I thank the Chairman for his invitation to attend today's meeting. Like the Chairman, I have been intensely engaged with the issue that is presented before us today as to the challenges facing our childcare sector.
I have the utmost respect for those who work day in and day out to look after our children. I know that for many this is indeed a vocation. They are significant people in the lives of children and also in the lives of parents. Placing their child in the care of someone else is a huge decision for parents. First and foremost they want their child to be safe and happy. As Minister for Children and Youth Affairs, that is also my priority. All my decisions on childcare are determined by what is best for children. I accept that sometimes these decisions do not suit everyone but the rationale is, and always will be, to have children at the heart. It is important in the context of what we are discussing today to take stock of where we are.
In the past five years there has been a 110% increase in capacity. The number of childcare places has more than doubled from 104,000 to 218,000. Investment in childcare has increased by 141% and it is almost one and a half times what it was in 2015 when €260 million was invested compared to €638 million in 2020. We have gone from one free preschool year to two free preschool years. We opened the national childcare scheme, NCS, four weeks ago tomorrow. In these four short weeks, the parents of more than 20,000 children will have received childcare subsidies for the first time, or significantly higher subsidies than a month ago. To put this in perspective, if one takes the life of a four year old child who is currently in an Early Childhood Care and Education, ECCE scheme the world of childcare has changed beyond recognition since the day he or she was born. This is good and positive progress but I am the first person to say that more needs to be done.
We can all be proud of the achievements and Irish people can be assured that their money has been well spent by the State in starting to address years of under-investment in childcare. I have repeatedly said that in order to change from one of the most expensive countries in the world to one of the best for childcare we need to at least maintain and possibly intensify this rate of investment. Through the national childcare scheme it is open to any future Minister or Government to increase the subsidies paid to parents. The NCS is built for the future.
With this progress comes challenges. The doubling of capacity and the stronger regulation requires more inspections. Those working in the childcare sector have to achieve certain educational qualifications. The doubling of capacity has led to a significant growth in the workforce and associated difficulties in getting suitably qualified childcare workers. The introduction of necessary regulations requires childcare providers to undertake additional responsibilities, including additional administrative work, to demonstrate compliance. Some childcare providers choose not to continue every year. For example in 2018, 78 providers closed their doors. However, 153 new childcare providers opened new services. This led to an increase of 2,200 childcare places that year and there were many other new places resulting from other measures. The average size of services has grown from 33 in 2015 to 47 in 2019.
This year, 2019, was a particularly onerous year for childcare providers due to a number of developments. Some 4,300 of them had to re-register with Tusla in order to stay on the register and operate as childcare providers in 2020 and beyond. While this was flagged from 2016, it still represented significant work. I am pleased that the CEO of Tusla confirmed that almost 100% of childcare providers submitted their applications for re-registration by the due date. He has also confirmed that it is processing applications received after 12 December.
I would like to particularly acknowledge the pressures services have faced in 2019 and to acknowledge the pressure and stress that deadlines bring. I hear this clearly from the sector. My Department, Pobal and Tusla will try to address this in a meaningful way in 2020 and to simplify and streamline procedures so that those in the sector are not over-burdened with administration.
To recognise how difficult this has been I have approved an additional, once-off programme support payment to all providers which will be made in the coming days, that is in December 2019. This is in addition to the programme support payment already given to providers this year. We value those who work in our childcare sector and perhaps they do not always feel our appreciation, but I would like to assure them on behalf of the Government that we do not take them for granted.
There are also challenges that have not yet been addressed. Our childcare workers are significant people in the lives of children, parents and families and significant also in keeping our economy working. They are poorly paid. I have given my support for a sectoral employment order. I have made provision in budget 2020 for a sectoral employment order support fund. Paying childcare workers a decent wage is important for them as individual workers, for our children, for maintaining consistency of care in the lives of children, and for the quality of our childcare services. I hope that sufficient numbers of workers join a union and make this a reality. It is a key piece of the unfinished business.
I will address now a key issue affecting the childcare sector that has received much media attention in the past few days, which relates to media reports and some commentary around internal risk rating documents from Tusla. I know that the CEO of Tusla has clarified that the risk ratings are used for the purpose of prioritising and scheduling more than 4,300 services for inspection. It is a risk-based, internal, profiling system which is in line with a recommendation by the OECD. I am aware that Tusla has circulated the committee members with his response to "RTÉ Investigates" on this matter. I do not want to rehearse again what he has outlined except to say that the chief social worker in my Department has confirmed that in using the term risk register in order to schedule inspections, Tusla is identifying a risk to itself, namely to ensure that Tusla implements an inspection regime that is fit for purpose and provides most assurance across the sector.
