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Financial Impact on Early Years

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THE FINANCIAL IMPACT OF EARLY YEARS INTERVENTIONS IN SCOTLAND: JOINT MINISTERIAL FOREWORD.

Our Early Years Framework, developed jointly with COSLA and other key partners, is founded on a solid foundation of research evidence showing the significance of a child's earliest years in shaping future health, social development, educational attainment and employability. This evidence has also underpinned our other policy frameworks aimed at tackling Scotland's health inequalities ("Equally Well") and poverty ("Achieving Our Potential").

There is also evidence to show the severe and permanent damage that can be inflicted on a child through abuse or neglect in the early years. Thankfully, damage can be mitigated by high quality, early and integrated interventions from service providers who work with both parents and children to meet their needs.

Up until now, we have relied on international evidence to show that investment of resources in the early years can generate financial saving, as well as meeting our primary goal of improving outcomes for our children and families. We now have a bespoke study which quantifies potential savings from early years investment in a Scottish context. This study shows that investment in the early years can yield savings in the short, medium and long terms.

We are only too well aware of the financial pressures that lie ahead of all of us and that hard decisions will, inevitably, have to be taken at both national and local levels. It will be for our local partners in Scotland's councils, NHS Boards and elsewhere to decide on how best to set their budgets to support local children, families and communities, but this report shows that savings are possible, while still tackling the inter-generational cycles of poverty, poor educational outcomes, unemployment and crime which have bedevilled too many of our communities for too long.

We commend this study to our partners in local government, the NHS, our justice system and more widely as a means of supporting local decision-making processes in these difficult times. We believe that investment in the early years is certainly an investment worth making - both in terms of improving the lives of current and future generations of Scots and making the best use of increasingly scarce resources.

Nicola Sturgeon MSP, Deputy First Minister and Cabinet Secretary for Health and Wellbeing.

John Swinney MSP, Cabinet Secretary for Finance and Sustainable Growth.

Michael Russell MSP, Cabinet Secretary for Education and Lifelong Learning.

Kenny MacAskill MSP, Cabinet Secretary for Justice.

THE FINANCIAL IMPACT OF EARLY YEARS INTERVENTIONS IN SCOTLAND

SUMMARY

· A wide range of economic studies suggest that returns to early investment in children during the pre-birth period and up to the age of eight years old are high, but reduce the later the investment is initiated. Skill formation in the early years begets more skill, and makes later acquisition easier. Children from advantaged environments by and large receive substantial early investment. Children from disadvantaged environments more often do not, and therefore there are greater returns to be sought from identifying and targeting interventions in early childhood for disadvantaged children.

· The models in this study are based on the assumption that early years interventions are 100% effective. The study is not an attempt to assess the efficacy of any specific early years programmes. It instead highlights the costs to the public sector of failing to intervene in the early years of a child's life, and the benefits that can be gained from mitigating against the negative outcomes associated with disadvantaged children.

· The models used in this analysis are based on hypothetical "pathways" for three different cohorts of children, reflecting existing policies and provision in Scotland: the "control" cohort or pathway, providing the baseline costs, are children with no additional needs who receive standard universal services; the second pathway is of those with "modest" additional needs; the third pathway is for those with "severe" additional needs. We use Scottish data on costs wherever possible.

· We use the numbers of looked after children in the community as a proxy for the size of the "modest needs" group of children and the number of looked after and accommodated children as a proxy for those with "severe" additional needs. The model examines hypothetical, but realistic, life trajectories for the two additional needs groups over the short term (from birth to 5 years) and over the full lifetime, and calculates the estimated additional costs to the public purse for these two cohorts in both the short, medium and the long term, in comparison with the control group.

· Our financial modelling of short term savings from investing in early years / early interventions from pre-birth to aged five suggest that there are potential net savings of up to £37.4k per annum per child in severe cases and of approximately £5.1k per annum for a child with moderate difficulties in the first five years of life. While these savings may be modest in comparison to the well known longer term savings, they are still significant.

