2975. Deputy John Clendennen asked the Minister for Children, Disability and Equality whether her Department has assessed the proportion of Exchequer funding invested in the early learning and childcare sector that is reflected in lower parental fees, improved pay and conditions for early years educators and the financial sustainability of providers; and if she will make a statement on the matter. [58185/26]

Core Funding is a supply-side grant to early learning and childcare providers towards their operating costs. It is designed to promote affordability for parents and sustainability for providers through increased funding to the sector, paid on a consistent and equitable basis.

A key condition of receiving the significant State funding available through the Core Funding Scheme requires that Partner Services adhere to the Core Funding fee management system, including a freeze on fees at 2021 levels and fee caps. These measures support the Department’s ongoing policy developments in relation to achieving standardisation of fees charged to parents and of income received by Partner Services.

The introduction of Core Funding in 2022 brought a significant increase in investment for the sector, with €259m of funding paid directly to services in year 1 of the scheme, of which €210.8m was entirely new funding.

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 years 2 and 3 was informed by the data from previous years, feedback from stakeholders as well as an independent financial review of sessional services by Frontier Economics.

That annual allocation has increased each year since and has exceeded €390 million for year 4 of the Scheme. This represents an increase of over 50% in Core Funding in three years. Within the Core Funding allocation for the 2025/26 programme year, €45 million was ringfenced to support employers to meet the costs of the latest increases to the minimum rates of pay in the sector.

I was delighted to announce further investment in Core Funding in Budget 2026. The additional funding being made available 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 increase of over €90 million, or 23%, on the current full year allocation.

This increased investment will allow for further increases in capacity across the sector, with €21.4 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. Consequently, over 2 years, the Department has made an allocation of €90 million available to support possible increased rates of pay.

Since the scheme was introduced, its effectiveness has been subject to ongoing assessment, which has facilitated the iterative evolution of this scheme.

Moreover, the annual changes to the allocation model and in the conditions attached to the funding has ensured the Scheme remains responsive, balancing the needs of providers while seeking also to meet a range of other objectives. Among these objectives is ensuring taxpayers’ money is being used in a way that sustains services while not excessively increasing their private profit.

The Department will explore further changes based on the operation of year 5 of the Scheme as well as stakeholder input and income and cost data from providers. The Department will continue to engage with the sector and continue to develop the scheme so that it can continue to see the high uptake levels it has seen this year, and indeed since it was launched in 2022.

Pay is one of a number of challenges impacting the early learning and care and school-age childcare workforce. The level of pay for early years educators and school-age childcare practitioners does not reflect the value of their work for children, families, society and the economy.

Although the Government is the primary funder of the sector, it is not the employer and cannot directly set wages or conditions for any staff in the sector.

The Joint Labour Committee (JLC) is the formal mechanism established by which employer and employee representatives can negotiate minimum pay rates, which are set down in Employment Regulation Orders (ERO), and is independent in its functions.

Pay and conditions are improving. Through the work of the JLC and successive ERO, minimum pay rates have now risen three times in four years, delivering an average 15% increase in minimum rates of pay. This marks significant progress in professionalising the workforce. The latest ERO came into effect in October 2025 which saw an increase in minimum pay rates of, on average, 10% and will increase pay for over 67% of staff in the sector.

The Phase 1 report of Shaping the Future: the Early Years Action Plan was published in December 2025. The report sets out the next steps in the delivery of a number of Programme for Government commitments relating to early learning and childcare. The Action Plan adopts a phased approach that allows for actions in 2026 to improve affordability, accessibility and quality, while also ensuring adequate time for a broad public consultation on longer term actions. A central objective of Shaping the Future is to reduce parental fees to an upper limit of €200 per month over the lifetime of the Government.

Phase 2 actions, which will be undertaken from 2027 through to the end of 2029, will be published in Q4 2026. Before Phase 2 actions can be specified, in line with the Programme for Government commitment a broad public consultation is underway.