Brendan Smith (Cavan-Monaghan, Fianna Fail)

Since the announcement of the new community child care subvention scheme in July this year, my officials and I have taken every opportunity to communicate the details of the new scheme, as it stands, to those who will be most directly affected by it, the wider child care sector and the public generally. There continues to be misunderstandings as well as genuine concerns on the part of many community child care services about the new scheme. There is even the impression that the Government will somehow walk away from its €1.1 billion investment in child care from 2000 to 2010, more than half of which has been spent to date.

The policy under the equal opportunities child care programme of putting community based child care at the heart of our investment in child care, continues to be a fundamental principle under the national child care investment programme, NCIP. I am conscious of the contribution community volunteers and local effort have made to the success of both programmes. The new scheme is being introduced to continue this recognition and support for the community not-for-profit sector.

The Equal Opportunities Child Care Programme 2000-2006, known generally as the EOCP, was the Government's first major investment programme in child care and was co-funded by the Exchequer and EU Structural Funds. The programme has provided capital grant aid to child care providers to assist them with the building and refurbishment costs of their facilities. As a programme with a particular focus on disadvantage, a clear distinction was made between private sector grant recipients and community based, not-for-profit child care groups, with grants for the full building or refurbishment costs of community facilities being provided up to a ceiling per project of €1.4 million.

It was recognised 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 had a strong focus on disadvantage might not be in a position to become self-sustainable in the short to medium term. As a result, a specific allocation of funding targeted at disadvantaged parents and their children was made available through the EOCP staffing support grant to assist this category of community providers in their start-up years. 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 European social funding 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 tailored to the differing economic circumstances of its client group 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 Exchequer funded community child care subvention scheme will continue to be based on the tiered fee system. Many but not all community child care groups complied with this requirement under the EOCP and operated effective tiered fee systems which enabled disadvantaged parents to access child care at reduced costs. For community services which were not implementing an effective tiered fee system until now, the new scheme may appear to be an intrusion into the way they operate their services. It is true that more could have been done to ensure these services implemented effective tiered fee structures following their introduction. However, the EOCP was administered in the spirit of a partnership approach to foster and support community services and the invaluable work and contribution to local child care services. As with any programme, particularly an innovative and developmental one such as the EOCP, there are lessons to be learned and we will build on the very substantial progress that has been achieved.

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 that 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 to 2015. These recommendations emphasised the need for the NCIP community support scheme to be based on having in place effective tiered fee structures 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 at appropriate groups, including social 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. To qualify for the staffing grant scheme community child care groups were first required to show they were located in a disadvantaged area, with the CLÁR and RAPID programmes 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 what was the actual 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. Unless brought to our attention, this change in circumstance was not generally reflected in the level of grant aid provided.

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 on the part of other, non-subsidised private sector providers in the area to compete. 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 disadvantaged parents for whom the grant aid was intended.

Another weakness of the present 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 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 these issues highlight 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 while, at the same time, further developing child care policy is that we ensure 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 disadvantaged parents and their children. Nothing could be further from the case. The new scheme has been given a total funding allocation of €153 million over three years. 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. It is a clear indication of our intent to build on the scheme and to provide additional funding. This substantial increase is intended to ensure the largest number of children and parents using community-based child care services benefit.

In the absence of sufficient data to enable my office to quantify and cost accurately a more generous scheme under the new, more transparent arrangements, it was decided to identify the most disadvantaged categories of parents at the outset. We could not disregard those parents and start at higher income levels, but we could not commit to a scheme that goes beyond the most disadvantaged categories until we were in a position to quantify and cost the outcome accurately. For this reason, an innovative and transitional approach to the introduction of the scheme was adopted. As more than 800 services are in receipt of staffing grant support, the first priority was to continue their funding during the transitional period. All existing grant recipients who apply for funding under the new scheme will receive their current level of funding during the first half of 2008.

On the basis of the information provided through applications, officials in my office will be able to establish a profile of each service in terms of the type of services provided, the profile of the parents using the services for their children, the operational costs and any other relevant data indicating a special need that requires a particular approach. At every opportunity, my officials and I have stressed that the data is essential to enable the assessment of the scheme as announced to be undertaken urgently to facilitate the existing services to move to the new scheme without disruption.

I expect that all services applying in the next week or so for funding under the community child care subvention scheme will be notified of their approval for transitional funding by early December. Subsequently, my office will be in contact with these services regarding the funding levels indicated from the information provided with their applications. The analysis of the data will be completed to enable me to report back to Government, as required in early 2008, with any further proposals to expand or improve the scheme. Subject to the Government's decision and any changes agreed, my office will be in further contact with the services. I cannot be specific in advance of any Government decision as to possible changes, but the way in which the scheme will be implemented will maximise the outcome for parents and children using community child care facilities and the funding provided for this purpose has been enhanced.

I wish to comment on a number of accusations made about the new scheme, including the accusation that it will lead to the segregation of children, with only the children of disadvantaged parents in community-based services. While capital grant aid is available under the EOCP and the NCIP to community-based child care services in disadvantaged and non-disadvantaged areas, the staffing support grant was intended for disadvantaged community services only. Non-disadvantaged community services were dependent on fee income alone. The new scheme will be available to all community-based child care services regardless of their location, thereby facilitating disadvantaged parents to access community services, which may not be the case currently, and improving the social mix.

As was the case under the EOCP, the tiered fee system underpins the principle that fee income plus grant aid equals operational cost. The community service will either charge the full operational cost to parents in respect of whom they are not receiving grant aid or the operational cost less the subvention being received in respect of qualifying parents. With some improvements on the EOCP, the profile of parents using a service will be cost neutral to the service.

A serious accusation levelled at the new scheme is that it penalises working parents, is targeted at parents on social welfare who do not need child care services and is a poverty trap. I refute these accusations.