James O'Connor (Cork East, Fianna Fail)
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468. To ask the Minister for Children, Equality, Disability, Integration and Youth if matters raised in correspondence (details supplied) in relation to the childcare fee cap will be considered; and if she will make a statement on the matter. [31381/25]

Norma Foley (Kerry, Fianna Fail)
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Investment in Early Learning and Care (ELC) and School-Age Childcare (SAC) has quadrupled in the last 10 years from €260 million in 2015 to €1.37 billion in 2025.

Included in this allocation is Core Funding, which is a grant to providers designed to support quality, sustainability, and enhanced public management, with associated conditions in relation to fee control and cost transparency, incorporating funding for administration and to support the employment of graduate staff.

The introduction of Core Funding in 2022, brought a significant increase in investment for the sector, with €259 million of funding paid directly to services in year 1 of the scheme, of which €210.8 million was entirely new funding. This funding increased by 11% in year 2 (to €287 million). The scheme increased by a further 15% in year 3 (to €331 million).

From September 2025, when year 4 of Core Funding begins, over €390 million will be available through Core Funding. The increased Core Funding available from September facilitates:

• Support for providers in meeting the costs of increases in minimum pay rates as a result of newly negotiated Employment Regulation Orders by the independent Joint Labour Committee;
• Increased funding for early learning and care capacity offered to ensure Partner Services can keep pace with rising costs without needing to increase fees charged to parents;
• An increase to the minimum amount of funding a centre-based service will receive, increasing to €14,400 per year from the current level of €14,000;
• A reduction in the maximum allocation for a services capacity to €450,000 to best spread a limited budget across the entire sector; and
• Funding to support capacity growth of 3.5% across the sector.

When introduced, this maximum allocation under Core Funding was set at an annual value of €600,000. This was deliberately above what any service was in line to receive under the new increased Base Rates which took effect in September 2023. This was the first step in the incremental introduction of enhanced budgetary controls for Core Funding. 2023/2024 was a transitional year where the concept of an upper control was introduced to the sector in a considered and controlled manner, without impacting any individual service.

For Year 3, 2024/2025, the maximum Base Rate was reduced to €500,000. Again, this was done in a careful manner. My Officials identified the services who would be impacted by this measure and assessed the impact of the reduced maximum allocation on their funding. Five services are in receipt of this maximum allocation of €500,000 with graduate premiums bringing their grant higher. These are services who will be in receipt of some of the highest levels of funding from my Department nationwide.

From September 2025, the fourth year of Core Funding, I will be reducing the maximum allocation to €450,000. Based on current operating models, just nine Partner Services will be reaching this upper limit. I have carefully considered the impact of this upper limit of funding on these services.

The introduction of fee caps for all Partner Services in receipt of Core Funding contributes toward the long-term scheme goals of promoting affordability and accessibility for parents. A parent being charged the maximum permissible fee of €295 per week for a full day place would be entitled to receive the universal National Childcare Scheme subsidy of €96.30, meaning their own co-payment would be no more than €198.70 per week. Higher subsidies are available for many parents, depending on their level of income and the age and number of children in their family.

In addition to this new maximum fee cap, the unprecedented funding available through Core Funding will ensure the existing fee freeze, which was introduced in 2022, will remain in place for participating services. This will continue to assist parents with children in the majority of services whose fees fall below the new fee caps.

The new maximum fee cap and increased State investment are important steps towards the Government’s commitment to progressively reduce the cost of early learning and childcare to €200 per month per child during the lifetime of the government.

In 2024, Core Funding services were allowed to apply for a fee increase. In this Fee Increase Assessment process, Core Funding Partner Services who were charging fees below the county average were eligible to apply to be assessed for a fee increase.

This Fee Increase Assessment process balanced the need of parents for stability with their early learning and childcare costs and the need for providers to operate viable businesses in order to continue providing this Public Good service for their community.

I have been informed by officials in my Department that this service did not apply for a fee increase.

The table below provides information on the Core Funding received by the service in question for year 1 and 2 of Core Funding, as well as the estimated grant in year 3 of the scheme:

I am confident that this measure will not make any service unsustainable. However, any service facing sustainability concerns can continue to avail of supports through my Department’s established case management process, through which local City and County Childcare Committees and Pobal work together to assess and provide support including financial support to services experiencing difficulties.