Annual cost of providing State-run childcare could top €2bn

The cost of providing a State-run childcare service could be as much as €2 billion annually, an internal analysis by the Department of Children and Youth Affairs has found.

The research, which was conducted early this year, was sent to the Oireachtas committee on Covid-19 this month.

It found that if current levels of demand, hours worked, and the number of childcare workers were to remain unchanged, “€1.6 billion would be required to cover staff wages in centre-based provision only” – excluding childminders.

Some 70 per cent of this, just over €1.1 billion, would be direct costs for managers, room leaders, assistants and other grades of creche employees, with a further 30 per cent for overheads.

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However, this cost may be further increased if the State were to step in with a form of subsidy or direct payment to phase out the need for parents to contribute fees for early-years care, which are among the highest in Europe.

The department estimates that parents currently spend about €450 million a year on fees for centre-based services, and that “a public model might require this to be replaced by Government subsidies”. It also notes that this is based on existing demand, which “might significantly increase if a public model was introduced”.

The Government would also need to consider the physical location of State-run services, with about 4,500 such operations spread around the country, ranging from extensions to family homes to large purpose-built creches.

“The cost of buying out these services is substantial. The alternative of leasing is also substantial,” the note finds. The research also compares Irish expenditure on early-years services, currently about €640 million a year, with a range of OECD and European countries.

It finds that to match Iceland, Ireland would have to spend €5.83 billion on childcare; for Sweden, the figure is €5.18 billion; Norway is €4.21 billion; the OECD average and EU average levels of spending would see the State spending €2.27 billion.

Ivana Bacik, the Labour spokeswoman on children, called on the Government to move "incrementally" towards a more State-focused model of provision. "There has been a huge overreliance on the private sector for too long," she said. "The fact is we now know the huge cost to society of not providing adequate childcare, and people have been floundering over the summer."

A spokesman for Siptu said that the document indicated the cost of “radically transforming childcare. This level of investment would slash fees for parents, improve quality for children and recognise educators with professional pay scales”.

A spokesman for the department said the costings were drawn up to “inform the public debate and provide for one scenario of how a public model might operate”.

“Caveats necessarily apply as to the extent of its application, scope and assumptions,” the spokesman said. He said childcare is currently provided using a market model to deliver affordability but that “fees and the quality of provision vary significantly”. While remaining relatively low by international standards, State investment in the sector has increased by 141 per cent since 2015. An expert group is currently examining a new funding model for the sector.

Sinn Féin will this week bring a private member’s motion before the Dáil calling on the Government to introduce a comprehensive plan for the early-years sector, including a “sustainability fund” and a commitment to significantly ramp up investment.

Elsewhere on Monday, Siptu released research which shows that 29 per cent of workers in the childcare sector are earning less than they did before the pandemic, with 32 per cent claiming they intend to leave the sector within the next 12 months.

The union is calling on the Government to re-introduce a top-up to the temporary wage subsidy scheme which ran at the height of the crisis, and saw the State responsible for nearly the entire wage bill of the childcare sector.