Report on Draft Budget 2016-17

(Web)

Contents

Introduction
Local authority spend on school education

Background from the survey of local authorities
Meetings with Local Authority Officials
Pupil Teacher Ratios
Recruitment, Retention, Pay and Conditions of Teachers
Sharing and Integrating Services across Local Authorities and Schools
Protected Budgets and Implications for Other Council Services
Attainment Issues
School Closure Policies
Scrutiny of five key public bodies.
Added Value/Value for Money and Outcomes
Other sources of funding

 

Remit and membership

Remit:

The remit of the Committee is to consider and report on further and higher education, lifelong learning, schools, pre-school care, skills and other matters falling within the responsibility of the Cabinet Secretary for Education and Lifelong Learning and matters relating to culture and the arts falling within the responsibility of the Cabinet Secretary for Culture and External Affairs.

Membership:

Stewart Maxwell (Convener)
Siobhan McMahon (Deputy Convener)
George Adam
Colin Beattie
Chic Brodie
Mark Griffin
Gordon MacDonald
Liam McArthur
Mary Scanlon

Report on Draft Budget 2016-17

Introduction

1. Last year we scrutinised the Scottish Government’s 2015-16 draft budget by focussing on spending on primary and secondary schools.1 To build upon that work, this year we have again considered local authority spend on school education as part of our budget scrutiny work for 2016-17. Education spend was estimated at some £4.8billion in 2012-13.2

2. We have taken an inclusive approach, spread across the calendar year, designed to maximise input from key stakeholders particularly local authorities and parents. Our approach, to complement our usual oral evidence taking, has included:

  • a survey completed by all 32 local authorities, providing basic budget and demographic information;

  • an informal event in the Parliament on 8th September with local authority finance and education staff from 28 authorities attending; and

  • meeting the board of the Scottish Parent Teacher Council (“the SPTC”) on 7th November.

3. This report sets out the key messages we have heard during this work. Owing to the later timetable for publication of the Scottish Government budget 2016/17 we have not sought, as yet, to take evidence from Scottish Government ministers. Our approach is to highlight the key issues brought to our attention and to seek a detailed written response from the Scottish Government.

4. In the New Year we will hold a further evidence session and then hear from the Scottish Government. At that session we will also seek views in relation to our ongoing work related to closing the educational attainment gap.

5. Also in relation to budget scrutiny we agreed to look at the spending decisions made and outcomes delivered by 5 key public bodies within our remit who between them are responsible for spending totalling in excess of £1.9billion of public money. This was the first occasion in which the Scottish Parliament had undertaken this type of work and closely scrutinised these bodies. We took evidence from Creative Scotland, Education Scotland, Scottish Funding Council, Scottish Qualifications Agency and the Skills Development Agency.

6. During evidence sessions our main focus was to ascertain and understand the added value each of those organisations brings and how they contribute to delivery of the Scottish Government’s National Performance Framework. We sought to consider their outputs related to their individual corporate plans and the objectives set for them by Government.

7. In relation to each of the bodies we have written separately to the respective Cabinet Secretaries covering individual and specific aspects of the evidence we received. The last section of our report sets out a number of generic questions and findings which apply across the 5 bodies.

Local authority spend on school education

Background from the survey of local authorities

8. We asked all local authorities to provide us with details of:

  • revenue and capital budgets for primary, secondary and special schools

  • schools revenue as % of total local authority revenue budget

  • NPD/PFI unitary payments

  • numbers of pupils

  • list of savings in 2015/16

  • list of investments in 2015/16

    9. The baseline information from the survey painted a consistent picture across the country. The survey indicated:
  • In almost all councils education has a higher share of the total budget in 15/16 compared to 12/13. Where it has dropped, this tends to be small - between 1% and 1.5%. In general therefore, it appears that education spend has been protected.

  • All returns show increasing pupil numbers in primary schools. This creates a pressure to increase the number of teachers in primary schools to maintain pupil teacher ratios. The returns disclosed 12 councils with small reductions in primary teacher numbers despite increasing pupil rolls.

  • Primary spend per pupil decreased in 15 local authorities.

  • Secondary school pupil numbers have been falling in every council, although they will start to increase in the next couple of years. Five councils showed small increases in teacher numbers in secondary.

