Réada Cronin (Kildare North, Sinn Fein)
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299. To ask the Minister for Children, Equality, Disability, Integration and Youth the number of early childhood care and education, ECCE, scheme services that are of standard capitation given that his Department states that a standard capitation ECCE service will receive at least a 9.5% increase through core funding; the number that were higher capitation; the percentage increase awarded by core funding to higher capitation sessions; and if he will make a statement on the matter. [49245/22]

Roderic O'Gorman (Dublin West, Green Party)
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As of 4th October, 3,879 services had contracted for the ECCE programme in 2022/2023, of which 1,493 are ECCE-only services. (i.e. the only child registrations for the purpose of funding were through ECCE programme). For the 2022/23 programme year, there all ECCE capitation will be paid at a flat rate of €69 per child per week.

This is a departure from the previous approach which paid differential capitation rates to services depending on whether or not sessions were led by a graduate. In 2021/22 952 ECCE-only services were in receipt of higher capitation.

For the programme year 2022/2023, services that deliver the ECCE programme will receive standard capitation in respect of registered children and will have the option to also avail of Core Funding. Core Funding provides funding based on a service's capacity (opening hours, number of places and age group of children), and graduate premiums for lead educators and managers. Base rate allocations for capacity at the sessional pre-school rate offers €0.65 per child place per hour and the graduate lead educator premium allocation is €4.44 per hour.

While Core Funding will operate in addition to and alongside ECCE (standard capitation), AIM, CCSP and NCS, it replaces ECCE higher capitation and incorporates funding previously allocated to the discretionary Programme Support Payments (PSP) from September 2022.

The change in approach to funding ELC Graduates is underpinned by the recommendations of an Expert Group, outlined in their report Partnership for the Public Good, and approved by Government in December 2021. The Expert Group noted that the higher capitation payment has diverted graduates away from non-ECCE provision, despite the importance of high-quality provision for under-3s. The Expert Group also reference a Focused Policy Assessment of higher capitation, which noted a difficulty in ensuring that the additional payment was passed on to educators.

Funding for ELC Graduates is now one element of a larger funding model, and is underpinned by Employment Regulation Orders setting minimum rates of pay in the sector, including differential pay rates for graduates in leadership roles. This will ensure that educators and managers with degrees will feel the benefits of the graduate premium payment being made to services.

Given the different approaches to funding ELC Graduates, it would not be appropriate to make direct comparisons between the previous ECCE higher capitation and the Graduate Lead Educator Premium in Core Funding.

ECCE higher capitation had been paid on the basis of the number of children participating in the ECCE session, not the number of hours of ECCE being led by a graduate. For example, an ECCE room with 22 children previously received 2.75 times more higher capitation funding than an ECCE room with 8 children. In both cases, the graduate Lead Educator is providing the same amount of hours of service.

Core Funding provides an opportunity to rectify that disparity as well as extend funding for graduates beyond the ECCE programme to other aspects of ELC provision.

For this reason, the Graduate Lead Educator Premium in Core Funding is paid as a top up on the number of hours of provision that is led by a graduate, rather than the number of children that are participating in that room.

Services who were previously in receipt of ECCE standard capitation in 2021/22 will see capitation increase by at least 9.5% through the Core Funding base rate. This is before any potential Graduate Manager Premium is awarded to the service, which is worth an additional €2,530.80 per ECCE session. In addition, any provision offered outside of the 15 ECCE hours per week will further increase Core Funding income to the service.

A full comparison of income under the previous funding model (ECCE standard capitation plus PSP) and the new funding model (ECCE standard capitation plus Core Funding) is published online and outlined below in tabular form. The data provided below is stylised for typical service models and makes assumptions about service capacity in order to estimate income. It also includes income from ECCE and Core Funding for ECCE hours only and does not include income available to services through the Access and Inclusion Model or other income such as from parental fees for extra services.

Standard Capitation services

Services previously in receipt of ECCE higher capitation will see capitation increase by up to 11.1% through Core Funding. A very small percentage of services will see no increase. These are larger ECCE-only services – with 20+ children in a session. In 2021/2022, ECCE sessional services with 22 children received income of €1,829.30 per week under ECCE higher capitation and PSP. This will be matched in Core Funding. I have issued a Funding Guarantee in order to ensure that no service will see a decrease in funding. Very few services will require this Funding Guarantee.

A comparison of income under the previous funding model (ECCE higher capitation plus PSP) and the new funding model (ECCE standard capitation plus Core Funding) is published online and outlined below. The same assumptions about typical service models, capacity and income apply as in the data provided above. Also as above, the Graduate Manager Premium and any non-ECCE provision are not included and would be additional income to the service.

Higher Capitation services

* All services will have their current income matched if they are operating on the same basis as last year.

Budget 2023 allocates €1,025m to early learning and childcare – a clear demonstration from Government of the value of the sector. In recent weeks, there have been numerous important developments including the commencement of the Employment Regulation Orders, the launch of Together for Better, and the Budget announcements.

Together for Better aims to transform the sector and my Department and I are committed to working constructively, collaboratively and positively with Partner Services towards a goal of delivering early learning and childcare for the public good.

