Brendan Smith (Cavan-Monaghan, Fianna Fail)
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105. To ask the Minister for Children, Equality, Disability, Integration and Youth if he has had discussions recently with representative organisations in relation to the core funding model given that concerns have been experienced by some childcare providers; and if he will make a statement on the matter. [36664/22]

Aindrias Moynihan (Cork North West, Fianna Fail)
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111. To ask the Minister for Children, Equality, Disability, Integration and Youth his consideration for an immediate review of the core funding structure for ECCE services to increase viability of ECCE small scale services; and if he will make a statement on the matter. [36744/22]

Pádraig O'Sullivan (Cork North Central, Fianna Fail)
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130. To ask the Minister for Children, Equality, Disability, Integration and Youth his views on the real concerns regarding the viability under core funding within parts of the early childhood care and education sector; and if he will make a statement on the matter. [36712/22]

Richard Bruton (Dublin Bay North, Fine Gael)
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137. To ask the Minister for Children, Equality, Disability, Integration and Youth if he has considered concerns of childcare providers that the new core funding scheme poses challenges for smaller providers. [35722/22]

Roderic O'Gorman (Dublin West, Green Party)
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I propose to take Questions Nos. 105, 111, 128, 130 and 137 together.

In December 2021, Government adopted the 25 recommendations contained in an Expert Group report, Partnership for the Public Good: A New Funding Model for Early Learning and Care (ELC) and School-Age Childcare (SAC).

The new funding model will support the delivery of ELC and SAC for the public good, for quality and affordability for children, parents and families. To achieve this, there is a need for greater State investment and greater public management of provision.

The Expert Group engaged in a widespread programme of stakeholder consultation in order to review the existing funding model for Early Learning and Childcare and develop a new funding model. Over the course of the two year project, the extensive programme of stakeholder consultation sought the views of parents, providers, the workforce, and other stakeholders, all of which is documented and publicly available.

One of major recommendations of the Expert Group report was to introduce a new supply-side funding stream based on capacity and incorporating funding for graduates and administrative support. Core Funding, which begins in September, 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 and improve affordability for parents as well as ensuring a stable income to providers. Core Funding allows for an estimated 19% increase in the total cost base for the sector.

My officials have engaged extensively with provider representatives and providers of all types, and continue to do so, via various fora, as the details of Core Funding are available. I, along with senior officials, have met with provider representative groups on a number of occasions and have maintained information, presentations, FAQs and other useful material online.

My Department and I have engaged with providers throughout the development and implementation of the new funding model, and will continue to do so in the future. I met with the Early Learning and Childcare Stakeholder Forum most recently on the 29th June, and this served as a useful opportunity to hear from a variety and diversity of stakeholders in the sector, following the publication of the funding agreement for Core Funding.

Core Funding is a new way of providing funding for the sector and addresses some disparities in the previous system of funding. It is a fair and proportionate approach to distributing funding that is linked to the main drivers of providers' costs. There is no a solid foundation in evidence for the concerns expressed by some that Core Funding will compromise services' viability.

In examining all of the data available to the Department, including that provided by some provider representatives, there is no evidence about a significant lack of sustainability for ECCE-only services or to suggest that services will face closure as a result of Core Funding.

Analysis of providers’ income and costs shows that services with the characteristics correlated with ECCE-only provision had the highest levels of income in excess of costs compared to other types of provision. Levels of income in excess of costs range from 14% to 23%, depending on the characteristic chosen. These figures compare to a sector median proportion of income in excess of cost of 4%. This was prior to increases in ECCE capitation rates and does not take account of the substantial investment in services during Covid-19 or the new Core Funding income that services will be eligible for.

Accounting for the proposed Employment Regulation Order rates currently being considered, Department estimates show that sessional pre-school services will receive income from the State through the ECCE programme that will cover staff costs and leave considerable room for overheads and surplus, or for any service that may choose to raise wages above anticipated new minimum rates. Core Funding constitutes additional income on top of ECCE capitation.

Every year a number of services close and others open. Current data on service closures and openings are not markedly different to the trend in previous years. This data also shows that services close for a wide range of reasons including retirement of owners or other personal circumstances and only a minority relate to sustainability issues.

I am committed to ensuring more stability of income for services, and that is one of the key objectives of Core Funding.

The vast majority of services will see an increase in funding, and less than 1% of services will see no change. No service will see a decrease in funding. For any service that does experience financial difficulties, a Sustainability Fund will be put in place. This new strand of the Sustainability Fund, linked to Core Funding, will be designed to provide an extra safety net for providers. This will be open to both private and community providers.

I look forward to working with all providers who wish to enter into a Partner Service agreement with the Department to deliver ELC and SAC for the public good.