· The short term costs of failing to mitigate against the most severe cases are incurred largely by Local Authorities and health services, particularly through engagement with Social Services, Maternal Health interventions and costs associated with not being ready for school education.

· The model also demonstrates that there are potential medium term net savings to the public sector, that can be realised 10 years after the early years period. Using Looked After Children as a proxy for those individuals with moderate difficulties, and those in residential care as a proxy for the severe cases, it is estimated that the total potential saving resulting from 100% effective interventions early in life (pre-birth to aged eight) could initially be up to £131m per annum, in the medium term.

· In the longer term, a failure to effectively intervene to address the complex needs of an individual in early childhood can result in a nine fold increase in direct public costs, when compared with an individual who accesses only universal services. A package of effective early years interventions designed to reduce the frequency and type of service demanded by those individuals experiencing severe pathways could have a significant impact on the outcomes for those individuals, and therefore a reduction in the level of cost to the public sector. For example, a ten percent reduction in the total cost to the public sector of an individual's severe pathway could result in a potential saving of approximately £94,000 per individual.

· The medium and longer term costs are accrued to a number of different budget areas at different points in an individual's life. For those in the most severe cases, Local Authorities experience the higher proportion of cost between 9-18 years, almost exclusively the cost of social services. In the longer term, the UK Government will experience a higher proportion of cost, with most of this being transfer payments through the benefits system, though Local Authorities would be expected to experience high social housing costs and adult social services. From age 40 onwards, the costs are split between Health, Local Authorities and the UK Government.

· Targeting children with identified additional needs could have a significant impact on lowering direct public costs and improving the outcomes of children, both in the short and long term. In 2009, there were over 15,000 looked after children in Scotland (1.5% of the under 16 population), 10% of who were in high cost residential placements. A further consequence of not having the best start in life is an increased vulnerability to disengagement from post-16 learning. Latest estimates put the number of those in need of more choices and chances in 2009 at 36,000 (13.8% of the total 16-19 population). In the longer term, early interventions could help in addressing intergenerational cycles of deprivation, such as the 15.7% of children growing up in workless households in Scotland.

THE FINANCIAL IMPACT OF EARLY YEARS INTERVENTIONS IN SCOTLAND

1. INTRODUCTION

1. A wide range of economic studies suggest that there are significant long term returns to early investment in children during the pre-birth period and up to the age of eight years [1]. These long term changes in the capabilities of young people will significantly contribute to the delivery of the Government's Purpose of increasing sustainable economic growth with opportunities for all of Scotland.

2. This study builds upon the insights of these economic studies by looking at a narrower question, but one that is particularly relevant to Scotland at a time when public budgets are under intense pressure and scrutiny. In this study we look at the potential short and long term costs to the Scottish public sector of failing to invest in the early years of a child's life.

3. Naturally much of the current debate about public spending focuses on the next four to five years and given this we provide estimates of the financial impact of Early Years policies over the next five years as well as over the more conventional lifetime estimates that feature in most studies.

Overview of our approach

4. Our approach is to construct hypothetical pathways for three cohorts of children. These pathways are based on our understanding of existing policies and provision in Scotland. The first provides the baseline and represents a child who receives a package of standard universal services and has no additional needs. The second pathway represents a child who has "moderate" additional needs. Finally the third pathway represents a child who has "severe" additional needs.

5. For each pathway we have developed a narrative of a typical set of life events and the associated demand upon public sector services and transfer payments. These narratives are meant to be illustrative rather than an exact description and are based upon information from Scottish Government statistics, and research papers outlining case studies for individual with high levels of need [2]. The pathways will typically not represent some of the extreme demands that may be made of the state.

6. We then cost each of the pathways using Scottish data where possible. This approach is consistent with a well established economic technique known as generational accounting. [3] Using standard economic techniques [4] we then express these costs as present values in 2009 prices.