  • Savings were reported across most types of activity; these included teaching staff, non-teaching staff, training budgets, infrastructure such as IT, heating, phone lines, and support services, including school meals.

  • There were some identified savings to curriculum activities, but these were generally less common than the above mentioned areas. They included cuts to: music tuition, pupil swimming lessons and clothing grants.

  • The largest savings tended to relate to staffing, which is likely to reflect that this is the largest element in the budget.

Meetings with Local Authority Officials

10. Using the material from the survey we held an informal event on 8th September for senior education and finance local authority officials at which 28 authorities were represented. This enabled us to use the survey data to discuss what was happening on the ground across the country. We received a consistent message across most authorities. Discussions covered:

  • Pupil Teacher Ratios

  • Recruitment, retention, pay and conditions of teachers

  • Sharing and integrating services across local authorities and schools

  • Protected budgets and implications for other council services

  • Attainment issues

  • School closure policies

11. For convenience we summarise what we heard throughout this inquiry using those headings.

Pupil Teacher Ratios 

12. The local authority finance settlement for 2015/16 included an agreement that local authorities would maintain their pupil teacher ratio (PTR) at the same level as the previous year as well as maintaining, as a minimum, the total number of teachers employed. Each authority therefore has a different ratio it is required to meet. As an incentive local authorities that meet the ratio agreement and employ the requisite number of teachers will receive a share of £10m Scottish Government funding. Those that do not, not only do not receive their share of the £10m, but also lose their share of £41m that was included in the local government settlement.

13. This topic was the most commonly mentioned issue in our discussions with local authority staff.

14. Local authorities generally considered maintaining the ratio to be challenging and were concerned it reduced local flexibility to put teachers in classrooms and schools where they were most required.3 They considered the PTR did not take full account of the reality in the classroom or take any account of the use made of classroom assistants, support and special needs assistants. Shetland, for example, indicated they were employing 3 additional teachers they did not need simply to meet their target.4 In East Lothian a specific example was given that should there be an increase of 60 pupils in a school no additional teachers would be required to maintain the ratio.5 Overall, it was suggested this inflexibility would become more problematic as budgets become stretched.

15. We were also told about inflexibility in the approach to assessing whether authorities were meeting their targets. Authorities were concerned even a small failure led to the full reduction in grant being imposed regardless of the reasons for falling short. Examples given included the inability to recruit.

16. When asked if local authorities should be left to set the levels of teachers required in each school all our local councillor witnesses on 1 December agreed, with COSLA also indicating it was necessary to look at the wider provision of children’s services [across all education and children’s services].6

17. Some teacher unions reiterated their view that maintaining sufficient teacher numbers was essential to tackling the attainment gap, primarily because it acted as a proxy for class size. In their view, small class sizes were linked to, and indeed central to, improving attainment. Andy Smith from the School Leaders Scotland said research evidence did not support such a position indicating class size was not a significant factor in raising attainment.7

  • Q: Could the Scottish Government explain the reasons behind having a different PTR ratio in each local authority?

  • Q: Does the Scottish Government have any discretion in the imposition of grant reductions for failing to maintain ratios, for example is there discretion, flexibility, tapering of penalties or even a reasonableness test that is applied?

  • Q: We note this is a target as opposed to an outcome driven measure. Could the Scottish Government indicate the linkage between the ratios and educational outcomes in individual local authorities?

Recruitment, Retention, Pay and Conditions of Teachers

18. We are aware current difficulties in recruitment follow several years of over-supply of teachers which led to the problem of teacher unemployment. Local authority officials voiced to us strong concerns about their current ability to recruit teachers. We also note this issue was subsequently highlighted at a ‘summit’ of several north of Scotland local authorities in September. Union evidence suggested looming challenges in recruiting sufficient teachers as well as voicing concerns around workforce planning.

19. At our informal event, officials suggested difficulties in recruitment as a reason why local authorities might have difficulty in meeting the teacher numbers target. It was noted teacher employment costs were fixed with pay and conditions set nationally, which differs for other council staff where local arrangements apply albeit COSLA has a role in agreeing national increases. Thus to make any savings in education employment costs and maintain its PTR a local authority can only reduce its numbers of non-teaching staff. This, it was suggested, is proving increasingly difficult as local budgets become more stretched.