The chief social worker notes:
Regulatory bodies, in general, have two functions. The first is to register all centres for compliance purposes – this provides public assurance.
The second function is to use its inspection resource proportionally to ensure inspectors are attending to those services which may have performance issues.
To do so the regulatory body uses the information available to it intelligently to prioritise its inspection schedule.
A service may have been profiled as red simply because it has not been inspected recently and should be prioritised for one. It may be a very good service. I hope members of the committee find this further clarification by the chief social worker helpful.
I want to make a few points on insurance and the current state of play. Over the course of the past year to date, there were three parliamentary questions, out of 1,500, tabled to my Department on insurance. I understand Deputy Rabbitte referred to a press statement she issued in April 2019 during her election campaign for the European Parliament elections. I do not know how many press statements she issued during her campaign but I confess I did not read all of her election material. I am aware there were some representations made, including from Deputy Funchion at the end of last month. The latter was responded to on Tuesday.
The cost of insurance for the childcare sector came into strong focus only in the past few weeks. This has arisen following the withdrawal of an insurance provider from the Irish market and the confirmation that another could not be found. It is undoubtedly causing distress to providers and worry to parents. I acknowledge there are many providers who are facing increased insurance costs. I am receiving representations from them also.
Until recently, there were two insurance underwriters offering insurance to the childcare sector in Ireland. On 6 December, one of these, Ironshore, notified its 1,300 clients that it would be withdrawing from the market. On 17 December, Mr. Padraic Smith, the broker who had provided the Ironshore underwriting services, informed the customers that the company had failed to get a new underwriter to take over their client base. This leaves only one underwriter currently offering insurance to the sector. That, as we know, is Allianz.
The Government is limited in what it can do in this situation. It cannot compel a private business to remain in the market, nor can it directly intervene in the pricing of insurance offered to childcare providers. However, officials in my Department are working hard to find a way to support those services that have been impacted. We have engaged with Allianz, which I understand has confirmed that it will offer quotes to all but the most high-risk services. Allianz, through the broker Arachas, is willing to consider quotes for all affected services. Quotes are being processed within 24 hours in the vast majority of cases. Some 1,100 quotes had been issued by midday today to previous Ironshore clients. This leaves 200 providers who have not yet received quotes. I will receive an update on this tomorrow. There may be a very small number of very high-risk services that will not receive quotations.
The press has reported that some providers are reporting significant increases in premiums. I understand the premiums charged by Ironshore were considerably lower than the market average, and this is leading to the increases.
I understand that the average cost of Allianz insurance for full-time childcare is €60 per year per child. The average cost for sessional services, such as ECCE, is €25 per year per child. This equates to 0.5% to 0.75% of the turnover of a service. I understand that the increase is causing difficulties for providers.
My Department and the city and county childcare committees are offering a number of supports for providers, including a case management system for services experiencing sustainability difficulties.
For community providers, who are one in four of all childcare providers, financial supports can be made available after an assessment through a process managed by the childcare committees and Pobal. I would encourage services to contact their local childcare committee to access a range of supports, including advice or business planning.
With regard to the issue of insurance, I am liaising with my colleagues the Minister for Finance and the Minister of State at the Department of Finance to consider a review of insurance in the childcare sector as part of my ongoing independent review of costs in the sector. We need to make the market more attractive to both existing insurers and new entrants in order to increase competition, which in turn should lead to a reduction in pricing and an increase in capacity.
For the childcare sector, this includes compliance with regulations. Compliance helps to manage risk. Managing risk is important for children and should also make childcare facilities safer places.
I agree with the CEO of Tusla when he says that the childcare sector is largely compliant. In my experience, we are lucky, or blessed, to have caring, compassionate champions for children working in our childcare sector. They need and deserve our support. They have had a very tough year.
Exposure of bad practice in any sector affects all of those working in it. The impact of exposure can cause stress, disappointment and pressure. The impacts are necessary to root out the small number who should not be caring for our children. The majority, however, work hard and diligently in the best interest of children. I am glad that I am in a position to make a once-off payment averaging €1,500 to providers to reflect their commitment. This is under the programme support payment I established in 2017 to recognise the administrative burden on providers. This support will come from existing resources available to me in 2019, and payments will be made by 28 December. The range of payments will be from small amounts right up to €26,000, for the very large providers, depending on the number of children being cared for.
This is a fast-moving situation but I am committed to supporting the sector appropriately, and, above all, to protecting children.