7. Finally we subtract the present value of the cost of the baseline pathway from present values of the costs of the "moderate" and "severe" pathways to give us the additional costs associated with an individual with "moderate" or "severe" needs.

8. We have calculated costs over two periods. The first is over the initial five years of life, including the pre-birth period, which we have labelled the Short Term. The second or Medium and Long Term is over the expected lifetime of an individual from the age of nine years, broken down into ages 9-18 and age 19 plus. This Long Term corresponds to the conventional period of which Early Years interventions are thought to provide returns.

9. Our costs are allocated to Scottish Local Authorities, the Health system within Scotland, the Scottish Courts and Justice system and finally the UK Government. This allocation represents the principal public services used by and the benefits claimed by individuals with additional needs. We have not considered the longer term costs of lower economic output, or tax revenue lost to the UK exchequer from individuals with additional needs. This simplification will not be a major issue for our estimates of the impact on Scottish public finances over the course of the next five years. However, it may mean that we underestimate the longer term impact on public finances, particularly those elements that accrue to the UK Government.

Interpretation of our results

10. Our modelling suggests that over the first five years of life there is an additional annual cost to the Scottish public sector of a child with severe additional needs of about £37,400 p.a in constant 2009 prices. Similarly a child with moderate additional needs is estimated to cost the state an additional £5,100 each year. How are we to interpret these figures?

11. One appealing interpretation is these are the early returns on investment in the Early Years. However, that is not the approach we have taken here as we have not considered in an exhaustive way the evidence on effectiveness of the policies. We can legitimately say that these savings represent the returns if Early Years policies and services demonstrate the approaches and characteristics shown to be effective through robust evaluation and can therefore prevent a child from developing moderate or severe additional needs.

12. We can also gross these individual savings up by an estimate of the number of children who currently have modest and severe additional needs.

13. Later in this paper we estimate that there is a potential annual saving of £5.4 million across the pre-birth to 5 year old group. Using a similar approach we estimate that there are medium term potential annual savings of £131 million in constant 2009 prices across the 9-18 age group who received completely successful Early Years interventions.

14. An alternative way of interpreting these figures is as the financial benefits that can be gained by the Scottish public sector of successfully mitigating the additional moderate and severe needs of individuals through Early Years and Early Intervention approaches.

15. An obvious question is whether or not it is realistic to assume that a package of Early Years interventions will in fact mitigate the additional needs of moderate and severe individuals. There is a wide range of evidence to suggest that this is in fact the case for individuals once they reach 9-18 years of age and in their later life. Although there is less formal evidence around the 0-5 age group we are starting to see some evidence that is consistent with this early success. [5] Furthermore, as part of the second stage of work for this study the Scottish Government has assembled an expert group that has been asked to design a package of interventions that will tackle the additional needs of moderate and severe individuals. Our early discussions suggest that such a package is a realistic objective and in that the Expert Group's judgement is that the package would be capable of mitigating needs over the first five years of life as well as in later life.

16. Section 3 of the paper explores our results in more detail as well as presenting some sensitivity analysis.

2. COSTING CHILDREN'S PATHWAYS

17. Our approach has been to model the impact of Early Years policies by developing three pathways for individuals: a baseline pathway in which an individual calls upon a standard package of universal services, a moderate additional needs pathway and a severe additional needs pathway. We apply this approach over two distinct time periods

· The Short Term where we focus on needs over the pre-birth period to age five

· The Medium and Longer Term where we focus on the period from age nine onwards as this represents the period by which conventionally the Early Years are complete. In turn we have divided this period into two sub-periods (ages 9-18 and age 19 plus) to capture distinct phases of demands on public services

18. We have developed hypothetical narratives for both periods to illustrate examples of an individual with moderate and severe additional needs as compared to those who need only access universal services. These narratives are based upon information from Scottish & UK Government statistics, and a range of research papers outlining case studies relating to individuals with high levels of demand for public services [6]. The hypothetical narratives are not designed to represent an average of any particular group, but have been developed to represent three quite diverse, but credible, life cycle pathways, reflecting circumstances in Scotland.

