Childcare is among the big bills for any young family, so it was not surprising that the budget announcement that the cost of care would fall next year to €550 a month per child from €735 attracted a lot of attention. Not all, it appears, is as it might seem.
What was announced in the budget?
Minister for Public Expenditure Jack Chambers said he was reducing the “maximum childcare fees paid by parents from €735 to €550 per month” for children up to senior infants from September of next year.
How is he doing that?
The Government is increasing the universal subsidy payable under the National Childcare Scheme to €2.50 an hour from €2.14. That subsidy is payable for care of up to 45 hours per week.
He also said he was reducing the maximum weekly fee cap that childcare facilities operating under the State’s core funding system can charge to €250 from €280.
RM Block
What would that mean for parents?
The Minister said the measure would save parents €2,220 annually per child, a significant saving from after-tax income.
Sounds like good news. What’s the problem?
There are several, not least surprised parents hearing that the maximum monthly bill should be €735 per child at the moment when they are paying well above that figure.
How much?
Angry parents were getting in touch with our Budget Q&A on Wednesday, wondering why they are paying anything from €959 to €1,400, well above the Minister’s figure.
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What’s happening there?
Not for the first time, there appears to be a substantial “reality gap” between the Government’s understanding of the “maximum” cost of care and the real maximum under its own core funding rules.
The amount childcare providers can charge is divided into bands based on the hours of care provided. The Minister’s figures are based on Band E, covering children in care for between 40 and 50 hours a week.
The issue is that most parents – certainly in and around Dublin – are paying under Band F, for children in care for 50 or more hours, which is significantly more expensive.
As 50 hours a week is almost 10 hours a day, how come children are in care that long or longer?
The issue is not so much how long they are in care as how many hours the providers have to stay open. In urban areas and the commuter belt, childcare facilities are open before 8am to allow parents to drop children off on the way to work. And they are still open at 6pm or later to accommodate parents getting back from their jobs.
The childcare providers need to staff up for those hours regardless of how long your child is actually there, so increasingly, the only package they are offering is the Band F package, providing for care of 50 hours or more.
And how does that explain the difference between €959 and €1,400 a month?
The €1,400 figure is the full gross cost before you deduct the subsidy parents are entitled to under the National Childcare Scheme. Once you apply the subsidy, the figure falls to €959. Some parents may just be looking at the top line of their childcare bill.
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So these parents are not going to see their bills fall to €550 next year?
Far from it. The Minister said Band E charges would fall from €280 a week to €250 a week before the subsidy next year. We don’t have any certainty what the charge for Band F would be but if it fell pro-rata, parents could expect to pay around €300 a week before subsidies – or between €750 and €810 a month.
And are charges falling?
That’s a separate issue. Childcare providers say they are really struggling to survive under the current charging structure, with one provider we spoke to on Wednesday saying there was a need for the department to “get real” on the cost of running a business. With energy, staff and other costs still rising, providers say they are unlikely to be able to cut the amount they charge parents, even if they get greater funding from Government.
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So how did the Minister get it so wrong?
The Government seems to have taken “good news” – the 36-cent-an-hour increase in the subsidy – and taken the good out of it by overpromising what it would mean for childcare fees next year and by being poorly briefed on what parents are actually paying at the moment.
