Many parents are facing an uncertain end to the summer as the withdrawal of some childcare providers from a Government-backed funding scheme gives rise to substantial fee increases – but a shortage of places means they have nowhere else to go.
Parents of children who attend the Little Rainbows chain of early-learning and childcare facilities in north Dublin were informed that it is exiting from “core funding” and so the fees charged to parents will increase by about 25 per cent from September.
A small number of operators are already known to have confirmed their intention to follow suit. There is uncertainty, however, as to just how many providers might take the plunge and exit the system.
So what is going on?
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The Government has been seeking to develop a system that provides more childcare places for families and substantially cuts costs by supporting both providers and parents through a number of funding streams.
“Core funding” is a grant that was first introduced in 2022 for early-learning and childcare providers towards their operating costs. The amounts involved can be substantial. In the case of Little Rainbows which operated five creches, almost €1.2 million was given in 2022-2023, roughly €2,000 per child.
The National Childcare Scheme is another Government payment which subsidises the cost of places on a per-child basis with parents nominating which provider they want to get the money. And the Early Childhood Care and Education (ECCE) scheme provides payment from the Government towards a set number of free hours of childcare and education for pre-school-aged children.
Sounds good, what’s the problem?
In return for signing up to core funding, which was established two years ago, operators had to commit to a fee freeze. Many claimed they had already halted any increases due to the pandemic and other factors. Some said that they had not increased the fees charged to parents in many years before that.
Providers were also required to comply with requirements to meet various staffing levels and regulations which, they argued, resulted in increased costs and more monitoring of their businesses.
Not all of them are happy with what the changes have entailed but the larger operators have been the most vociferous in questioning aspects of the system. There have been warnings almost from the outset from some there would be an exodus. However, this did not materialise at the end of year one with almost the same number of providers, more than 90 per cent, signing up again.
The department says this because the funding model actually works well for providers, more are opening than closing, more than 200,000 children are in the system and it is working hard to continue making improvements.
So what’s happening now?
Additional Government payments made during the pandemic meant that many services did well financially and some argue that the current problems arise because surpluses amassed but then have been exhausted. Others say many larger operators in the sector are quite profitable but do not like the level of Government interference in their businesses. Many operators, however, say they are simply struggling to make ends meet.
It’s argued that a small number have now carried through on threats to withdraw from core funding in order to increase prices. Some were to be permitted increases within the scheme but fewer than 10 per cent were expected to be eligible. So far, the numbers are small. But many hundreds of families will now face increased costs, up to €80 a week more than they had been expecting to be spending per child during the coming year.
More services have threatened to exit and the final number will not be clear until the end of the month.
What are childcare providers and parents saying?
Operator representatives say the current system simply doesn’t work and the department needs to sit down with them The unions, and others including the National Women’s Council, argue that the Government needs to step in and run a public system. Meanwhile, the Government says that annual funding has doubled to almost €1.2 billion in four years, with more to come, so we are getting there even if things are still far from perfect.
The question now is for how many parents will things get worse before they get better.
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