19. We present full details of the hypothetical pathways in paragraphs 21 to 33 below. For each pathway we provide a short narrative describing a likely outcome and an illustration of the public services such an individual is likely to demand. We then calculate the potential cost to the public sector of providing the services described in each of these pathways.

20. The cost information that we have been able to use in this study has typically been taken from national data on expenditure and divided by a scale variable to derive a very simple unit cost. It has not been possible to obtain expenditure by specific groups or on specific individuals so it is likely that our simple unit cost data underestimates the cost of some of the services demanded by both modest and severe individuals, but particularly so the services demanded by those at the more extreme end of the two ranges. For this reason our estimates probably represent a lower bound of costs.

Short Term Narrative and Costs

21. Table 1 below provides our illustrative narrative for the baseline, moderate additional needs and severe additional needs from pre-birth to the age of five years. We then identify a corresponding set of service demands that a child in each of the three pathways would be likely to make. The levels of service demand were estimated using research evidence into the consequences of substance misuse in the ante-natal period, the impact of parenting programmes and their ability to mitigate against conduct disorders, and the benefits of pre-primary education [7]. In Table 2 below we provide illustrative examples of some of the services demanded by a child in each of the three pathways. [8]

Table 1: Narrative around Early Years Policies: Short Term

Baseline

Moderate Additional Needs

Severe Additional Needs

Maternal Health

General health of mother and child good. Low demand for additional services

Low birth weight, pre-term baby (32-36 weeks) due to mother's substance misuse. Baby has behavioural and developmental problems

Child has limiting long term illness due to mother's substance misuse during pregnancy

Parenting Programme

Strong parent child relationship and good child development and behaviour

Poor parent child relationship and poor child development and behaviour, child put on child protection register

Breakdown in parent child relationship and parent and child displaying harmful and violent behaviour

Pre-school

Child is engaged and willing to learn when starting primary school. Has no behavioural or development problems.

Child has problems engaging with learning. Shows signs of ADHD.

Child has problems engaging with learning. Disruptive and violent behaviour in class that leads to exclusion and attendance of special school



22. The final step is to use our estimates of the unit costs of service delivery to cost the illustrative services demanded under each pathway. These costs are then converted to figures known as present values which represent the total costs of the services over the initial period of a child's life but expressed in constant prices and to take account of the cost of borrowing over time.

Table 2: Illustrative Public Services Demanded by Children: Short Term

Baseline

Moderate Additional Needs

Severe Additional Needs

Maternal Health

Standard Ante-natal Care

Special care baby unit.

Sick Children's Hospital Inpatient

Sick Children's Hospital Inpatient

Additional Cost of pre-term birth associated with mothers who are substance abusers

Parenting Programme

Family Support Workers

Looked after child at home

Family Support Workers and Child Psychiatry Outpatients Looked After Child with family member

Pre-school

Standard School Education

Additional education support estimated as primary placement.

Residential school as a proxy for increased need for education services



23. Table 3 illustrates the additional cost of these present values broken down by the different parts of the Scottish public sector that bear the cost. To arrive at our estimates of the benefits that can be gained by mitigating the need for additional service provision we subtract the baseline present value from both the moderate and severe present values. If we express these net present values as annual figures we arrive at the potential savings each year of £5,100 for a child with moderate additional needs and £37,400 for a child with severe additional needs.

24. We discussed above how we could gross these per child estimates up to provide a global figure for Scotland. If we take the number of looked after children in this age range as a proxy for those with moderate additional needs and the number of children in a residential setting in this age range as a proxy for those with severe additional needs we arrive at a total potential annual saving of £5.4 million across Scotland. [9] This saving is based on the strong assumption that a package of interventions can completely mitigate the additional needs we have identified.

