Mary Upton (Dublin South Central, Labour)
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Question 200: To ask the Minister for Health and Children the steps she proposes to take to alleviate the pressures on private pre-school operators when they are forced by the budget proposals to suffer a serious drop in income (details supplied); and if she will make a statement on the matter. [18069/09]

Barry Andrews (Dún Laoghaire, Fianna Fail)
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As the Deputy will be aware I have responsibility for the implementation of the new scheme to provide a free Pre-School year of Early Childhood Care and Education (ECCE) which was announced recently by the Minister of Finance. The scheme will allow children to avail of a free playschool place in their pre-school year, which will be provided for 3 hours per day, 5 days per week for 38 weeks. It will also allow children in their pre-school year who are attending full day or part-time daycare services to avail of a free session of 2 hours and 15 minutes per day, 5 days per week for 50 weeks. As the new scheme will be introduced from January next, the first full year will be from September 2010 and children availing of the scheme in January 2010 will have a reduced period of free pre-school provision.

Participating children must, normally be aged between 3 years 3 months and 4 years 6 months on the 1st September of each year. Exceptions will be allowed where children have special needs or it is necessary to accept children at an older age due to the enrolment policy of the local primary school. Participating services will receive capitation of €64.50 per week where children attend for 38 weeks, and €48.50 where they attend for 50 weeks of the year. Services will receive payments at the start of each term. Where the child is attending full-day or part-time child care, the service will be required to reduce the child care fees by the amount of the capitation. A participating service may also operate a pre-school service which is not within the scheme.

A major benefit for pre-schools arising from the Scheme is that it will introduce certainty in their income, with payments being made at the start of each term. For many months now, I have had private pre-schools and their national bodies approaching me about high vacancy rates in services, often of 20-25%, with many on the brink of closure as a result. For many, a significant part of their cost per place is to cover for unused places, and many pre-schools which had run 2 sessions per day have cut back to a morning session only, citing lack of demand. This scheme will save these pre-schools, and allow them see out what are, in economic terms, tough times ahead for all of us.

Taking the example provided by the Deputy, the service states that they are considering increasing their fees by approximately 16% this September due to rising costs, although only water charges are mentioned as having increased. While I do not have the precise details of that service's cost base, it would be extremely unlikely that charges such as these could increase the underlying total cost by such an extent, as typically 65% of the costs associated with running a pre-school service are wage costs, which are not rising at present, and a significant portion of the remaining 35% are rental costs, which are currently falling. It would therefore appear more likely that the main reason for any increase in unit cost is under-occupancy, i.e. the total costs are being divided among a reduced number of children, thereby increasing the cost per child. However, I would be concerned that, in the current economic climate, a pre-school service which increased its fees by 16% would see an even greater level of under-occupancy from September, making the service unsustainable.

Services participating in the scheme would be expected to see increased occupancy levels and, therefore, increased total income, which, together with the payment of the capitation fee in advance at the start of each term, should make them generally more sustainable. I understand that the service in question employs 3 child care workers and the staff to child ratio required in sessional pre-schools is 1:10. A pre-school service with two sessions daily (e.g. 9am – Noon & 12:30-3:30 pm) of 30 children each would, under this scheme, receive capitation of some €147,000 for the 38 weeks of pre-school, which in most cases would be expected to result in a sustainable margin after costs such as wages, rent and local authority charges. Of course, if the service only opens for 1 session per day, this would reduce that margin, although the additional demand created by the scheme will make a second session more viable. I would still hope, however, that the margin would be sufficient for the scheme to be attractive to this service and others like it, particularly when the benefits of advance payment and guaranteed income are taken into account.

It is of course the case that some very high cost services may choose to stay out of the scheme, in much the same way as fee paying private Primary Schools choose to operate outside the national school system, however, it is hoped that the very large majority of eligible services will participate in this scheme. Participating services may charge for additional hours (e.g. when open for 4 hours per day) or for optional extras such as dancing classes etc, however, it is a fundamental principle of the scheme that children have access to free pre-school provision regardless of the ability of parents to pay for additional services.