Roderic O'Gorman (Dublin West, Green Party)
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I propose to take Questions Nos. 606 and 629 together.

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. Core Funding is optional and to date 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.

As early learning and childcare services are private businesses, the State is not the employer. As a result, my Department cannot set wage levels or determine working conditions for staff in the sector.

My Department has provided a range of supports to service providers to enable them to improve wages and working conditions. In particular, there is now, through the independent Joint Labour Committee process, a formal mechanism by which employer and employee representatives can negotiate pay rates.

With effect from the 15th September 2022, two new Employment Regulation Orders for Early Years Services negotiated through the JLC came into effect, which provide for minimum hourly rates of pay for different roles. ERO rates are set in legislations and must be paid by all employers whether a service is a partner service in Core Funding or is operating outside of it. I understand the JLC is continuing to meet to discuss possible changes to the EROs.

I am also committed to addressing other challenges which may impact on recruitment and retention of staff. In 2021, I published Nurturing Skills, the Workforce Plan for the sector. This Plan includes specific actions for moving to a graduate-led workforce by 2028, establishing a career framework for staff, and strengthening career pathways.