Brendan Smith (Cavan-Monaghan, Fianna Fail)

The community child care subvention scheme is a new support scheme for community-based child care services which is being introduced under the national child care investment programme, NCIP, 2006-10 and which will come into effect in 2008.

I am concerned at some of the negative reporting in recent weeks regarding the scheme which is undoubtedly causing some unnecessary concern to child care providers in the community sector and to parents and staff associated with these services. The Fine Gael motion, and the way it is being presented in some elements of the press, will contribute to this mis-reporting and the unnecessary concerns. I am pleased to have this further opportunity to set the record straight in regard to the community child care subvention scheme, which has the sole purpose of continuing to support the community child care sector. I am also pleased to have this opportunity to explain once again the deliberate and measured way, over a 12 month period, in which the new subvention scheme is being introduced.

Since the announcement in July of this year of the Government's decision to introduce the new scheme in 2008, two of the most significant points which I continue to make have been consistently overlooked or ignored. These are that the scheme has been designed to take effect following a 12 month transition phase, one of the key reasons for which was to enable an in-depth analysis of the scheme, as announced, to be undertaken. The fact that I intend to report back with the outcome of this process to my colleagues in Government in early 2008, appears to be something of a surprise to the Deputies supporting the Private Members' motion. That position has been outlined consistently since July last.

As I said in the Seanad last week, there appears to be an impression that the Government will walk away from its €1.1 billion investment in child care from 2000 to 2010, over half of which has been spent to date. There also appears to be an impression that the policy of putting community-based child care at the heart of our investment in child care will cease to be a fundamental principle of this investment despite the success of the Equal Opportunities Childcare Programme 2000-06 and the National Childcare Investment Programme 2006-10, much of which has been built on the contribution and work of community volunteers, as has been mentioned by Deputy Shatter and others. Nothing could be further from the truth and the new scheme is being introduced to continue this recognition and support for the community not-for-profit sector.

As Deputies will be aware, the new subvention scheme will replace the EOCP staffing support scheme which ends next month. The eight year EOCP, which has been co-funded by the Exchequer and EU Structural Funds, was the first major investment programme in child care in Ireland. It adopted a particular focus on disadvantage and the community not-for-profit sector was able to apply for 100% capital grant funding, up to a ceiling of €1.4 million per project, to develop community based child care facilities. Community child care services were also supported with current funding, under the staffing support grant scheme. This scheme made funding towards the cost of child care staff available, recognising that, even where the full capital cost of these projects was met through grant funding, and despite being non-profit bodies, community child care groups which were located in disadvantaged areas and which had a strong focus on disadvantage, might not be in a position to become self-sustainable in the short to medium term.

Specific funding was allocated under the scheme to assist community providers in their start-up years to target disadvantaged parents and their children using their services. The grant was given on a three year basis as a support towards the services' staffing costs. It took this form because supporting employment for child care workers qualified for grant aid under the EU rules governing the programme. The original three year funding under this scheme began to end for some groups from 2004 onwards. In most cases, where the community services receiving staffing grants were able to confirm their continuing focus on disadvantage, they were approved for continuation funding to bring them up to the end of the EOCP in December this year.

The ability of projects which receive developmental aid to become self-sustainable over time through funding support in their developmental stage, is an underlying principle of both the European Social Fund and the Exchequer. The principle of self-sustainability was built into the EOCP from the outset and has been an explicit condition of grant approval since 2004 when the continuation funding commenced. As a result, every existing EOCP staffing grant recipient has agreed to operate a tiered fee system which is tailored to the differing economic circumstances of their client group and which ensures that child care places subsidised by the programme are targeted towards those most in need. In effect, the grant recipients were required to use their grant aid to give a high degree of subsidisation to very disadvantaged parents, a lesser degree of subsidisation to less disadvantaged parents, and no subsidisation, other than the general benefit of the capital grant aid, to non-disadvantaged parents.

The new community child care subvention scheme will continue to be based on the tiered fee system. Under the new scheme, services will continue to receive grant aid on the basis that they charge fees to parents which relate directly to the level of subvention they receive in respect of particular parents. I should say that many community child care groups implemented effective tiered fee systems and complied with this requirement under the EOCP, thereby enabling disadvantaged parents to access child care at reduced costs. However, it is also the case that many services did not implement this requirement as envisaged under the programme and, for them, the new scheme will require them to review their current fee structures.

I can see that for community services which were not implementing an effective tiered fee system up to now, the new scheme may appear to be an intrusion into the way they operate their services. The comment could be made that the more structured approach under the new scheme, to ensure that all services implement effective tiered fee structures, should have been introduced earlier. It is a point that Deputy Shatter made earlier. I would not support this view as I think it was important that the EOCP responded in a developmental way to fostering and supporting the community services and their invaluable work and contribution to local child care services. However, as with any programme, in particular an innovative and developmental one such as the EOCP, in moving forward it is important to build on strengths and identify weaknesses.

