Brendan Griffin (Kerry, Fine Gael)
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157. To ask the Minister for Children, Equality, Disability, Integration and Youth if childcare fees will be capped for families who cannot qualify for the national childcare scheme and have more than one child in childcare services; and if he will make a statement on the matter. [31026/22]

Roderic O'Gorman (Dublin West, Green Party)
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One of my top priorities in Government is to improve affordability of Early Learning and Care (ELC) and School-Age Childcare (SAC) for parents. The package of measures announced in Budget 2022, particularly the Transition Fund and Core Funding, are designed to ensure that fees to parents do not increase and that the full affordability benefits of the National Childcare Scheme (NCS) are felt without being absorbed in fee increases.

The introduction of fee management measures is one of the recommendations contained in the Expert Group report, 'Partnership for the Public Good: A New Funding Model for Early Learning and Care and School-Age Childcare', as approved by Government. Fee management will start with the requirement for providers to maintain fees at or below September 2021 levels to access Core Funding in 2022. This will be developed further in future years.

From August 2020 to April 2022, ELC and SAC services could access the Employment Wage Subsidy Scheme (EWSS) without having to demonstrate a reduction in turnover required by other employers. This significant level of funding to the sector has ensured that fees have remained largely static for the last two years and that providers have continued to be sustainable.

Following the tapering of EWSS and prior to the introduction of Core Funding, a Transition Fund is available to providers. The primary conditionality of the Transition Fund is an agreement not to increase fees from September 2021 levels. I am delighted to report that so far 94% of services have agreed to operate a freeze on parental fees by coming into contract for the Transition Fund.

Following the Transition Fund, Core Funding will become available from September 2022 and will be worth up to €221 million in a full year. A central condition of Core Funding will be that providers agree not to increase fees above those which were charged last year. This will give parents greater certainty about what they will be charged and ensure that increases to National Childcare Scheme (NCS) subsidies are not absorbed by fee increases.

NCS provides income-assess and universal subsidies in respect of ELC and SAC. Income-assessed subsidies are available to families with children aged between 24 weeks and 15 years. This subsidy is means-tested and calculated based on individual circumstances. Rates will vary depending on the level of family income, the child’s age and educational stage, and the number of children in the family.

Parents who do not qualify for an income-assessed subsidy may qualify for a universal subsidy. The universal subsidy is currently available to all families with children under 3 years old and families with children over 3 who have not yet qualified for the free preschool programme (ECCE). This subsidy is not means tested and provides 50 cents per hour towards the cost of a registered childcare place for a maximum of 45 hours per week.

Two significant number developments to the Scheme were announced as part of Budget 2022.

The first development, which came into effect on 2 May, has removed the practice of deducting hours spent in pre-school, or school, from NCS awards. This means that parents may use their full awarded subsidised NCS hours – benefitting an estimated 5,000 children from low income families.

The second change will extend the NCS universal subsidy to all children under the age of 15 from September 2022 – benefitting up to 40,000 children.

Both of these changes will result in more families receiving additional subsidised hours for early learning and childcare.

Additionally, participation in NCS is a requirement for services to come into contract for Core Funding (unless they are a sessional pre school service only).

Ensuring no fee increase, in tandem with developments to the NCS will together deliver improved affordability for parents and I hope to build on these in future.

As you can see, I am committed to putting in place a strong foundation to improve affordability for parents and sustainability for services, as well as improved quality of provision, including pay and conditions for the workforce. This foundation will allow for further developments in future years.

Matt Shanahan (Waterford, Independent)
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158. To ask the Minister for Children, Equality, Disability, Integration and Youth the plans that he has in place to support the early childhood care sector given the significant costs that childcare businesses are experiencing and the difficulties in recruitment and retention due to low wages; the way he intends to create additional space in the sector; and if he will make a statement on the matter. [31032/22]

Roderic O'Gorman (Dublin West, Green Party)
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I was pleased to have secured a Budget 2022 package of €716 million for investment in Early Learning and Care (ELC) and School Age Childcare (SAC), a very significant advance on the previous year and designed to begin to introduce major changes to the model of funding the sector.

The most substantial new development in Budget 2022 was the introduction of Core Funding. Core Funding is a new funding stream designed to facilitate a partnership between the State and ELC and SAC providers for the public good. Its primary purpose is to improve pay and conditions in the sector as a whole and to improve affordability for parents, as well as ensuring a stable income to providers. 2022 will see up to €73m being made available for Core Funding, which equates to €221m in full year costs.

Core Funding will give providers a stable income source based on the nature of the service they deliver. A provider’s income will now consist of Core Funding, NCS subsidies and ECCE capitation, as well as AIM funding for those services that participate in that model, in addition to parental fees. Structuring Core Funding primarily based on capacity means that services will have an allocation each year that will not fluctuate in line with children’s attendance.

Core Funding makes a contribution to staff costs, which comprise approximately 70% of a service's operating costs. In this respect, Core Funding includes allocations for improvements in staff pay and conditions (€138 million) and for administrative staff/time (€25 million). Employer costs are factored in to the staff costs allocation in Core Funding. A further €38 million will be distributed in line with ELC graduate qualifications of ELC Lead Educators and Managers in ELC or combined ELC and SAC services.

Core Funding also makes a contribution to non-staff overhead costs (for example, utilities, rent) that make up the remaining 30% of providers costs. In a full year, there is an allocation of €20 million for a contribution to non-staff overhead costs through Core Funding. This includes an increase since the original allocation was announced in the budget.

Extensive analysis of the income and costs of providers demonstrates that the combined funding model of ECCE, NCS and Core Funding offers a substantial and attractive package to providers to cover costs, including increased costs related to quality measures, while also committing to the key conditions of Core Funding such as the fee freeze.

On the matter of capacity, the availability of high-quality ELC and SAC is a key Government priority.

To ensure that the supply of ELC and SAC places meets demand, my Department has, since 2015, funded the creation of more than 27,000 new places through an Annual Capital Programme.

Before the onset of Covid-19, national data indicated that, on the whole, supply of places was meeting demand, with evidence of undersupply for certain age groups including children under 3, and in certain areas.

Data gathered throughout the Covid-19 pandemic revealed lower demand for ELC and SAC. Indeed, data captured in June 2021 found significant vacancy rates across the country – with the national vacancy rate averaging at 21%. My Department has continued to monitor capacity, with a particular focus on monitoring Covid-19 impacts as public health restrictions have been lifted and on responding to the unmet needs of families. In April of this year, City/County Childcare Committee (CCC) undertook a nationwide survey of capacity in ELC and SAC services. This was followed in May by the Early Years Sector Profile Survey that is undertaken by Pobal annually on behalf of my Department.

Capacity data captured through the recent CCC survey and the Early Years Sector Profile Survey has been extracted and will be made available in the coming weeks. An initial analysis of these data shows the national vacancy rate at 13.3%.

In addition to these efforts to monitor capacity issues across the country, my Department is planning a range of steps to address any issue of under supply. Some €70m has been allocated to my Department through the revised National Development Plan (NDP) – with the majority of this funding earmarked for new places. Under the National Action Plan for Childminding, I have committed to opening up access to the NCS to parents who use childminders following the extension of regulation to childminders, which is expected to happen within the first 2-3 years of the Plan.

My Department, in partnership with the Department of Housing Planning and Local Government, is in the process of updating the 2001 Planning Guidelines for Local Authorities on Early Learning and Childcare Settings. In addition, City/County Childcare Committees have been mobilised to engage proactively with services to identify vacant places and to explore possibilities for expansion among services, particularly where there is unmet need.