I would encourage services that are experiencing difficulty and who would like support to contact their City/County Childcare Committee (CCC) to access case management supports. Services can be assisted on an individual basis through this route and it also allows for trends and themes across the country to be identified that can inform a more systematic response if necessary. My officials are not receiving any indications from CCCs that there have been providers reporting financial difficulties and in need of support. This case management process through the CCCs is the route to access additional sustainability funding if required.

Réada Cronin (Kildare North, Sinn Fein)
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300. To ask the Minister for Children, Equality, Disability, Integration and Youth the progress made to date in establishing a definition for reasonable profit within the meaning of the Crowe Report; and if he will make a statement on the matter. [49246/22]

Roderic O'Gorman (Dublin West, Green Party)
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The term ‘reasonable profit’ within the Crowe report had a particular meaning within European legislation on State Aid.

Consideration of profit rates in the Early Learning and Care (ELC) and School Age Childcare (SAC) sector requires further detailed analysis. I am pleased that with the enhanced financial transparency and public management underpinning the new funding model, we are now in a better position than ever before to make progress on this front.

The 'Independent Review of the Cost of Providing Quality Childcare Services in Ireland', published in October 2020 and the 'Analysis of the Rate of Surplus for Early Learning and Care and School-Age Childcare Services in Ireland', published in October 2021, provide relevant information and insight into sector level data.

The sectoral information on rate of surplus in ELC and SAC in Ireland suggests that, on the whole, there are not excessive profits in the sector. However, there are significant variations across different types of provision. For example, the evidence suggests that ECCE-only services see the highest levels of income in excess of costs compared to other types of provision. The sector average rate of surplus is 4% whereas the characteristics associated with ECCE provision indicate surplus rates of between 14% and 23%.

This analysis was useful for the development of the new funding model, undertaken by an Expert Group and outlined in their report, 'Partnership for the Public Good: A New Funding Model For Early Learning and Care and School-Age Childcare', published in December 2021. The Expert Group stated that the reports provide a good argument for increased financial transparency to be assured of the position on surplus/profits in the sector.

The Expert Group noted that in designing the funding model, it is important to consider the impact of public funding on a privately delivered sector. They further noted that while it is entirely appropriate that providers earn a fair and reasonable income, it is important to ensure that profit is not the primary motive for providers in this sector. This is particularly important given the scale of public funding in the sector, which will exceed €1 billion in 2023 as recently announced in the budget.

One of the key arguments outlined in the Expert Group report is that, in essence, the State has a right and a duty to ensure that the market serves the public good. For this, my Department will be monitoring emerging trends in the model of delivery, identifying any threats to the public interest, such as profiteering or financialisation, or sustainability issues, in order to take appropriate mitigation measures.

The collection of information on income and costs is essential for the full understanding of this complex and diverse sector in order to inform the development of policy. As recommended by the Expert Group, there needs to be full visibility and understanding of financial information in the sector in order to better understand the impact and interaction of income, costs, surplus and profit in the sector.

I am pleased therefore that the recent data collection for the 2021/2022 Annual Sector Profile, including questions on income and costs, has been completed by 93% of services. This new and emerging data will allow the Department to rerun income and cost analysis and ascertain the latest available financial position to inform the next policy developments.

Together for Better, the new funding model for Early Learning and Childcare, was launched in September. Over 90%, more than 4,000 providers, have become Partner Services under Core Funding, committing to working in partnership with the State for the public good. The response from providers to become Partner Services in delivering Core Funding has been hugely encouraging and positive.

The investment requires providers to freeze their fees at last year's rates; it requires new pay rates to be in force; and it requires a significant degree of operational and financial transparency over how services operate. This assures Government and the public that public money is being used for its intended purpose - high quality, affordable, and accessible Early Learning and Childcare. It also puts in place a solid foundation and brings further confidence to the system to allow for additional increases in investment. This is already happening, with a landmark investment of €1.025 billion in the ELC and SAC sector in 2023.

Further interrogation of the new Core Funding application and income and cost data is required in order to most effectively design developments in Year 2 of Core Funding. Developments may focus on promoting further capacity expansion, investing more in the base rate, or to taking more targeted initiatives to invest in specific parts of the sector.

Réada Cronin (Kildare North, Sinn Fein)
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301. To ask the Minister for Children, Equality, Disability, Integration and Youth if the attention of his Department has been drawn to a penalising effect of the core-funding allocation wherein smaller independent services face closure thereby reducing choice for parents who want part-time care or early childhood care and education scheme-only provision, something that is not catered for in many full day care creches; and if he will make a statement on the matter. [49247/22]

Roderic O'Gorman (Dublin West, Green Party)
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Together for Better is the new funding model for Early Learning and Care (ELC) and School Age Childcare (SAC). Together for Better brings together the three major funding schemes, the Early Childhood Care and Education programme, including the Access and Inclusion Model (AIM), the National Childcare Scheme and Core Funding. It implements a series of recommendations in the Expert Group report, Partnership for the Public Good.

Core Funding, which commenced on 15 September 2022, marks the beginning of the transformation the early learning and childcare sector to one that is increasingly publicly funded and publicly managed, delivering a service for the public good, through a partnership between the State and providers, to the benefit of children, parents, educators and practitioners, and society overall.