The value for money review of the EOCP made recommendations for a new community support scheme under the NCIP, which it identified as a transitional programme which should complete the development of new child care services while longer-term child care policy would be considered in the context of a third child care programme for 2011-15. These recommendations emphasised the need for the NCIP community support scheme to be based on having effective tiered fee structures in place with appropriate minimum and maximum fees. In addition, eligibility for funding should be monitored on an ongoing basis to ensure all services move towards sustainability when this is possible and the new scheme should be less ad hoc, more structured and transparent, and better targeted on appropriate groups, including socially excluded groups.

In considering those aspects of the staffing support scheme which could benefit from more structured and transparent systems and criteria, it is clear that a more consistent approach is required in determining the level of grant aid and the way it is used, than was the case under the EOCP. In order to qualify for the staffing grant scheme, community child care groups were first required to show that they were located in a disadvantaged area, with CLÁR and RAPID as the two key indicators in this respect. After that, the group was asked to demonstrate in its grant application that it would adopt a strong focus on disadvantage. This was largely a self-reporting system with no clear data, particularly as time went by, on the level of disadvantage in the services. Clearly, with the economic upturn and high employment rates now enjoyed in Ireland, the profile of disadvantaged parents using the services has, possibly, changed considerably and the increase in employment is welcome.

As the profile of services in receipt of grant funding changed over time, different services responded in different ways. Many services implemented effective tiered fee structures enabling the broad range of parents and their children to benefit based on their ability to pay and ensuring a good social mix. Where services did not implement an effective tiered fee structure but charged reduced fees across the board, in some cases this resulted in very low fees for all parents, including non-disadvantaged parents, sometimes leading to an inability to compete on the part of other, non-subsidised private sector providers in the area. Where services combined the grant aid with their increasing ability to collect more substantial fees and adopted a higher, across the board rate, this often resulted in a very high quality of service provision, but one that was outside the reach of the disadvantaged parents for whom the grant aid was intended.

Another weakness of the current scheme is its non-transparency and the fact that the broadly drawn criteria resulted in a high level of subjectivity in the assessment of grant applications. There have been cases where applications from services with very similar levels of disadvantage and service provision were approved for substantially different levels of funding. Again, the subjectivity of the criteria was not assisted by the degree of self-reporting on which the system relied. In addition, the current scheme penalises large-scale services which have very disadvantaged profiles, as the level of grant funding is capped and disadvantaged parents using a community service which is not located in a disadvantaged area could not avail of the subsidised fees as the scheme is defined by reference to the area rather than the parent.

All of these issues highlight the fact that in meeting the needs of the existing grant-aided community child care sector, as well as moving forward to any future child care programme of initiatives, we need to address a series of diverse and complex issues. However, the fundamental principle which must guide us in meeting these needs, and at the same time further developing child care policy, is that we ensure that we find a fair and equitable approach to targeting disadvantaged parents using community child care facilities which is underpinned by transparency and accountability.

The new scheme has been portrayed widely as a cutback in funding for the community sector and for disadvantaged parents and their children. Nothing could be further from the truth and the new scheme has been given a total funding allocation of €153 million over three years. This means that in 2008, some €47 million will be available to the new scheme while €37.25 million was available under the EOCP staffing scheme in 2007. This substantial increase in funding is intended to ensure that the greatest number of children and parents using community-based child care services benefit. The truth is that, in the absence of sufficiently hard data to enable my office to accurately quantify and cost a more generous scheme under the new, more transparent arrangements, it was decided to identify the most disadvantaged categories of parents at the outset. Clearly we could not disregard these parents and start at higher income levels but, equally, we could not commit to a scheme which goes beyond the most disadvantaged categories until we are in a position to accurately quantify and cost the outcome.

This is the essential reason an innovative, transitional approach to the introduction of the scheme was adopted. As more than 800 services are currently in receipt of staffing grant support, the first priority was to continue funding for these services during the transitional period. All of the existing grant recipients who apply for funding under the new scheme will receive their existing level of funding during the first half of 2008. To date, applications have been received from approximately 75% of the existing grant recipients and these are being processed as quickly as possible by my officials. When the first priority of informing these services that they have been approved for funding under the new scheme has been completed, work will begin on the detailed analysis of the services in terms of the type of services they provide, the profile of the parents using the services for their children, the operational costs, and any other relevant data which might indicate that a special need exists which requires a particular approach to be adopted.

My officials and I have stressed at every opportunity that this data is essential to enable the assessment of the scheme, as announced, to be undertaken, and that the urgency with which this is being undertaken is to facilitate the existing services to move to the new scheme without disruption. As I stated, the first priority is to inform the services that they have been approved for transitional funding. After that, the analysis of the data will be completed and I will be considering the various issues which emerge so that I can meet my commitment to report back to the Government in early 2008. Subject to the Government's decision and any changes agreed, my office will then be in contact with the services to advise them of their new funding level, based on the information provided with their application and the final details of the scheme. I hope to see this process fully completed by the end of February or early March 2008.

Clearly, I cannot be specific in advance of any Government decision as to what changes will take place. However, I reiterate that the scheme will be implemented in a way which maximises the outcome for parents and their children using community child care facilities and that the funding which has been provided for this purpose has been greatly enhanced.

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