don't know if she'd agree with me that the description from Siân Gwenllian a moment ago of 'an utter Horlicks' would be disputed by the parents of the 16,000 children who currently do it, but also the providers, I have to say, who have seen the tangible benefits of this for the children in terms of early years education, in terms of socialisation and development of social skills. But it was always a limited offer, limited to the manifesto description of it.

So, I'm pleased that the Welsh Government now is actually considering looking at extending it, but I do have a question on that. There are existing schemes out there in terms of support for training and education for parents. One thing we've got to avoid is a wasteful use of resources, so if we are looking at extending the offer to that, can we just make sure that there is a seamless edge; that we're not actually duplicating what is currently on offer out there? It'll be great if the finance Minister can find additional money to do this, because there was always an ambition on the CYPE committee, when I appeared in front of it, to do more. So, beyond that, I'd like to ask the Minister how the discussions are going within Government about a wider offer that is beyond the childcare offer. Now, I'm not expecting her to come out today with a blueprint for the way forward, but we all know that, actually, the ideal way forward is an early years and childcare offer that is universal, comprehensive and actually starts at an age-appropriate amount of hours and an age-appropriate learning at one year of age, two years of age, and so on. It goes way beyond this—so, not simply to parents in education or training, but way, way beyond it.

Now, I know that when I left the post, officials were working very hard and Cabinet had signed off on a paper that was going to take some of this work forward, so it'd be interesting to know whether that is still progressing even if we can't be given a complete road map today, because, ultimately, that is the way forward.

In terms of HMRC, if local authorities have changed their views on this, I think it's fantastic, and we always identified three possible options: the made-in-Wales, a HMRC version and a new agency—highly expensive. The HMRC approach, bespoke, has the advantages of modelling alongside the UK model, but the disadvantages of modelling alongside the England model, as well. So, if the costs have run away with that, it's absolutely understandable to come back to local authorities, particularly if they've changed their mind. But, could I ask will there be any revision done of the cost to local authorities? Because one of the original concerns was the cost and bureaucracy, and with that bureaucracy comes cost. Now, I suspect the Minister will answer that the lessons that we've learnt from some of those local authorities that are now providing the organisation and administration for other local authorities is to be more cost-effective and they've learnt how to do it quite easily. I think it's the situation, actually, in Powys, where it's provided by a different local authority to do it throughout the area. Is that the case and will we have revised costings?

And the final thing I'd just like to ask, because it wasn't in the statement, is how this is going in terms of Welsh language provision? I know there's been good discussion in my own area about making sure that the Welsh language provision is mapped well and that we extend it. Sorry, I said it was the final question. The final question is: Bridgend County Borough Council—traditionally, over-providing early years, foundation phase to the tune of 25 hours or even 30 hours per child, far more generous than other local authorities. I know that her officials have been discussing with BCBC how we can avoid rolling this out and actually disrupting what was very good and already in place. How has that gone? Are those discussions still going on with her officials and BCBC?

I'd like to thank Huw Irranca-Davies very much for those points. Certainly, we don't want any duplication and that's why, in extending the offer to education and training, we are looking at the gaps in the system,  because there are a range of ways that you can actually get some help for childcare if you're in education and training. The last thing we want to do is to duplicate when we've got very scarce resources. So, we're certainly looking at that.

It would be absolutely ideal to have a universal offer that was there for all children, like the Scandinavian offer, and I think probably everybody in this Chamber would want us to reach that. When you were in office, the officials were looking at a long-term vision. We are still looking at that. I think that is the sort of thing we'd like to aspire to but, obviously, we have got the issue of how you pay for it, which, obviously, everybody is aware of.

I think you're absolutely right; I think that the local authorities have learnt how to do it because, certainly, I know you were aware that they were reluctant at the beginning, but I think it is very positive that they want to do it now. I think they've seen the huge benefits there have been, and. for the 16,000 children who have had these very positive benefits, and for their families—I'm sure you've all had them in your constituencies—they've said they can't really believe it that they're having this childcare free. So, I really do think we ought to welcome it, because it is a great opportunity for families.

The Welsh language: 29 per cent of the children are going to Welsh language provision, or to bilingual provision, and we have made a specific effort to try to reach out to ensure that there is Welsh language provision. It is more difficult to get Welsh language providers, and that is what we're also trying to work on as well because, obviously, we're totally committed to the ambitions of the Welsh Government in terms of getting more Welsh speakers.

And as for Bridgend, yes, the discussions are still going on, and I hope that we will be able to continue those discussions until we reach a conclusion that will satisfy the Member.  

The Llywydd took the Chair.

Thank you, Deputy Minister.