Neale Richmond (Dublin Rathdown, Fine Gael)
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I am very grateful to the Minister of State for coming in to take this really important debate early this morning. This is an issue that Deputy Cathal Crowe, who is in the Chamber, has raised a number of times under Questions on Promised Legislation, as have Deputies from all sides of the House. As the Minister of State can appreciate, it is something that is particularly close to home for me because I have kids in this age bracket but also because my wife works as a Montessori teacher. I do not know if that is a declaration of interest or whatever but it frames the context of my contribution.

The concern I have is that this new funding scheme was rightfully announced last week with a bit of fanfare from the Minister. I really welcome it. This is the key opportunity for the Government to introduce a scheme that will bring down the cost of childcare for parents and increase the level of availability for parents and guardians, but also ensure that providers can earn a good living and pay their staff a good wage. I welcome the decision by the Workplace Relations Commission the other day. The scheme will ensure providers can run a viable business that serves a vital cohort in the community, not just the young children themselves and their parents, guardians and grandparents, but also employers who are desperate to ensure that parents can return to work when they can and when they are ready.

However, the sad fact of the matter is that 90% of providers have taken this up but there is an absolute geographic split. In my constituency where I am from in the Dún Laoghaire-Rathdown area of Dublin, it is only an 81% take-up. It is in the 80% bracket across the Dublin city and county region. It is the same when one goes to Cork city and county. There is an imbalance where we have some counties in which pretty much all the providers have bought into it but in others, providers have just said they simply cannot afford to go into this scheme based on the core funding model the Department currently has at hand. I am extremely worried that the core funding model is based on an interest rate calculation that is quite simply outdated at this stage. It also does not bear in mind the very significant additional costs that providers, particularly those based in Dublin, will have that are at a different rate from those encountered by people across the country.

Another issue is that when we look at the rising inflation generally in society, we must also look at the rising fixed costs that all these schools have. They need light and heat. They cannot afford to turn off the heat when they have three-year-olds and four-year-olds in a classroom for three or four hours per day. They cannot afford to dim the lights when they are trying to ensure that kids at the most vulnerable age are catered to. Therefore, we have a situation where 500 providers have sent their concerns to the Minister for Children, Equality, Disability, Integration and Youth and they have not received the level of engagement they are rightfully entitled to expect. At this stage, I would really appreciate if the Minister of State could bring this matter back to the Minister, Deputy O’Gorman, and all her wider colleagues. I know she has a particular interest in this. We have to see the key areas the Government needs to address to bring these providers onside. We need to get these providers inside the tent in order to provide the service to parents, children and the wider society. These providers want to sign up to a scheme but they need to sign up to a scheme that is fair. We already have hundreds of providers who have signed up simply because they feel they have no choice, even though they know they might be in a situation where they will lose money in providing this important service that is, of course, also a business.

Mary Butler (Waterford, Fianna Fail)
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I thank Deputy Richmond for raising this really important issue and offering the opportunity to respond. The biggest issue anybody with young children will deal with is trying to make sure they are well cared for and looked after before and after school.

On 15 September, the Minister for Children, Equality, Disability, Integration and Youth launched Together for Better, which is the new funding model for early learning and childcare. Together for Better is underpinned by an expert group report entitled Partnership for the Public Good: A New Funding Model for Early Learning and Care and School-Age Childcare. This new funding model will support delivery of early learning and care, and school-age childcare, for the public good and in the interests of quality and affordability for children, parents and families.

Together for Better brings together three major elements of the early childhood care and education, ECCE, programme including the access and inclusion model, the national childcare scheme and core funding in line with the employment regulation orders that are coming into effect. The Minister is very pleased that so far, 90% of early learning and childcare providers, or almost 5,000 services, have become partner services under core funding, committing to working in partnership with the State for the public good and to freeze one-parent fees at September 2021 rates.

Core funding is the new funding stream worth €221 million in full-year costs to start this partnership for the public good between the State and providers. Its primary purpose is to improve pay and conditions in the sector as a whole, which everyone welcomes, and to improve affordability for parents while ensuring a stable income for providers. Core funding allows for an estimated 19% increase in the total cost base for the sector. The vast majority of services will see substantial increases in funding. No service will see a decrease in funding. Together for Better, the new funding model being implemented, aims to transform the sector with a higher degree of public investment and public management. This transformation starts with core funding and the new approach will entail a shift in the relationship between the State and providers. Core funding is open to all registered providers subject to their agreement to the terms and conditions of the funding, including financial transparency and fee management.

