Dáil Éireann Debate, Tuesday - 5 December 2023
471. Deputy Kathleen Funchion asked the Minister for Children, Equality, Disability, Integration and Youth the estimated first year, full year and annual cost to reduce childcare fees by 10%, 20%, 25% and 33% effective from September 2024. [53426/23]
View answerThere are two types of subsidies available under the National Childcare Scheme:
- Universal Subsidies are available to all families with children under 15 years old. This subsidy is not means tested and provides €1.40 per hour towards the cost of a registered childcare place for a maximum of 45 hours per week.
- Income Assessed Subsidies are available to families with children aged between 24 weeks and 15 years. This subsidy is means tested and will be calculated based on your individual circumstances. Your rate will vary depending on your level of family income, your child’s age and educational stage, and the number of children in your family.
The Deputy has requested the first year, full year and annual costs of reducing childcare fees by 10%, 20%, 25% and 33% from September 2024.
This Department does not hold individualised fee data for parents as these are local agreements between parents and providers; instead a reduction in the average cost of childcare to parents is examined. To estimate the cost, officials in my Department used data from Pobal on average weekly childcare fees across the country. Assuming a 45 hour week for all children, the following hourly minimum (universal) subsidies were derived to achieve the desired outcomes:
- Reducing childcare fees by 10%: €1.70
- Reducing childcare fees by 20%: €2.00
- Reducing childcare fees by 25%: €2.14
- Reducing childcare fees by 33%: €2.3
The ESRI SWITCH model was then used to estimate the quantum of the changes and applied to the Departments baseline cost of the NCS for 2024. The results are given in the below table.
|
Reduction in Childcare Fees |
New Minimum NCS Subsidy |
September Implementation cost |
Full Year and Annual Cost |
|
10% |
€1.70 |
€12.47m |
€37.78m |
|
20% |
€2.00 |
€24.9m |
€75.45m |
|
25% |
€2.14 |
€30.68m |
€92.97m |
|
33% |
€2.38 |
€40.52m |
€122.79m |
As fees can vary from service to service and depending on parents usage, impact estimates must be made as an average of the overall parental financial contribution to fees for their early learning and childcare.
The impact of this change will also vary based on the income level of the applicant. Parents on the maximum subsidies under the income assessed subsidy, that is those on annual income of €26,000 and below will see no change in their fee, as they are already in receipt of the highest available subsidy. For remaining parents, with income above €26,000 under the income assessed subsidy, reductions in fees will vary according to income levels, with those currently in receipt of the lowest subsidies benefiting the most and vice versa.
These estimates come with some important caveats. Firstly, the above costings are based on the NCS as it operates currently and it rates as time of this PQ being asked. As part of Budget 2024 I announced an increase to the NCS universal subsidy from €1.40 per hour to €2.14 and an extension of the NCS to a larger cohort of childminders from September 2024. As these are not yet implemented, the impact of these changes have not be factored into the above costing.
Finally, the costings are on the basis of a static system; that is, the model assumes that the level of usage of eligible early learning and childcare remains static. Any changes to subsidies may create a change in behaviours in families, for example, women returning to workforce and using formal early and childcare for the first time.
