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What will latest childcare funding scheme mean for parents, children and providers?

The State is about to inject an extra €172m into the childcare system. Where will it go?

The well-known joke about a tourist who asks for directions being told, “Well if I were you, I wouldn’t start from here,” has long seemed applicable to the question of how to design a better Irish childcare system.

It has been a slow and difficult journey from an early, commercially driven response to the need of working parents, towards the “nirvana” of high-quality and affordable, Scandinavian-style early-learning and care options available for all children. A destination that is still some way off.

High-quality early childhood care and education is expensive and so it should be – we know how vital and formative the first five years of life are. The question is who pays for it.

Years of inadequate State investment have resulted in parents paying some of the highest fees in the developed world, ranging in 2021 from an average of €244.08 a week for a full-time place in Dún Laoghaire-Rathdown to the lowest equivalent rate of €152.08 in Co Carlow.


The challenge has been how to increase State funding fairly and responsibly for such a diverse range of providers in a market-led sector, while meeting wide variability in families’ needs. There are 4,690 services registered with Tusla, of which 1,214 are community organisations and 3,476 are private businesses, according to 2019/20 figures.

The introduction of the so-called “free pre-school year”, the Early Childhood Care and Education (ECCE) programme in 2010, extended to two years in 2018, was a game-changer. It was a child-centred initiative that used State money to fund a universal service provided predominantly by private operators. It also brought in minimum qualification requirements for staff for the first time.

Launched during a recession, the ECCE was a lifeline for many creches, a welcome free service for parents and, most importantly, available to all children of qualifying age equally – although the Aim and Inclusion Model (AIM) to support children with additional needs wasn’t introduced until 2016.

Every funding programme brings additional administration and conformity that the spending of taxpayers' money requires but which many providers regard as a double-edged sword. Yet, still a 2019 report found Ireland had the second lowest public spending on early childhood education and care in the OECD. (Although policymakers here argue that expenditure in this area is not comparable across different countries, because in many other countries school does not start for children until age six or seven, so their education funding is categorised as pre-school.)

Teething problems

The National Childcare Scheme (NCS) was launched in 2019 to provide financial support to parents. Despite teething problems and complaints that its benefits had been wiped out by some providers raising fees, it was the first statutory entitlement for parents to childcare support. Initial subsidies might have seemed low but, apart from one universal payment, they were targeted towards families of greater need, being graded through means testing.

The latest vehicle for increased State investment in early childhood care and education is a €221 million Core Funding scheme, due to be introduced this September. As some grants are being replaced by the new payments, it represents an additional €172 million in spending by the Government for the next programme year.

Here is a brief guide to what the Minister for Children, Equality, Disability, Integration and Youth, Roderic O’Gorman, has described as “a significant milestone on the journey towards a new funding model” and a “new type of partnership” between providers and the State.

What is “core funding”?

Broadly, it is payments linked to the capacity of early learning and care centres, with bonuses for degree-level qualifications among staff. It is intended to support not only sustainability and quality but also enhance the public management of a predominantly private sector.

The other funding schemes work on a per-head basis, which means providers’ income fluctuates if children come and go during the year, although overheads remain the same. Core funding will be guaranteed income based on capacity, which is determined by regulations on minimum space, staffing levels, age ranges and service type.

These rates will apply universally across all locations, says the Department of Children, which points out fees vary depending on where services are based. In other words, parents are already paying for providers’ higher, location-related costs – except in ECCE-only services that can't charge fees.

Will it mean a cut in fees for parents?

That’s highly unlikely but the good news for parents is that providers must freeze their fees at whatever they were charging in September 2021 to qualify for core funding. But as you can imagine, rising inflation is preying on the minds of providers who want to know if the Department is going to take increasing costs into account, considering they can’t now claw those back from parents.

What is it worth to individual providers?

They have all been trying to work that out since the Department issued a  “ready reckoner” in March.  This is intended to give each provider “the approximate figure to expect”, it says, and “should not be relied on for financial planning”.

As rates vary according to ages of children attending, hours and weeks of operation and type of service, along with premiums for rooms led by a graduate educator, and also for a manager with degree qualification, the bottom line is calculated through mathematical formulae.

The nitty gritty, as with the sector’s other funding programmes, would make outsiders’ eyes glaze over because there are so many permutations. But to give you one example, the value of core funding paid per place per hour will be €1.07 for a child aged one to two attending full-time (more than five hours per day), or part-time (three and a half to five hours). The graduate premium per room is €4.44 for each hour of operation.

Are staff going to get a pay rise?

Most of them almost certainly, as €138 million has been included in the core funding package specifically to improve rates of pay across all roles in the sector. There’s a further €38 million to reward better qualified staff (as explained above) no matter what age group of children they’re working with.

Before this, it was only the ECCE scheme that paid higher rates for graduate staff. There can only be one manager and then just one leader in each room, so it does not mean a bonus for every graduate employed.

However, to ensure this funding results in improved pay and conditions for staff, introduction of the scheme is contingent on an Employment Regulation Order (ERO) for the sector being accepted by both employers and trade unions, which is still a work in progress. After the two sides in the Joint Labour Commission failed to reach agreement between the employers’ suggested minimum rate of €12.20 an hour and the unions’ proposal of €14.45 an hour, the Labour Court last month (April) recommended a minimum rate of €13 an hour for early education and after-school educators.

The Department confirms to The Irish Times that “if an ERO cannot be agreed that reflects the objectives [of minimum pay rates and terms and conditions], Core Funding as announced in Budget 2022 cannot proceed”.

Will childminders be entitled to this new funding?

Only those 77 or so registered with Tusla, among a childminding workforce variously estimated at anything between 15,000 and 35,000. (Nobody’s counting.) They must also be enrolled in one of the other funding schemes, such as the NCS.

Meanwhile, the National Action Plan for Childminding (2021-2028) is in the early stages of introducing tailored regulations, training requirements and registration to those responsible for almost a quarter of non-parental care for three-year-olds, according to ESRI figures – among younger children, that percentage is likely to be higher. Formal oversight is, understandably, a prerequisite for any sort of State subsidies.

Do providers have to sign up for core funding?

No, it’s voluntary. Some ECCE-only providers may feel it’s Hobson’s choice as they will lose the higher rates for better-qualified staff, whether or not they sign a contract. Only the standard capitation rate of €69 per child per week will be paid for these three hours of pre-school education daily, 38 weeks of the year, and the extra €11.25 per child for higher staff qualifications will no longer apply because it is being incorporated into the core funding.

The Minister has given an “as you were” funding guarantee to the estimated 1 per cent of services that might find themselves getting less State money by signing the contract.

Read: What are providers saying about new funding scheme?