25. We explored using several different proxy population groups. The proportion of looked after children in the population was adopted as a proxy measure as it relates to a group with relatively high, and differing, levels of need, and is therefore an appropriate estimation. It is however a small proportion of the overall population, and a conservative estimate of the size of the moderate and severe groups.

26. We estimated that for the moderate case the largest proportion of the additional potential savings would accrue to Health, with Social Work and Education also experiencing some saving. In the severe case both Social Work and Health are estimated to accrue relatively large additional savings (£141,404 and £83,370 respectively over the pre-birth to 5 years old period).

Table 3: Present values of costs per child for Moderate Additional Needs and Severe Additional Needs: Short Term (Pre-birth - 5 years old)

NPV [1] Short-term
cost

TOTAL NPV Short-
term cost

Additional
Cost of
Moderate
Outcome
Scenario

HEALTH

EDUCATION

SOCIAL WORK

£20,026

£2,880

£7,489



£30,395

Additional
Cost of Severe
Outcome
Scenario

HEALTH

EDUCATION

SOCIAL WORK

£83,370

£0

£141,404



£224,774


Medium & Longer Term Narrative and Costs

27. We take a similar approach to estimating the potential for medium and longer term savings from mitigating the additional demands for public services and transfer payments made by individuals with moderate and severe additional needs. This is more familiar territory for the analysis of Early Years interventions. However, we should remember that our methodology remains one of identifying the scale of potential savings that was used above. We do not - as other studies do - present evaluation evidence in the form of clearly identified savings that allow calculation of a rate of return on Early Years investments.

28. Table 4 below illustrates the basic medium and long term narrative, Table 5 provides some illustrative examples of the public services demanded by individuals following the three pathways.

Table 4: Narrative around Early Years Policies: Medium and Long Term

Baseline

Moderate Additional Needs

Severe Additional Needs

· Works P/T & F/T while studying.

· Buys own home.

· Has 2 children. Living with partner and 2 children.

· Works F/T until retirement at 60.

· Prostate cancer

· Periodic use of GP and Nurse services

· Glaucoma.

· Hip replacement

· Dies at 83

· Foster/Kinship care until 16 years old.

· 6 month spell in Residential Care

· Periodic redundancy.

· Sheriff Court Summary case.

· Lives in LA housing

· Has 2 children.

· Bronchitis

· Lung Cancer

· Dies at 70

· Several welfare and offence referrals to reporter.

· Community care followed by residential care

· Criminal behaviour

· Chronic poor health

· Chronic Liver Disorders - Ongoing.

· Dies at 50



Table 5: Illustrative Public Services Demanded by Individuals: Medium and Long Term

29. The final step is to use our estimates of the unit costs of service delivery to cost the illustrative services demanded under each pathway. These costs are then converted to figures known as present values which represent the total costs of the services over the initial period of a child's life but expressed in constant prices and to take account of the cost of borrowing over time.

Baseline

Moderate Additional Needs

Severe Additional Needs

GP/Hospital Visits

Pension

Kinship/Foster Care

LA Housing

Courts System

Transfer Payments (JSA, Housing Benefit, CTC)

Hospital treatment linked to smoking/Drinking

Residential care

Courts and prison System

Drug testing orders, rehabilitation

Transfer Payments (JSA, Incapacity benefit)

Hospital treatment linked to substance abuse



Table 6: Present values of costs per individual for Moderate Additional Needs and Severe Additional Needs: Medium and Long Term (9 years old onwards)

30. Table 6 summarises the present values of costs for the Medium and Long Term, splitting them by those costs that are associated with devolved issues, and those associated with reserved issues. Most of the present value of the cost is associated with Local Authority Social Work and Health spending, though the discounting technique used does serve to discount heavily those costs incurred in later life.