20. The leader of Aberdeen City Council told us difficulties in recruitment and retention in Aberdeen and surrounding areas also stemmed from the locally high cost of living.8 As a result they had spent over £1million from the education budget on advertising and retention incentives. The latter has the potential to create an “incentives war” across authorities as well as a differential between new and existing teaching staff.9 Alongside the current shortages of teachers we were told of the continuing difficulties in obtaining supply teachers10 and heard about a lack of flexibility with GTCS registrations.11

21. Difficulties in accurate teacher workforce planning were discussed by the unions. The NUS wanted better tracking of newly qualified teachers particularly whether they go on to teach in Scotland12. We were told pupil numbers at primary were currently increasing and this, allied to large numbers of teachers reaching retirement in the near future, meant the demand for teachers would continue to rise.

  • Q: Can the Scottish Government describe the efforts that have been made to improve the accuracy of teacher workforce planning over recent years and what effect that has had?

  • Q: Can the Scottish Government explain what measures it has taken to track the employment that teacher graduates secure both after graduation and on completion of their probationary year?

  • Q: Can the Scottish Government indicate how we move to a more stable and sustainable workforce planning system in all parts of the country and what role the Scottish Government will undertake?

Sharing and Integrating Services across Local Authorities and Schools

22. In our budget report for 2015-16 we noted the potential for shared services both within and between local authorities.13 We stressed this was an area that required to be re-examined by councils. In a written response to our report the Scottish Government indicated the work on “reforming Scotland’s public services involving bodies working across organisational boundaries to deliver services which best meet people’s needs.” Reference was made to the work of the Improvement Service including work “aimed at helping councils explore shared services possibilities.” COSLA did not respond to our report on this aspect.

23. At our informal event we were keen to follow up on last year’s report and discuss any suggested approaches for improving financial efficiency through the sharing of services across local authority boundaries and/or between schools. However, we received a mixed response. The scale of available savings in comparison with the budgetary difficulties was questioned. In particular, it was suggested sharing services effectively might be difficult where councils are politically different. Others expressed concern about possible impacts on pupils’ education from sharing services. Impacts on pupils’ education were not raised in oral sessions while the EIS noted the failure of a proposed merger between Stirling and Clackmannanshire councils for political reasons14.

24. We heard some examples of sharing, including staff between schools in Shetland15, a city campus in Aberdeen to which pupils travel during the school day for lessons, offers to share Gaelic medium education provision in East Ayrshire, sharing of language teachers by the old Tayside authorities and the sharing of a finance director between Aberdeen and Shetland. We also heard limited mention of the use of distance learning confined to rural and remote areas. In general, witnesses suggested this was an area from which large scale savings were unlikely to emerge, although one suggested more should be spent on exploring potential opportunities.16

25. In responding to the suggestion from the EIS that there was an “irrefutable case” for savings from back office services e.g. payroll, including across council boundaries, councillors cautioned against this being seen as a panacea suggesting any potential was extremely limited. COSLA also suggested that authorities looked primarily for local solutions, championing local democracy while also preserving connections between communities and local members.17

  • Q: Could the Scottish Government indicate what progress has been made in relation to the reforming of public services involving the sharing of local authority education services since we reported on the 2015-16 budget?

  • Q: Does the Scottish Government agree with COSLA and councillors opinion that little financial benefit could accrue from sharing of services and if not what more could the Government do to encourage this?

  • Q: Does the Scottish Government see any potential benefits from increases in distance learning and if so what could the Government do to encourage this?

  • Q: What are the views of the Scottish Government in relation to the suggestion by COSLA that local authorities’ focus should be on local democracy and local connections?

Protected Budgets and Implications for Other Council Services

26. The Committee's survey of local authority budget returns showed that in most councils education had a higher share of the total budget in 2015/16 compared to 2012/13. In general it seems education spend has been protected although, as noted, the education budget has had increasing demands placed upon it - particularly in terms of teacher employment costs.

