New Petitions

Good afternoon, ladies and gentlemen. I work for the Galloway Childcare Company, which is a social enterprise child care organisation based in Wigtownshire in the far south-west of Scotland. We submitted our petition last year in the wake of a financial crisis that threatened to close all our services, leading to the loss of 35 jobs and 190 registered child care places. Since then, we have been able to negotiate short-term support from Dumfries and Galloway Council to ensure the continuation of services until the end of March this year. However, it is unclear what support, if any, will be available from April 2008. Our immediate monetary situation has improved, but we are still living hand to mouth financially, and that looks set to continue for the foreseeable future. The fundamental problems of resourcing, sustainability and the lack of strategic direction will remain unless the issues are addressed in the Government's forthcoming early years strategy.The reason for our petition and for our longer-term aim of lobbying the Scottish Government is to ensure that the future of child care provision in deprived and rural areas throughout Scotland is fully considered, and that both the challenges and the opportunities are acknowledged as being distinct from those in more urban and affluent areas. Not all communities in Scotland are the same, therefore different measures need to be put in place if we are to achieve the initial national child care strategy aim of providing good-quality, accessible, affordable child care in every neighbourhood. The current financial crisis, which is referred to in our petition, emerged in November 2006, when a number of voluntary sector child care projects across Dumfries and Galloway indicated to the local authority that they would struggle financially during the current financial year. Since 1998, funding has been made available each year from the child care strategy fund to support fragile child care groups throughout the region. Initially, that funding was accessible only to voluntary sector groups with a deficit. Over time, that has developed into a grant system based on the number of places that are provided, and all providers from the voluntary, private and public sectors may bid. Ironically, the change penalised smaller providers that the system originally protected. The local change's impact on policy was camouflaged by the introduction in 2004 of several other funding streams that were available to the child care sector, including the new opportunities fund and out-of-school-hours child care and quality child care programmes. Several local groups were successful in securing up to three years' funding from lottery initiatives, and the investment undoubtedly led to an expansion in the number and quality of registered child care places. By the start of the current financial year, however, most of the grants had come to an end, and little alternative funding was available. Dumfries and Galloway is primarily a rural area, with a large number of small, isolated communities and many areas of deprivation. Developing and maintaining sustainable child care services has been a significant challenge, as the majority of groups secured grants in the first place because of demonstrable levels of deprivation in their catchment areas. It has proved impossible for us to become self-financing in the time that has been available. The unit costs of running small rural projects are higher than those for our larger counterparts in more densely populated areas, where demand is more consistent and economies of scale are possible. The NOF's own evaluation of the out-of-school-hours programme recognised that sustainability is difficult to achieve in disadvantaged communities. The NOF stated: "The funding has led to a robustness among childcare clubs with fewer closures than under previous childcare schemes. However, clubs, particularly in disadvantaged areas, demonstrated a need for additional grant funding if longer-term sustainability is to be achieved. Almost two-thirds of clubs included in the research reported that they would be looking to secure future grant funding if they were to continue operating."Many of the Galloway Childcare Company's child care places were originally set up with short-term start-up funding from the New Opportunities Fund. Now that the subsidies have ended, we find ourselves unable to generate sufficient income from parental fees alone. The introduction of child care tax credits has not enabled us to increase fees sufficiently, but a debate on the tax credit system would probably warrant a petition in its own right. For a decade, child care strategy funding has been made available to local authorities throughout Scotland specifically to support, develop and expand the local child care market. Dumfries and Galloway previously was fortunate. Until last year, the funding was ring fenced and was used exclusively for child care. However, the funds are increasingly being used to resource other local council activities. This year, council efficiency savings resulted in 43 per cent of the funding being top-sliced. We are aware of the introduction of the single outcome agreement from next year, and changes to how funding is allocated to local authorities may mean that even less financial support will be dedicated to child care. Previous national policies sought for the wider child care market to be a mixture of public, private and voluntary sector provision, and the role of each local child care partnership was to manage that market. The cost of providing quality child care in deprived or rural communities is higher than parents will ever be able or willing to pay. The private and public sectors recognise that the true cost of care in those communities is prohibitive to their operations. It is left to the third sector to continue to meet the needs of children and parents in remote or underprivileged areas. That is the reality of a sector that is driven by the free market economy, where the money follows the profit margin rather than the child. Where, then, is the principle of the child being at the centre, or the concept of universal services?I thank the committee for giving my colleague and me the opportunity to bring our case to your attention. I conclude by requesting that the committee give further consideration to two particular issues. We ask that members seek to ensure that the proposed early years strategy is developed to take full account of and make provision for the needs of rural child care services throughout the country. We also ask that you reflect on whether it is appropriate for a service as important as child care to be left to the vagaries and unpredictability of market forces in 21st century Scotland.

In November 2006, several groups throughout Dumfries and Galloway realised that their funding streams were coming to an end and indicated to the local authority that that was the case. In February 2007, the council made cuts to the funding that was to be made available. The situation has evolved during the current financial year.

