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Pre-Consultation Consideration of Fees
Introduction
88. Section 67 of the Bill sets out provision for Scottish Ministers to set fees for scheme membership. The policy intention set out in the Financial Memorandum is that the overall costs of operating the scheme should be covered in full by the payment of fees by individual scheme members (although it is acknowledged that some employers may choose to cover this cost on behalf of employees). The exception to this is fees associated with volunteering in the voluntary sector which will continue to be met by Scottish Ministers. This mirrors arrangements for covering the costs of the existing enhanced disclosures, which will be replaced by scheme membership for people in regulated work.
89. It is important to stress that no decision has been reached on fee levels or structures nor can actual fee levels be set at this early stage. The key issue for the pre-consultation phase is the broad fee options for scheme membership. The purpose of developing the options is to expose the range of possible choices and invite early views on whether we have taken account of the right issues and whether there are other options which we have not yet identified.
90. Prematurely setting fees on the basis of incomplete information may lead either to fee rises or to a surplus of fee income being generated. Indicative fee levels have been included to be helpful in drawing out the difference between the options. The actual fees will be calibrated by decisions on other significant aspects of secondary legislation and by the cost of operating the scheme. The latter costs comprise the costs of the Disclosure Scotland Service and the additional costs of the Central Barring Unit:
- Disclosure Scotland: The costs of Disclosure Scotland are now well established and understood. The new scheme will lead to an increase in these costs in the early years of implementation, dependent on decisions on retrospective registration of the existing workforce. They will then reduce significantly once scheme membership is established since issuing subsequent disclosures of an existing scheme record will be much less labour intensive than undertaking fresh disclosures. As Disclosure Scotland is a Public Private Partnership with BT plc, the implications of this, along with the necessary developments in IT systems will be the subject of detailed contract negotiations before the cost can be finalised. These negotiations cannot commence until the Bill is enacted. The continuous vetting arrangements for scheme members will also place a cost on Police Forces and on other sources of information which will need to be quantified. Discussions on the means to deliver these functions and therefore the implications for both the scheme and the providers of information to it are underway.
- Central Barring Unit: The Central Barring Unit's costs can only be estimated at this time. The outcome of decisions around determination criteria will have a direct impact on the staffing and IT requirements of the unit and therefore the costs. These decisions can only be finalised when the legislation has been passed.
91. The remainder of this discussion is based upon existing assumptions in the Financial Memorandum that the new provisions of the Bill would cost approximately £1.5M per year on top of the existing costs of the Disclosure Scotland service. This remains the best estimate and has been further validated against assumptions independently made in the establishment of the Vetting and Barring Scheme for England, Wales and Northern Ireland.
Options for Fees
92. In the consultation on the vetting and barring scheme, the assumption that there should be a higher joining fee and a reduced fee for subsequent checks was supported and formed the basis for proposals set out in the Financial Memorandum. However subsequent discussions with stakeholders and evidence given to the Education Committee has suggested improvements and variations to the fee structure that could simplify the operation of the scheme and make it easier to use for both employers and scheme members. These are explored further below.
93. Essentially, three options are explored.
- Option 1 uses a higher joining fee followed by lower subsequent fees and explores a number of variations that address concerns expressed by stakeholders in evidence during Stage 1 of the Bill
- Option 2 is based on a single up front cost for scheme membership with no subsequent fee for checks of scheme records
- Option 3 is based on an annual subscription for scheme membership
94. A number of objectives for fees has been identified. All three options broadly deliver on these objectives but their relative merits can be assessed with reference to these objectives:
- cover the costs of the scheme (after subsidy for volunteers);
- be simple to understand;
- be equitable and generally considered to be fair;
- prevent unnecessary over-use of the scheme by employers;
- be consistent with encouraging volunteering;
- not place a barrier to work, especially for the low paid; and
- offer good value, especially for "frequent users".
Option 1
95. Option 1 is essentially as set out in the financial memorandum. A fee, estimated at £26, would be paid to join the scheme. Assuming vetting information did not lead to the individual being barred, a disclosure certificate would be released to both individual and employer. When changing jobs or for subsequent disclosures, an individual would be able to present his/her existing disclosure and a prospective employer would be able to request either a short scheme record at a cost estimated to be £10, or a full scheme record at the full cost of £26. The short scheme record, which would be available on-line, would identify whether any new information had been added since the last full scheme record was issued. It is worth noting that the full scheme record cannot be made available on line without significant and additional IT security measures which are likely to be prohibitively costly.
96. The benefits of this option are that anyone who had more than two disclosures during a 10 year period would pay less than they do currently, meaning that the cost burden to the workforce would be significantly reduced. It is also the case that on-line access to short scheme records significantly reduces bureaucracy and therefore, costs, for the 85% of people who have no information on their scheme record. There are however, some demerits associated with this option:
- Stakeholders have expressed concerns that short scheme records would not in themselves give details of any new information and that this will require further full disclosure at £26 on top of the £10 paid for a short scheme record if there is new information.
- Some stakeholders have expressed concern at the potential for scheme members to lose or fraudulently alter a scheme record. As this option relies on new staff members presenting their existing scheme record, it is vital that employers have confidence in the validity of the information presented. State of the art anti-fraud measures are already in place on current certificates, making fraud extremely unlikely.
- Some employers have insisted that they would always want a new full disclosure on prospective members of staff in order to be absolutely sure that they have seen all of the information. Each issue of a scheme record would therefore cost £26 as compared to the current £20 making the new scheme more, rather than less, expensive to users albeit that continuous updating would be incorporated into the disclosure process. It would also increase the vetting and barring scheme workload if short scheme records were not used as envisaged.
97. In order to respond to the potential problems identified by stakeholders two variations to option 1 could be considered.