27. Councillors warned this “protected status” could not continue noting the importance of other services which contribute towards education. One example we were given of unintended consequences from cuts related to reductions in school transport potentially leading to vulnerable children not attending school.18

28. Teacher unions, when pressed, were reluctant to argue for any service to be cut – they want to see additional funding across the whole of local government rather than ‘play off’ one service against another.19 Unions defended national pay bargaining and, rather than comment on the effects of creating differentials between teachers and other staff, sought pay increases for all. Councillors cautioned the need for a more holistic approach with COSLA noting their approach to national pay bargaining for all [non-teaching] local government staff.20

29. During our meeting with SPTC Board members they indicated parents are often seen as “cash cows”, in some schools fundraising up to £15-£25k annually was used to purchase equipment and other items. One example given was in Aberdeenshire where parent teacher councils, drawing on parental expertise, are devoting considerable time to sourcing and completing applications to seek external funding. We were advised this effort is targeted at local industry, oil companies as well as parents.

30. Fundraising to the levels mentioned can, the SPTC suggest, cushion the effects of budgetary restraint in certain schools (mainly in affluent areas) and thus widen the gap between schools.

  • Q: The Scottish Government is seeking to protect teacher numbers and education budgets are being protected by local authorities. Given this, what impact does the Scottish Government consider it is having on other local authority services which support children?

  • Q: Does the Scottish Government consider local authority education budgets require to be maintained across the country at a minimum of current levels? What impact does the Scottish Government consider reductions would have on educational attainment?

Attainment Issues

31. Although the focus of our budget work was on local authority spending decisions, an important issue is the impact of those decisions on attainment. It was noted the policy of maintaining teacher numbers implies a lower pupil teacher ratio which can impact favourably on attainment. Although a pupil teacher ratio is not a direct measure of class size, one argument for maintaining teacher numbers is as a proxy for class size.

32. We asked council officials in the informal discussions, about the best staffing mix for improving attainment. For example, if we had slightly fewer teachers, could we have commensurately more support workers? We also asked whether, if the McCrone hours were to be filled by non-teaching staff, would this actually enhance the overall quality of education provided?

33. Councillors in evidence disagreed with unions over drawing a direct correlation between teacher numbers and attainment. Viewing education as being much wider and delivered by more than simply teachers, councillors while officials stressed the importance of classroom assistants.

34. They also made linkages to other important services such as midwives, health visitors, housing, libraries and early years, each being seen as important contributors to a child’s education.

35. The SPTC noted the key role played by career advisor teachers and also observed that achievements, other than just exams, require to be recognised.

36. In our earlier work on attainment we considered the importance of parental involvement. The SPTC highlighted Edinburgh as an example of good practice in engagement and listening to PTC’s with, in addition, a parent representative sitting on the council Education Committee. However SPTC observed this was not a universal position across the country notwithstanding the Parent Involvement Act. They explained many parents have little or no knowledge of the legislation and their rights. The SPTC indicated a common comment from parents when advised of their rights to be involved and consulted was “I didn’t know we were allowed to do that”. SPTC members queried the roles of local authorities and Education Scotland in this regard.

37. SPTC also said that attainment difficulties are caused by more than poverty. It was noted such a gap exists for many by the start of P1. They suggested the change required must be to family learning and educating families (parents) while accepting all parents want the best for their children.

38. The SPTC consider a major influence in attainment is the aspiration of parents, adding that those with money/influence have advantages. It was suggested a radical approach is required noting that all (recent) policies to improve educational attainment have had the opposite effect and widened the gap primarily because take up is higher by children already at higher levels.

39. We have been considering attainment issues over the past year and will return to this subject in the new-year. Meantime we agree with the observations of Councillor Laing that improvements will not happen over-night and agree politicians at all levels require to take a longer term view on initiatives allowing them time to show benefits.

  • Q: Can the Scottish Government indicate what Government spending has the greatest impact on closing the attainment gap?

  • Q: Can the Scottish Government indicate how it intends to evaluate and monitor outcomes achieved as a result of funding from the attainment Scotland fund.

  • Q: Can the Scottish Government indicate what actions it has taken to help disadvantaged children with educational needs?

School Closure Policies

40. In our informal discussions, local authorities referred to difficulties in rationalising the school estate although a number noted that closing a school does not necessarily lead to savings in staff costs. For example transport costs and maintenance of buildings could cost as much, if not more than the running costs of keeping schools earmarked for closure open.

41. Many considered school closure had been made more difficult, particularly in relation to rural schools, due to the extent of legislative requirements for consultation. While there might be financial savings to be made from school closures, the policy debate and legislative changes have centred largely on the idea that closing a school should be an educational and not a financial decision.

42. Unions also noted very small schools might not be attractive options for a teacher early in their career, and this might impact on recruitment difficulties in some rural authorities.

