The introduction of core funding in 2022 brought a significant increase in investment for the sector. A sum of €259 million in funding was paid directly into services in year one of the scheme, of which €210.8 million was entirely new funding. This funding, which increased by 11% to €287 million in year two, increased again by 15% in year three to €331 million.
In the first programme year, a total of 11 services withdrew from the scheme but remained open. In the second programme year, a total of 16 services withdrew from the scheme and remained open. For this current programme year, which commenced on 2 September, five services had withdrawn from the scheme as of 1 October.
Currently, 90% of services have signed up to year three of core funding. The application rate for year three of core funding is similar to the application rate for the same period in 2023, with services continuing to sign up. While it is my ambition to have as high a take-up as possible to core funding, a small proportion of early learning and childcare services - approximately 5% - chose not to join core funding in years one and two of the scheme, of which 98% were for profit services.
In view of the 15% increase in core funding in year three and the associated supports, including the increase in the flat rate allocation for sessional services to €5,000, an increase in the minimum core funding allocation to €14,000 and the introduction of the fee increase assessment process, I am confident that participation rates will continue to remain on par with previous years.
In the budget announced yesterday, I was able to set out the core funding allocation for year four and that will be €390 million. A proportion of that will be allocated for a pay agreement that we hope to see made between the unions and providers in 2025. The State will step up to support that with direct investment to help providers to meet the pay needs of their staff.