Thousands of families could face substantial increases to their childcare costs if providers pull out of a Government-backed “core funding” scheme in a dispute over the ability of businesses to raise additional income.
Core funding is a grant provided to childcare providers towards their operating costs, and in return services agree to the conditions of the scheme, including fee management and financial transparency.
Dublin-based chain Little Rainbows, which caters for 600 children, told parents it would withdraw from the scheme on Tuesday. At least two more providers have either confirmed their intention to leave or have warned they will do so if they are not allowed to increase fees.
Some parents have been told their fees will now increase by almost a third at the start of next month. A south Dublin childcare provider, Daisy Chain, said they would increase fees by 40 per cent from the start of next month as a knock on, if they are not granted permission to charge smaller increases and still receive the grant. “This is not our preferred option as it will be a costly outlay for parents,” management said in a letter to families. “We hope to avoid this but it will be dependent on significant increase in core funding.”
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The owners of Spraoi and Sonas, a chain operating multiple sites in Galway and Clare, told parents the company would go out of business by the end of the year if it did not exit core funding. It said it required a modest increase but could not obtain this due to the obligation to freeze fees charged to parents that is a condition of core funding. Instead it would exit the scheme and increase fees by about 30 per cent or about €250 a month per child.
Financial records suggest the chain made substantial profits during the year to August 2023.
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Parents argue the potential impact of any increases will be exacerbated by the fact they actually expected their weekly outlay to decrease by €33 due to a scheduled rise in the subsidies under the National Childcare Scheme. One parent said she would be spending €4,000 more on childcare next year than she had anticipated because of the changes at Little Rainbows.
At the same time the State has sought to address the cost pressures operators have claimed were building due to the fee freeze by allowing providers to apply for increases of up to €33 per child as long as they currently charge below the average figure for their county.
This seems not to have been enough for some operators, although with the process of signing up for the third year of funding until later this month it is not yet clear how many will go through with withdrawing from the scheme.
“I certainly have members who are telling me they can’t make a go of this any more as things stand,” says Stephanie Roy, director of industry body Childhood Services Ireland. She said a survey of one organisation’s membership had found almost half were considering whether to stay in the scheme, and that “meaningful engagement” was required to address concerns.
The Department of Children acknowledges there is an issue but maintains that more than 90 per cent of services are currently in core funding, and sign up rates for the new round are currently ahead of the same point in the process last year.
It says a number of larger providers, the key group when it comes to expressing unhappiness, have already committed. There is a acceptance, however, that some do not like the level of regulation being applied in return for increased funding.
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