43. The SPTC noted attempts to close schools are one subject guaranteed to engage parents, but the effect is that in such circumstances trust in the authority is inevitably lost. SPTC members recognised that educational value for children could, in certain circumstances, be improved by closure.

44. Councillors were clear the closure process is onerous and time consuming while also considering the need to link educational benefits with potential financial savings.21 Some disparities across rural councils were noted between size, population and school numbers. The definition of a rural school was queried particularly in relation to proximity to major conurbations.

  • Q: Can the Scottish Government indicate how they are monitoring the overall impact of school closure legislation and the impact found to date?

  • Q: Can the Scottish Government clarify the balance that requires to be given between educational benefit and financial considerations when school closures are being considered?

Scrutiny of five key public bodies.

45. In addition to our scrutiny of local authority educational spend we also looked at the spending decisions made and outcomes delivered by:

  • Creative Scotland £33.4m;

  • Education Scotland £24.8m;

  • Scottish Funding Council (SFC) £1647m;

  • Scottish Qualifications Agency (SQQ) £33.7m; and

  • the Skills Development Scotland (SDS) £184m.

These 5 public bodies between them are responsible for spending a draft budget in 2015-16 approaching £2 billion (£1,922.9 million).

46. In examining these bodies our main focus was to ascertain and understand the added value each organisation brings and how they contribute to delivery of the Scottish Government’s National Performance Framework. We sought to consider their outputs related to their individual corporate plans and the objectives set for them by Government with a view to using performance information against their priorities. Given the lack of performance information available this proved challenging.

47. In this report we concentrate on those areas arising from our scrutiny which are common to most, if not always all, of the bodies we scrutinised. There are a number of specific areas we highlight from that work.

48. Separately we have written to the Scottish Government seeking views in relation to each of the 5 bodies.

Added Value/Value for Money and Outcomes

49. Underpinning our scrutiny of the five bodies was an attempt to understand the outcomes each achieved set against the roles and objectives set for them including scrutiny of the letters of guidance issued by the Scottish Government.

50. The bodies were clear they provided value for money, but none reported “on their plans to improve the value for money achieved ….. “actions undertaken and results achieved.”22 In responding on their added value bodies tended to refer to reductions in some budgets, perhaps suggesting increases in efficiency but without making reference to efficiency. No direct link to outcomes from the reduced budgets was made nor were we given any comparative information with other similar bodies in other jurisdictions and we heard nothing about any benchmarking of activity with other organisations.

51. We did receive evidence from most about inputs and outputs, as well as in some instances how reports on activity, impact and outcome measures were compiled. Some were unable to provide costs of activities or indeed compare costs across different fields of activity. For example the SQA could not compare the costs of providing different subject examinations or costs per candidate.i

52. In letters to the Scottish Government following these sessions and in advance of hearing from the Government in the new year we have asked for details of the current measures used by the Scottish Government to assess the extent to which the bodies are providing value for money, in what way outcomes are monitored and whether they consider benchmarking against other comparable bodies should be introduced.

Partnership Working

53. We heard considerable detail about bodies working together across the public sector. This involved not only the 5 bodies we scrutinised but also others such as Scottish Enterprise, Highlands and Islands Enterprise and Community Planning Partnerships as well as schools and colleges. In many cases we heard about the benefits from collaborative working and the results of joint working.

54. It was no surprise to hear about partnership working, indeed the role of some bodies requires interaction with others. What was less clear was how the impact of partnership working is being assessed, and the extent to which partners are individually, as well as collectively, adding value.

55. In our letters to the Scottish Government we have asked what means and measures the Scottish Government uses to assess and evaluate what has been achieved by the SDS and others when working in partnership with other agencies.

Other sources of funding

56. During our examination of the bodies there were a number of references to external funding. For example the SQA charges for consideration of unsuccessful appeals and raises funds from overseas activities. We also heard about how other sources of funding are often available in addition to awards or grants from the bodies we scrutinised. For example we considered the success of higher education institutions (HEIs) in generating substantial income, some £441 in 14/15 from knowledge exchange activities.

57. In relation to the HEIs we asked the SFC about the merit of taking an equity share, or similar, in relation to the public money (£264 million in 13/14) it provides to universities for knowledge exchange activities noting the amount of income this generated for universities.