The primary purpose of Core Funding is to improve pay and conditions in the sector as a whole and improve affordability and accessibility for parents as well as ensuring a stable income to providers.

I was delighted to announce under Budget 2023 that the original allocation for Core Funding will be increased to €259 million for Year 1 of the Scheme to meet the cost of expanded capacity that has materialised through the actual application data that has been received to date. This significant expansion of capacity is not only positive for parents in providing more hours and weeks of provision, it is also positive for staff as it allows opportunities to work more hours per week and weeks per year.

Initial analysis shows the increased capacity is the type of capacity that is in highest demand relative to supply (i.e. more baby and toddler places as well as school-age places), supporting labour market participation of parents, and women in particular. The geographical breakdown across the country also indicates expansion in urban and commuter areas where there has been significant pressure on places.

Core Funding, underpinned by the Employment Regulation Orders, makes provision for improvements in staff pay and conditions, for additional administrative staff/time, and a contribution to non-staff overhead costs.

Core Funding is distributed in a fair, reasonable and transparent manner that is related to services’ costs of delivery. Consequently, services opening longer hours or offering more places will receive a higher value of Core Funding than other services. ECCE services remain a key component of the system, and in fact, the value of Core Funding offered is weighted in favour of sessional services for 2.5-6 year-olds. ECCE services receive proportionately more than other types of services relative to the staffing requirements of sessional pre-school provision.

It is important to acknowledge that Core Funding will intentionally address some of the existing disparities in funding levels across ECCE and non-ECCE provision, providing funding proportionate to the cost of delivery and supporting the employment of graduate Lead Educators across ELC provision as well as graduate Managers.

Services currently in receipt of ECCE standard capitation will see capitation increase at least 9.5%. A majority of services currently in receipt of ECCE higher capitation will also see a moderate capitation increase. A very small percentage of services will see no increase. These are larger ECCE-only services – with 20+ children in a session. ECCE sessional services with 22 children currently receives income of €1,829.30 per week. This will be matched in Core Funding. No service will see a decrease in funding.

Participation in the new partnership for the public good is optional and I am pleased to be working together with more than 4,000 Partner Services signed-up for Core Funding. I would encourage services that are experiencing difficulty and who would like support to contact their City/County Childcare Committee (CCC) to access case management supports. Services can be assisted on an individual basis through this route and it also allows for trends and themes across the country to be identified that can inform a more systematic response if necessary. My officials are not receiving any indications from CCCs that there have been providers reporting financial difficulties and in need of support. This case management process through the CCCs is the route to access additional sustainability funding if required.

Réada Cronin (Kildare North, Sinn Fein)
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302. To ask the Minister for Children, Equality, Disability, Integration and Youth if his Department accepts that a 40-week preschool should be funded, wherever such provision is profitable, and that the Departmental policy extant could lead to the eradication of small, home from home services of which up to 1500 exist across the State; and if he will make a statement on the matter. [49248/22]

Roderic O'Gorman (Dublin West, Green Party)
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Through the three early learning and childcare programmes ECCE, NCS and Core funding my Department aims to ensure stability and sustainability in the sector. I do not want any services to be faced with financial sustainability issues and am fully committed to working with any such service to support them in delivering early learning and childcare for the public good.

Core Funding is distributed in a fair, reasonable and transparent manner that is related to services’ costs of delivery. Consequently, services opening longer hours or offering more places will receive a higher value of Core Funding than other services. ECCE services remain a key component of the system, and in fact, the value of Core Funding offered is weighted in favour of sessional services for 2.5-6 year-olds. ECCE services receive proportionately more than other types of services relative to the staffing requirements of sessional pre-school provision. Through a combination of Core Funding and ECCE capitation, sessional services can now avail of weekly funding of at least €78.75 per child in ECCE (€69 ECCE capitation plus €9.75 per week in Core Funding base rate). Where a service has less than full occupancy, the funding on a per child basis is even higher.A service that has space for 11 children but has an average occupancy of 9 will receive an equivalent of €80.92 per child.

We are not seeing any evidence of a significant lack of sustainability for ECCE-only services or to suggest that services will face closure as a result of Core Funding. Services that are experiencing difficulty and who would like support are encouraged to contact their City/County Childcare Committee (CCC) to access case management supports. Services can be assisted on an individual basis through this route and it also allows for trends and themes across the country to be identified that can inform a more systematic response if necessary. We are not receiving any indications from CCCs that there have been providers reporting financial difficulties and in need of support. This case management process through the CCCs is the route to access additional sustainability funding if required.

Regarding the suggestion of a 40 week preschool term, any significant change to the ECCE programme rules such as providing ECCE funding for more than 38 weeks funding needs to be considered carefully and comprehensively in consultation with stakeholders.

I would note that my Department has commenced a review of ECCE which is expected to be completed by Q3 2023. The review will assess whether the ECCE Programme is meeting its core objectives and will identify any changes or improvements that can be made to the Programme, based on international evidence, experience to date as well as consultation from a wide number of stakeholders.