NPV 9 to 18
years (Medium Term)


NPV19years+

Total NPV 9
years + (Long Term)

Additional
cost of

UK Public Sector only


£0


-£5,665


-£5,665

Moderate Outcome Scenario

Scottish Public Sector only


£137,212


-£11,301


£125,911

Additional
Cost of

UK Public Sector only


£1,974


£38,588


£40,563

Severe Outcome Scenario

Scottish Public Sector only


£616,449


£177,609


£794,059



31. Medium term savings were estimated over the first 10 years after the early years period, between 9 and 18 years of age. Using Looked After Children as a proxy for those individuals with moderate difficulties, and those in residential care as a proxy for the severe cases, it is estimated that the total potential saving resulting from 100% effective interventions early in life (pre-birth to aged eight) could initially be up to £131m per annum, in the medium term.

32. In the longer term, a failure to effectively intervene to address the complex needs of an individual in early childhood can result in a nine fold increase in direct public costs, when compared with an individual who accesses only universal services. Table 7 shows the potential reduction in the net public cost to the public sector resulting from reducing an individuals "severe" pathway by a given percentage.

Table 7: Present values of potential % cost reductions Severe Additional Needs: Long Term (9 years old onwards)

Target % reduction in NPV public cost

5.0%

10.0%

15.0%

20.0%

Potential Reduction in NPV Public Cost

£47,000

£94,000

£142,000

£189,000



33. A package of effective early years interventions designed to reduce the frequency and type of service demanded by those individuals experiencing severe pathways could have a significant impact on the outcomes for those individuals, and therefore a reduction in the level of cost to the public sector. For example, a ten percent reduction in the total cost to the public sector of an individual's severe pathway could result in a potential saving of approximately £94,000 per individual.

3. CONCLUSIONS

34. Our financial modelling of short term savings from investing in early years / early interventions from pre-birth to aged five suggest that there are potential net savings of up to £37.4k per annum per child in the most severe cases and of approximately £5.1k per annum for a child with moderate difficulties in the first five years of life. While these savings may be modest in comparison to the well known longer term savings they are still significant.

35. The short term costs of failing to mitigate against the most severe cases are incurred largely by Local Authorities and health services, particularly through engagement with Social Services, Maternal Health interventions and costs associated with not being ready for school education.

36. The model also demonstrates that there are potential medium term net savings to the public sector that can be realised 10 years after the early years period. Using Looked After Children as a proxy for those individuals with moderate difficulties, and those in residential care as a proxy for the severe cases, it is estimated that the total potential saving resulting from 100% effective interventions early in life (pre-birth to aged eight) could initially be up to £131m per annum, in the medium term.

37. In the longer term, a failure to effectively intervene to address the complex needs of an individual in early childhood can result in a nine fold increase in direct public costs, when compared with an individual who accesses only universal services. A package of effective early years interventions designed to reduce the frequency and type of service demanded by those individuals experiencing severe pathways could have a significant impact on the outcomes for those individuals, and therefore a reduction in the level of cost to the public sector. For example, a ten percent reduction in the total cost to the public sector of an individual's severe pathway could result in a potential saving of approximately £94,000 per individual.

ANNEX: COST ASSUMPTIONS

This annex focuses on the Health, Education, Social Work, Housing, Court/prosecution and Transfer Payment public costs estimates. It is accepted that there will be other direct/social costs incurred throughout an individual's life cycle (such as the cost of crime), opportunity costs and also contributions to the public sector which would offset costs incurred. For simplification of comparison these costs have been omitted.

All costs are apportioned to the child, such as those associated with birth etc. It is accepted that the cost estimates may differ along gender lines, though this is beyond the scope of this analysis.

Education: Per head learner costs have been estimated using Education Analytical Services data for Pre-Primary, Primary, Secondary, HE/FE and Modern Apprenticeships. Education and training are included as costs in this exercise, though it is accepted that spending on education can be viewed as an investment, and there are benefits generated as a result of gaining higher qualifications, such as higher wages and therefore more likely to generate a return in the form of higher tax receipts and productivity increases.