58. It response the SFC explained their role was “to fund research and to fund development”23. They invest in research capacity and they suggested it would not be appropriate to take equity shares, noting efforts made to support institutions “to take imaginative approaches to ensure a return on the public investment made in projects with significant commercial potential”24.

59. In relation to the SFC we have asked for the views of the Scottish Government:

  • as to whether they consider the public purse – as opposed to private investors or HEIs – should benefit more from state investment in research and innovation.

60. More generally given the substantial income the HEIs receive from other sources we asked the SFC whether it takes account of universities’ overall income in setting levels of award. The SFC’s response seemed to be based on the principle that it is for the SFC to support the sector to grow, rather than for the sector to support itself, and seek SFC support where necessary. We were told:

“As we want to encourage and support our universities to grow and diversify their external income to ensure the long-term sustainability of the sector and this provision, we do not allocate funding based on universities’ overall incomes from other sources.”

61. In response to a question relating to the costs incurred by universities in delivering additional places SFC stated:

“The issue of meeting the full economic costs of teaching is a bit more complicated. Some universities have multiple sources of income and we expect them to maximise those sources because that income contributes to covering the costs that they incur in their provision of teaching.”

62. As a consequence we have asked for views from the Scottish Government:

  • as to whether HEI’s should contribute more towards this cost?.

63. During examination of SDS we heard that “few industries or employers have a long-term view of their skills needs” and this had led to a need to play catch-up in relation to matching industry demands with skilled employees. SDS made the point that generally workforce planning was poor and contrasted the position in the UK with all other OECD countries when indicating the UK are alone in not planning ahead and “investing today for the future of tomorrow”.

64. SDS is, along with the SFC undertaking considerable work on a range of initiatives to address and anticipate the skill needs of industry. This has led us to ask the Scottish Government:

  • on what basis to date the Scottish Government has been funding further and higher education in the absence of demand statements from industry; and

  • who they consider bears the primary responsibility for ensuring the workforce of the future has the skills required by industry.

65. Finally on funding we have over the year been looking at the Scottish Government policy of widening access to university for disadvantaged students. This has led us to ask the Scottish Government:

  • as university access is widened how the funding of the SFC to pay for university places will be adjusted.

Any links to external websites in this report were working correctly at the time of publication.  However, the Scottish Parliament cannot accept responsibility for content on external websites.

Footnotes:

1 Education and Culture Committee, 1st Report 2015 (Session 4). Report on Draft Budget 2015-16.

2 Education and Culture Committee, 1st Report 2015 (Session 4). Report on Draft Budget 2015-16.

3 Education and Culture Committee. Official Report, 1 December 2015, Cols 50-51

4 Education and Culture Committee. Official Report, 1 December 2015, Col 51

5 Education and Culture Committee. Official Report, 1 December 2015, Col 52

6 Education and Culture Committee. Official Report, 1 December 2015, Col 53

7 Education and Culture Committee. Official Report, 24 November 2015, Col 35

8 Education and Culture Committee. Official Report, 1 December 2015, Col 49

9 Education and Culture Committee. Official Report, 1 December 2015, Cols 63-64

10 Education and Culture Committee. Official Report, 1 December 2015, Col 56

11 Education and Culture Committee. Official Report, 1 December 2015, Col 64

12 Education and Culture Committee. Official Report, 24 November 2015, Col 34

13 Education and Culture Committee, 1st Report 2015 (Session 4). Report on Draft Budget 2015-16, paragraph 55

14 Education and Culture Committee. Official Report, 24 November 2015, Col 44

15 Education and Culture Committee. Official Report, 1 December 2015, Col 56

16 Education and Culture Committee. Official Report, 1 December 2015, Cols 67-68

17 Education and Culture Committee. Official Report, 1 December 2015, Col 69

18 Education and Culture Committee. Official Report, 1 December 2015, Col 54

19 Education and Culture Committee. Official Report, 24 November 2015, Cols 54-55

20 Education and Culture Committee. Official Report, 1 December 2015, Col 64

21 Education and Culture Committee. Official Report, 1 December 2015, Cols 74-75

22 Scottish Government. Scotland Performs

23 Education and Culture Committee. Official Report, 29 September 2015, Col 43

24 Scottish Funding Council. Written submission, paragraph 5.

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