A 43 per cent cut was applied to the child care strategy fund that was available to Dumfries and Galloway Council. Not all of the fund is available to support projects—it is also used for infrastructure, the child care partnership and training. However, the amount for groups was reduced significantly. That coincided with the ending of funding streams for several groups, so more groups needed support than had needed it in the previous three years.

We are concerned about Dumfries and Galloway Council's financial situation and its deficits. Obviously, the statutory responsibilities must come first. We have had no information about what, if any, support will be made available next year. We are working with the local authority, and the network for community child care providers in Dumfries and Galloway is working with the local authority and the child care partnership but, at present, no decisions have been made on the funding that will be available.

It can vary from year to year, depending on how much external funding is available. This year, the figure will probably be a fifth.

Lottery funding has proved to be a major source. In the past three years, we have raised almost £1 million through external funding, which has been spent on several activities. We developed projects and outside play spaces, and last year we funded purpose-built accommodation for one of our projects in Stranraer. The funding is mostly for capital projects—very little revenue funding is available. We can attract funding to buy things or to carry out tangible projects, but we require funding to contribute to core services, particularly funding for staff costs, but also for rent and utilities.

I know that it applies to other groups in Dumfries and Galloway, and I can think of no reason why Dumfries and Galloway would be unique in Scotland. Groups that operate in rural or deprived areas face the same difficulties, whether they are in Newton Stewart, Stranraer or north-west Scotland.

It is £9 million over three years.

I do not know what the council's overall budget is.

It is not relevant, because we do not currently deliver pre-school education. We have done so and we entered into partnership with the local authority to provide a service in communities. However, currently we provide a different service.

We have communicated at chief executive level as a result of the current crisis and we are trying to develop better working relationships with officers who have responsibility for the areas of work that we cover. I will be optimistic and say that the relationships are improving. However, relationships between the council and the voluntary child care sector have been strained during the past year.

The financial restraints are a contributory factor.

Not really.Communication has been poor. We are working to ensure that an arena is available for people to enter into appropriate negotiations about our needs and constraints and those of the local authority, and to identify a future direction. The child care partnership in Dumfries and Galloway is going through a period of review and the local authority is carrying out a review of child care, but those reviews have not been concluded. The problem that we face is uncertainty. There is the potential for improvement, but groups are operating in an information vacuum. We do not know what direction will be taken either locally or nationally in the early years strategy that is due later in the year.

The strategy that I referred to is the Scottish Government's strategy, which is due out in October. We met Adam Ingram late last year and he showed us the work that was being done.

There is the previous strategy, which is being reviewed and updated to encompass many more children's services. The revised strategy will be an early years strategy, whereas the strategy that was introduced in 1998 was specifically a child care strategy. Child care will form a strand of a bigger, early years strategy.

It is up to each local authority to interpret the strategy to determine how they provide support. The argument that we have tried to make to our local authority and to the committee is that not every community and not every child care organisation operates in the same way. We are often accused of being inefficient when, in fact, we simply have higher unit costs because of the communities in which we operate.

We were aware from budget projections in 2006 that there would be shortfalls for some groups this year. The crisis did not kick in in November, but we alerted the local authority to the fact that it would kick in for some groups at various stages throughout the 2007-08 financial year. November 2007, when we were allocated funding to get us through to the end of March this year, was a critical point.In the intervening period, we have had to carry out a review of our organisation and to make some significant changes. As well as completely reviewing the management and operational structures, we have introduced cutbacks in pay and terms and conditions, and staff redundancies will come into effect later next month and the month after. Some big changes and difficult decisions have had to be made by the board to ensure that we will be able to continue from April 2008 onwards. We will be able to do so only as a result of making those cutbacks to services and structures.

We have the resources in place to operate for another financial year. Beyond that, it is completely unknown.

Yes. We are concerned that there is not enough consultation with the voluntary sector, not only in relation to child care but in general, in determining what the single outcome agreement targets will be locally. We are aware that certain broad-picture expectations have been provided by the Scottish Government, but we are concerned that the fine detail has not been identified at a local level.

Seven posts have been identified for redundancy, which is about a quarter of our workforce. Staff costs represent our biggest area of expenditure. Staff have voluntarily agreed to a reduction in some of their terms and conditions. For example, sick pay has been eliminated and it was hoped that pensions would be brought in at some point, but that has now been ruled out.We are cutting back certain services. We are trying to ensure that, when it comes to the services that remain, the scaled-down organisation is still able to deliver provision of the highest quality that we can possibly manage, but obviously such a major restructuring involves some risks to the future of the organisation. The same amount of work will remain, but there will be fewer staff and volunteers to carry it out. Any organisation that goes through such a process faces such risks.

Some children will no longer be able to access particular services. We have had to close certain services over the past few months. Certain communities to which we previously delivered out-of-school care no longer have that child care. Other projects are considering reducing the number of hours that they are open, so instead of opening from 8 o'clock to 6 o'clock they will cut back to a core service for a shorter time in the day.

Yes, now that everything is together. In the past, there has been a specific ring-fenced child care strategy fund, but that will no longer exist.

No.

We would welcome that opportunity.

No, it was very interesting. Thank you.