Catherine Murphy (Kildare North, Social Democrats)
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225. To ask the Minister for Children, Equality, Disability, Integration and Youth if his attention has been drawn to childcare and early learning providers' petition to notify service users of the potential for them to withdraw from core funding and increase fees; and the steps he is taking in this regard. [34669/23]

Roderic O'Gorman (Dublin West, Green Party)
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This Government has in 2023, for the first time, allocated more than €1 billion to early learning and childcare – a clear demonstration from Government of the value of the sector. Over the past eight budgets, investment in early learning and childcare has risen from €260 million in 2015 to € 1.025 billion in 2023, reaching the First 5 investment target 5 years ahead of time. This unprecedented investment speaks to the commitment of Government in prioritising early learning and childcare services.

In September 2022, Together for Better, the new funding model for early learning and childcare was launched, bringing together the ECCE programme, including the Access and Inclusion Model (AIM), the NCS and Core Funding, with a fourth programme, the Equal Participation Model in development.

The new funding model has been broadly welcomed by sectoral representative organisations who I meet with regularly through the Early Learning and Childcare Stakeholder Forum. While some representatives have raised issues in relation to fee management, I am not aware of any petition relating to withdrawl from the model. Core Funding is optional and to date more than 95% of services, over 4,200, are signed-up. I am pleased with this high level of engagement and every effort has been made to carefully design the scheme to meet the policy objectives, including making the scheme attractive to providers to choose to operate their services with the terms and conditions associated with the scheme.

In terms of investment in the new Core Funding scheme, the initial investment in Budget 2022 of €207 million, was increased to €221 million in April 2022, and again increased to €259 million before the programme began in September 2022. For year 2 of the scheme, a further 11% increase in this budget or €28 million was secured. In total, there is now €287million provided to the sector for year 2 of Core Funding, providing a sustainable model with increases for all services.

Core Funding introduced a new way of funding the sector through direct funding to contribute to a services costs of delivery, where services have significant freedom on how best to spend this grant once they are committed to delivering their service in line with public management requirements. Such a significant investment of public money needs the appropriate controls through public management to ensure that it achieves its purposes in the public interest.

One of the key conditions in relation to public management is fee management. Core Funding allows for substantial increases in the total cost base for the sector, related both to pay and non-pay costs thereby creating the conditions to introduce fee management, which in year one and two is effectively a fee freeze, where providers cannot increase the fees charged from September 2021. This ensures that parents’ costs do not increase and that the increased NCS subsidies are fully felt by parents.

Fee management has been introduced following the recommendations approved by Government of the Expert Group to first limit increases in fee rates. This effectively freezes services fees at those set by services in September 2021 to ensure that the introduction of Fee Management to the sector is done in a sustainable and considered manner.

For the vast majority of services, the increased income through Core Funding is above the potential income services would have received through higher fees, based on trends in individual services fees over a number of years. It is reasonable and justifiable therefore that on receipt of the Core Funding grant, Partner Services must agree not to increase their fees given the level of funding available and the supply side nature of it.

The approach for fee management in future years will be further guided by the Expert Group recommendations and may include the introduction of a common national provider fee structure and rates, and transitional arrangements such as where all fee rates would have to fall within a specified percentage tolerance range around a given rate.

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. Sustainability funding is available to Partner Services, community and private, who are experiencing financial difficulty. Partner Services set their own fees policies based on their individual operating model, however Partner Services can be assisted through the case management route to ensure their services remain sustainable under Together for Better.

For Budget 2024, I want to build on the success of Together for Better, with the ECCE programme (including AIM), the NCS and Core Funding working well to achieve affordability, quality, inclusion and sustainability achieving significant benefits for services, staff, parents, children and society overall.

Catherine Murphy (Kildare North, Social Democrats)
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226. To ask the Minister for Children, Equality, Disability, Integration and Youth the number of service providers that have opted into the core funding model since its introduction; the number that did not opt in; and the number that have since withdrawn. [34670/23]

Roderic O'Gorman (Dublin West, Green Party)
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Core Funding, which began in September 2022, is the new funding scheme under Together for Better the new funding model for early learning and childcare. The primary purpose of Core Funding 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 offers greater stability and sustainability for providers by substantially increasing the overall investment in the sector, particularly through a supply-side funding approach and in providing funding for spaces rather than participating children. Services can choose to spend their Core Funding on a wide range of expenditure areas related to the delivery of a quality service.

The original Core Funding allocation of €207 million secured in Budget 2022 increased to €221 million in spring 2022 at a time when cost pressures were significantly increasing. This further increased to €259 million based on significant capacity growth in sector in Budget 2023. For the second year of operation, Core Funding has increased by €28 million, an 11% increase, to a total of €287million.

With 95% of eligible services signed up for Core Funding in year 1, these benefits for parents, providers, staff and children are felt widely across the sector.

There are 4,452 services eligible to sign up to Core Funding for Programme Year 2022/2023 and of this eligible cohort 4,212 are currently contracted. 7 Services have a ‘Withdrawn’ application since the beginning of Core Funding Programme Year 2022/2033.

[1]Eligible Service = any open service on EYP currently contracted to at least one of the Department’s early learning and childcare programmes.

[2]Data sourced from Pobal as of 10 July 2023