Employment: Employment costs are largely the cost of the transfer payments made as a result of unemployment, and use the most recent Scottish averages from the Department for Work and Pensions (Jobseekers Allowance, Incapacity Benefit, State Pension). Change to the future level or structure of these payments has not been included for this analysis. Current Scottish Averages were used, and transfer payments discounted to present values. Transfer payment estimates do not include the costs of administering the social security system.

Housing: Detailed data on the average or unit costs to the public sector of providing social housing was not available. A proxy measure, Local Housing Allowance (LHA), was substituted. LHA replaced what was formerly Housing Benefit, paid to tenants on low incomes. 2009 data on the average level of LHA in Scotland was calculated from Scottish Government data.

Social Services: The main social services costs that were estimated were with respect to looked-after children. Rough estimates of costs associated with looked-after children were available from Education Analytical Services. There is little robust data on the unit cost of Social Work services to older people and the range of adult services (mental health, substance misuse, learning difficulties, disabilities, and criminal justice social work). These areas account for approximately a third of all Social Work spending, and therefore costs are likely to be an underestimate of the true cost with respect to the severe case study. Furthermore, a large proportion of Social Work expenditure is defined as assessment, though it is difficult to disaggregate this into a unit cost, again underestimating the total cost of those accessing social services.

Criminal Activity: Recent data on incidence of crime, average sentences and criminal justice unit costs were available from the Scottish Government for the adult criminal justice system. Costs available included per case costs of legal aid, prosecution costs and disposals e.g. prison. Incidence of crime and sentencing data was used to make assumptions about the criminal activity engaged in and sentences passed for convictions.

Data was not available on the costs of arrests that do not lead to conviction e.g. cautions, nor any direct costs to the police force (such as crime management, public order, community safety etc)

Health: Health data was taken from the ISD cost book 2009, the only source of published costs information for NHS Scotland (NHSS), and provides a detailed analysis of where resources are spent in the NHSS. Cost estimates for specific treatments and conditions utilised the Scottish National Tariff Project, which uses data collected via the Costs Book project. Tariffs are based on national reference costs which provide unit cost information for a wide range of procedures and treatments carried out in Scottish hospitals.

Costs not included:

Policing: No unit cost data readily available for Policing.

Adult Social Services: No unit cost data readily available for adult Social Services

[1] See Cunha and Heckman (2006) "Investing in our Young People", and Doyle et al (2007) "The Timing of Early Childhood Intervention", Working Paper, University College Dublin

[2] See Scottish Children's Reporter Administration Research papers, and Godfrey et al (2002) Estimating the Cost of Being "Not in Education, Employment or Training" at Age 16-18.

[3] See Cardarelli, Sefton and Kotlikoff (2000) "Generational Accounting in the UK", Economic Journal, for an application to the UK.

[4] HM Treasury (2003), Green Book (online). Available http://www.hm-treasury.gov.uk/data_greenbook_index.htm (accessed July 2010)

[5] For example, see New Economics Foundation (2010) "The economic and social return of Action for Children's East Dunbartonshire Family Service" for an evaluation that points to such early success.

[6] See Scottish Children's Reporter Administration Research papers, and Godfrey et al (2002) Estimating the Cost of Being "Not in Education, Employment or Training" at Age 16-18.

[7] For examples see Edwards et al (2007) "Parenting programme for parents of children at risk of developing conduct disorder: cost effectiveness analysis", BMJ. Also Institute for the Study of Children, Families and Social Issues (2007) "Effective Provision of Pre-School Education" (online), http://www.iscfsi.bbk.ac.uk/projects/effective-provision-of-pre-school-education, (accessed May 2010). Scottish Government (2007) "The Societal Cost of Alcohol Misuse in Scotland for 2007"

[8] Full details are available from the Scottish Government on request.

[9] We have performed some simple sensitivity analysis of plus or minus 25% on the numbers of children with moderate and severe additional needs that gives a range of £4.1 million to £6.8 million.

[10] Net Present Value