Dáil Éireann Debate, Tuesday - 29 April 2025
89. Deputy Shane Moynihan asked the Minister for Children, Equality, Disability, Integration and Youth when she expects the planned review of core funding to take place; and if she will make a statement on the matter. [20772/25]
View answerAs a dad of three in a constituency that has one of the fastest growing communities in the country, childcare and the services that underpin our childcare system are crucial to many of the working families. My question for the Minister is regarding the planned review of core funding, the timeframe for that to be rolled out, the process that will underpin it and give certainty to a number of providers who at this stage are starting to leave the childcare system because of the financial pressure they are under.
I thank the Deputy. This issue is of particular interest to him and he has raised it many times.
As I have said previously, the introduction of core funding in 2022 brought a significant increase in investment for the sector, with €259 million of funding paid directly to services in year 1 of the scheme, of which €210.8 million was entirely new funding. Since the scheme was introduced, its effectiveness has been subject to ongoing review and the scheme itself has evolved year on year. Core funding increased by 11% to reach €287 million for the second year, and by a further 15% to €331 million for the current and third year of the scheme. The allocation of this additional funding in years 2 and 3 was informed by the data from previous years and feedback from stakeholders, as well as an independent financial review of sessional services by Frontier Economics.
Targeted supports for small and sessional services introduced in year 2 were also enhanced in year 3. Moreover, changes to fee management were introduced in year 3, enabling low-fee services to apply for a fee increase. The full-year allocation for year 4 of core funding will be €350 million. As already has been referenced, a further €45 million has been ring-fenced to support employers to meet the costs of further increases to the minimum rates of pay in the sector. Combined, and contingent on the third successive employment regulation order, the core funding allocation will exceed €390 million. It is an unprecedented investment by the State. The details of the allocation will be published shortly, and has been informed by data from previous years as well as stakeholder feedback. An evaluation of the first year of core funding and the development of an evaluation framework for core funding is currently under way. This project will examine the early implementation of core funding and will make recommendations for further evaluations of the grant. Findings from the project are expected in or after quarter 4 2025.
This project is being undertaken by the Irish Government Economic and Evaluation Service, IGEES, policy analysts working in the research and evaluation unit of my Department.
I thank the Minister for her response. Without a doubt, I welcome the huge progress that has been made in bringing the costs of childcare back down. It was certainly raised with me by parents throughout the campaign and we are keen to maintain that progress and see it persist throughout the lifetime of this Government and to achieve that aim of a monthly cap of €200 in childcare costs for every family in the State. The trick with core funding is - and I fully understand the challenges - about getting the balance right for parents but also for providers. There have been one or two providers in my constituency that have withdrawn from the core funding model. What they have told me is that the financial pressure they are under is real. I acknowledge the progress that has been made with regard to issues such as pay and so on but I ask that the evaluations that will be undertaken by the IGEES and other bodies will feed into that planned review and give certainty to the provider side of the sector to ensure it can then give certainty to the parents who rely on its services.
As I have said previously, there has been almost €1 billion of investment by the State into this whole sector. It is unprecedented; it has never been done before. It has had a significant impact, both in terms of supporting providers, but also reducing costs for parents. We are now seeing more services opening than closing, which is a significant feature and consequence of core funding. In fact, 92% of all providers are in the core funding model. It is very high. As a consequence, we have seen fee freezes in a majority of services. We have seen a stability of funding for providers, which is hugely important to them. Again, as I have said, we have the lowest level of closures in six years. It is quite significant in that respect. There is more work to be done here, however. I hear, from engagement with providers, that there are issues for them with regard to the amount of administrative burdens placed on them. We are doing a body of work in that regard, while also supporting parents and workers in the sector.
I recognise the huge progress that has been made in giving stability to that sector and shoring it up. That public investment is extremely welcome, not only because of the relief it gives working parents, but also ensuring full participation in the labour market for men and women, that they do not have to worry about the cost of childcare. One of the hallmarks of how core funding has been improved in the previous four years - which has been very positive and I am keen for it to continue - is that engagement between the Department, parents and providers and that parents who have rightly seen the great progress being made in reducing the cost of childcare are not necessarily left with a provider that will exit the core funding scheme. It is not necessarily that the provider would close, but that it would exit the core funding scheme. The review the Minister has alluded to is important, and I look forward to seeing the results of the evaluation.
I also welcome the Minister's clarification today that a body of work is being done on the administrative burden faced by childcare providers, which, compared to the Minister's previous portfolio in schools and so on, there is a bit of difference there in respect of how much administrative work is required of childcare providers versus schools.
I cannot and will not underestimate how important it is that we get this right. However, I am also conscious that it is an evolving and live situation. Things change and move with time. From every step of the way of the introduction of core funding, there have been learnings, notwithstanding the fact that there is a significant evaluation of the first year of core funding, and how this evaluation will examine the early implementation of core funding and make recommendations for future changes and additions that we might be able to make for the grant. As I have said, the findings of that will be published in and around the first quarter of 2025 or thereafter. The Deputy made a very strong point that, where there is sufficient childcare, it ensures that we have equality of access to the labour market. I do not think that we should forget that. It is a worthwhile investment. There is more to be done, but the work is well under way.
