170. Deputy Tom Brabazon asked the Minister for Children, Disability and Equality if her Department is aware of concerns of childcare providers and parents over the core funding system and the fee structure of the scheme; and the actions her Department is taking to address these concerns. [46057/26]

Core Funding offers supply-side funding to service providers to support them with their operational costs. Core Funding operates alongside all other early learning and childcare programmes and constitutes additional income to services on top of these programmes (and parental fees) towards a service’s operating costs. It is designed to deliver:

• Affordability for parents through ensuring no increases in fees, capping the maximum fees that can be charged, and offering the National Childhood Scheme (NCS) and the Early Childhood Care and Education (ECCE) programme to all eligible children;

• Quality in services, including through better terms and conditions for staff and supporting graduate leadership in services; and

• Sustainability for providers through substantially increased funding to the sector, paid on a consistent and equitable basis.

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 to the sector.

Core Funding has seen consistent increased State investment to the sector year on year. Core Funding increased by 11% to reach €287m for the second year, and by a further 15% to €331m for the third year of the scheme. The allocation of this additional funding in year 2 and 3 of was informed by the data from previous years, feedback from stakeholders as well as an independent financial review of sessional services by Frontier Economics.

Moreover, changes to fee management were introduced in year 3, enabling low fee services to apply for a fee increase.

That annual allocation has increased each year since and exceeds €390 million for the fourth and current year of Core Funding. This represents an increase of over 50% in Core Funding over three years. The additional funding is supporting further capacity growth, the maintenance of a fee management system to benefit families and significant improvements to pay and conditions in this valued sector.

Within the Core Funding allocation for the 2025/26 programme year, €45 million has been ringfenced to support employers in meeting the costs of further increases to the minimum rates of pay in the sector, as set out under the Employment Regulation Orders.

This allocation supports an average of a 10% increase to minimum hourly rates of pay for all roles outlined in the Employment Regulation Order that came into effect on October 13 2025. It is estimated that 67% of staff working in the sector will have seen their wages increase as a result of these new minimum pay rates.

I was delighted to announce further investment in Core Funding in Budget 2026. The additional funding being made available in 2026 will see the allocation for Core Funding in the next programme year (which begins in September 2026) increase to over €480 million. That is an additional €90 million on the current full year allocation, or a 23% increase.

This increased investment will allow for further increases in capacity across the sector, with €20.6 million specifically set aside to support Partner Services in adhering to Core Funding fee management conditions, including reductions in the maximum fee caps, from September 2026. This will guarantee that Core Funding’s monetary protections will continue to be passed on to families while ensuring sustainability and stability for the sector.

The increased allocation also includes €45 million to facilitate improved pay for early years educators and school-age childcare practitioners through enhancement of the Employment Regulation Orders in Year 5 of the scheme.

The majority of Core Funding is distributed to services via the Base Rate, which is based on a service’s staffed capacity – the opening hours, operating weeks, the age group for whom services are provided, and the number of places available. Core Funding allocations are based on staffed places, not on child registrations and attendance levels. Places do not have to be filled in order to be allocated Core Funding, but for capacity to be funded, there must be enough staff in place to satisfy the minimum staff to child ratios as set in the Regulations made under the Child Care Act 1991. This provides services a guaranteed minimum income, supporting stability where attendance may be fluctuating.

Although the cost of delivery components such as improvements to staff pay have been used to derive the base rates, the eligible areas of expenditure of the Core Funding grant are much broader.

The Department has also made changes to improve the sustainability of providers through, for example, targeted measures for small and sessional services, and a fee increase assessment and approval process for services with fees frozen at unsustainably low rates.

Adherence to the Core Funding fee management system is a primary condition of receiving the significant State funding that is available through the Scheme. The fee management system requires compliance with a fee freeze and the maximum fee caps.

The continued development of the fee management system forms part of a phased process of transformation founded in the recommendations made by the Expert Group in the 2021 report Partnership for the Public Good.

The Department is conscious of the importance of promoting affordability for parents without compromising the viability of businesses in the sector, and appropriate safeguards are carefully considered during planning for new developments.

Participation in Core Funding also unlocks access to enhanced support for services caring for concentrated numbers of children facing disadvantage. Equal Start is a funding model and set of associated universal and targeted measures to support access and meaningful participation in early learning childcare for children and their families who experience disadvantage.

Partner Services also have access to Building Blocks capital grants. The Building Blocks Capital Programme is designed to support services to expand their existing facilities by creating additional, full time, early learning and care spaces.

I do not want any provider to be faced with financial sustainability issues in their delivery of early learning and childcare services. To support services, there are wider financial supports available from the Department. Where a service is experiencing financial difficulty or has viability concerns, these can be accessed while remaining within Core Funding.

This support can take the form of assisting services with interpreting analysis of staff ratios and cash flow, financial support, as well as more specialised advice and support appropriate to individual circumstances.

These supports can be accessed by any Core Funding Partner Service by contacting their local County/City Childcare Committee.

I encourage all services to avail of these supports as an alternative to withdrawing from Core Funding and removing these invaluable services from children and their families.

I am confident in the adequacy of Core Funding for this sector. However, there is a safety net in place for the small number of services who may for any number of reasons require additional supports, to ensure that they can continue to provide this vital service for the public good without needing to withdraw the benefits that Core Funding achieves for parents such as fee freezes and caps.