Option 1a
98. In this option, employers could request a full scheme record after having viewed a short scheme record that has some new information and only pay the difference. In effect they would pay around £10 to view a short scheme record and where new information was highlighted they could request a full record at an estimated cost of £16. This ensures that employers make effective use of the much quicker and simpler short scheme record, while giving them the reassurance of being able to order a full scheme record later, without having to double pay. It would give rise to an administrative burden in separating out the full disclosures which should be charged at £26 from those which should be charged at £16.
Option 1b
99. A further variant on the two-tier fee structure would be for all subsequent disclosures at the lower cost. In practice this would mean that an employer employing an existing scheme member would be able to do a short scheme record check on-line, then if anything caused them concern, send an electronic request for a full scheme record at no additional cost. The full scheme record would then be issued on paper within 24 hours. This gets around the problems of IT security associated with viewing the whole record on line, while avoiding making two payments to see the full scheme record. The cost effect of this would be to reduce slightly the initial membership and increase slightly the cost of subsequent checks. Indicative fees are £24 for membership and £12 for subsequent disclosures of the record.
100. This option would avoid employers asking for full scheme records for those scheme members where it isn't necessary. It also avoids double payment of short scheme record followed by a full scheme record and would be an administratively simple and quick process allowing for quicker decisions. It could however, lead to unnecessary demand for full scheme records. This could be addressed by only allowing them to be ordered if the information had changed since the last printed scheme membership record.
Option 2
101. A completely different option briefly referred to in Financial Memorandum is a single one off fee for scheme membership, with all subsequent information provided at no cost. Based on current estimates, the likely fee would be £65. Membership would be renewed every 10 years as indicated in the original consultation paper and the assumption used in the Financial Memorandum. In costing this option it is assumed that free access to subsequent checks would result in more frequent checking of scheme records by employers. The indicative £65 fee assumes a doubling in the frequency of record checks. If there were more frequent checks, then the cost would rise proportionately (for example a five fold increase in checks would result in a fee of £120).
102. A one off fee would make the whole system very easy to operate. Once a person was a scheme member, they and their employers, would be able to access subsequent information at no cost. However, there would be winners and losers in this approach. The financial benefits are greatest for those who move around the workforce frequently. In contrast, the high initial cost of scheme membership does not favour those who are static in workforce terms. It could also put some people off working in the sector, particularly those who may only plan to work for a short time. Where an organisation meets the cost of scheme membership for its workforce, a one-off fee would prove burdensome in the early years and during any programme of retrospective checking. This could lead some employers to favour employing people who were already in the scheme. As noted previously, free subsequent checks may lead to unnecessary or inappropriate use of the system, creating extra demand for disclosures rather than reducing demand and ultimately forcing up the fee level for future scheme members. A one-off payment would also mean that income to the vetting and barring scheme would be uneven, with significant surplus over the early years and then shortfalls for most of the remaining ten year cycle.
Option 3
103. Scheme membership could be funded through an annual subscription, paid either by the individual or employer. As long as an individual is a subscribed member of the scheme, all subsequent checks of the scheme records would be provided at no cost. The fees for a subscription based approach are proportionately higher than other options. The reason for this is that the costs for operating the scheme are substantially front loaded, checking identity, establishing a scheme record and matching the individual against any relevant conviction or non conviction information. If an individual were to leave the scheme after less than three years, the full costs of this would not be recouped, hence a slightly higher cost is spread across the whole scheme membership. Based on current estimates, the subscription would be around £8 per year, based on an assumption that demand for record checks would double. As in option 2, the impact of higher numbers of scheme record disclosures would be to push the subscription higher (a five fold increase would result in a fee of £14).
104. The annual payments made would be relatively small, although the cost to people who do not move around the workforce would, over a ten year period, be significantly more than option 1. The annual fee may make the scheme more affordable particularly for smaller organisations and for low paid individuals. It would not be necessary to re-register as a scheme member every 10 years. An annual subscription would also mean that the income flow into the vetting and barring scheme would be constant and more predictable.
105. However, free subsequent checks may lead to unnecessary or inappropriate use of the system, creating extra demand for disclosures rather than reducing demand. Organisations are unlikely to make use of the short scheme record if they can request a full record at no cost. This may make the overall cost of the scheme and thus the subscription fee higher than it needs to be. A subscription model is however likely to require different administration arrangements than any of the other models and there may be an issue of who pays the subscription if a scheme members has more than one employer.
Electronic scheme membership
106. In addition to the fee options outlined, we are exploring the potential to manage the scheme electronically. Because of the sensitive nature of the information held about individuals, it would be necessary to apply extensive security measures, such as the use of smart cards for both scheme members and registered bodies and encrypted connections to a secure server. If successful, this approach would allow for both electronic applications and on line access to scheme records.
107. An electronic approach would result in higher set up costs, to provide registered bodies with the necessary technology, but should drive down costs thereafter. This approach would be quick, simple and easy to use. Scheme members privacy would be maintained as employers could not view their scheme record without their smart card. However, it may be difficult for smaller organisations who don't have internet access. Smart cards would need to have anti-fraud measures to prevent identity theft although there is reassurance that the double smart card approach reduces this risk.
108. It is unlikely that an electronic approach to scheme membership could be introduced during initial implementation of the scheme. Nevertheless, views are sought on whether this should be explored as a longer term solution to streamlining the administration of scheme membership.
109. Discussion is being undertaken at this pre-consultation stage to canvass early views from stakeholders on the relative merits of an initial fee for membership followed by additional charges for subsequent checks as compared with a one-off payment for scheme membership each ten years or an annual subscription. We also seek views from stakeholders on the merits of further exploring the feasibility and costs of electronic scheme membership.
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