Some providers take the view that the autonomy of their business is of greater value to them than committing to offering services under the conditions and investment levels on offer through core funding, the early childhood care and education programme and the national childcare scheme. To address the nub of the Deputy's point, participation in core funding is, of course, optional. The 90% participation rate countrywide currently ranges from 82% uptake in Dún Laoghaire-Rathdown to 100% uptake in County Leitrim. A total of 947 providers across Dublin as a whole have signed up to core funding, representing 85% of eligible services. The remaining 165 services may choose to sign up at a later point.

One of the questions asked by the Deputy was whether small services would lose out. Core funding is based on operating hours, the number of places offered by services and the age group of children for whom the places are offered, given the staffing requirements determined by the regulatory ratios for different care categories. Service opening hours offering more places will receive a higher value of core funding than other services. This is because their costs of operation are higher. The ECCE preschool scheme is 15 hours per week over 38 weeks of the year. This amounts to 570 hours per year and is equivalent to 23% of the annual hours of a full-day service operating from 8 a.m. to 6 p.m. for 50 weeks of the year.

I will, however, take on board the issues the Deputy outlined. I will take them back to the Minister, especially those relating to engagement.

Neale Richmond (Dublin Rathdown, Fine Gael)
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I appreciate the Minister of State's reply but a couple of things stand out. Some 165 services in Dublin have not signed up to this scheme. Last year, a survey conducted by the Federation of Early Childhood Providers showed that 260 providers that have signed up to this scheme did not know whether they would be able to open their doors this autumn. A number of services that are not included, and to which there is no reference, have signed up to this scheme somewhat under duress. They have no other choice. They know what the wider societal benefits are. However, they believe their concerns are simply not being listened to.

I heard a previous response from the Minister, Deputy O'Gorman, indicating that he would encourage providers to contact their local county childcare scheme. That is a slap in the face. We need real engagement. We need the Minister to sit down with the providers that have not signed up to this scheme, or that have signed up but are extremely worried they will not be able to keep the lights on. Some 165 service providers have not signed up for this year. What happens if the 260 providers that believe they are at risk go bust next year? What happens if more providers realise this scheme will not work for them, particularly in Dublin? The Minister said that 100% of providers had signed up in Leitrim. That is great in Leitrim but just 81% have signed up in my constituency. This is at a time when people are dying to get children into these places in order that they can access the workplace and we can fill critical jobs, bearing in mind we have a labour shortage in the wider society and people want to give their children the best choice. People do not want to be saddled with the second mortgage that is childcare costs and then find themselves having to drive 25 to 30 minutes out of their way in the morning, and drive another hour back to the workplace, paying all the additional extras that come with breakfast clubs and after-school care.

I plead with the Minister of State to bring it back to the Minister that there has to be a level of genuine engagement. There should no longer be warm words. Until the Minister can provide a system that will ensure these services are not under financial threat, we will not be able to provide proper facility for all in our society.

Mary Butler (Waterford, Fianna Fail)
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I listened intently to what the Deputy said. The one thing we have to consider is that this is a voluntary scheme. Some 90% of providers overall have signed up to it but, as the Deputy said, it varies from 81% in some areas to 100% in others. There are positives here in that there is a total annual budget of €221 million to support the childcare sector. This includes €138 million to support staffing costs and improve pay and conditions; €25 million to support administration, incorporating the old programme support payment budget of €19.4 million; €20 million to reflect increases in non-staff overheads; and €38 million to support the employment of graduates. These are the key determinants of delivery costs. Capacity does not change from week to week, which provides income certainty for the providers.

What also has to be looked at in respect of the inflationary impacts is that the total funding package for core funding, an allocation of €20 million, is included to contribute to non-staff overhead costs. An additional €25 million is also available for administrative costs, which was not there previously. Some of the providers have welcomed this. I have spoken to many providers in my area. Some were apprehensive about signing up but I am very hopeful that more providers will join once the scheme is up and running. I will certainly take on board the points the Deputy made about engagement and the fact that 19% of providers in his area have not signed up.