2904. Deputy Denise Mitchell asked the Minister for Children, Disability and Equality if she will meet with representatives from an organisation (details supplied) regarding their concerns around core funding, in order to ensure their services remain sustainable and to ensure that the organisation continues to be in a position to deliver childcare across their 34 branches; and if she will make a statement on the matter. [61104/26]

I acknowledge the viewpoints of childcare providers regarding the operation of the Core Funding scheme, and I wish to assure them that the Department has taken steps to ensure the scheme remains viable.

Core Funding offers supply-side funding to services 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.

Balancing affordability for parents with viability for businesses remains a key priority for the Department. When first introduced in 2022, Core Funding had an annual allocation of €259 million, of which, €210.8 million was entirely new funding to the sector.

That annual allocation has increased each year since and will exceed over €480 million in the fifth programme year, which starts in September. This represents an increase of over 86% in Core Funding over four years.

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.

A key condition of receiving the significant amount of 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. They also ensure that the State’s significant investment through the Scheme is not absorbed by unnecessary fee increases.

As part of the progressive development of the Core Funding fee management system, in Programme Year 3 the Department ran a Fee Increase Assessment process. Partner Services charging fees below the county average were eligible to apply to be assessed for a fee increase. This process ensured that services, who had fees which may not have been sustainable, were given the opportunity to apply for a fee increase. This process was launched on 31 July 2024 and closed on 29 November 2024. 898 services were approved to increase at least one fee through this process.

The Core Funding Agreement noted that a new Fee Increase Assessment could be run within the Programme Year, and that details would be made available in advance of the programme year. This assessment would only be provided under exceptional circumstances, and at the Minister’s discretion.

A revised version of this process - the Sustainability Review Process - has now commenced and will give services charging low fees the opportunity to increase up to an approved level. This seeks to strike a balance between the protection of affordability for parents and the interests of services, refining eligibility criteria to target particularly vulnerable services around the country where fees have been frozen at low levels since at least 2021. Any sanctioned fee increases will be implemented after September 2026.

Fee increases will be limited in the Sustainability Review Process to vulnerable services charging the very lowest fees. This targeted approach on low fees was implemented as a complementary support to the very significant funding increases secured for Core Funding for year 5.

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.

As per the table below, Tiger Time Limited’s projected full-year Core Funding allocation for year 4 of the scheme is €6.25 million, based on 31 services identified as attracting a Core Funding allocation in the current year. 33 Tiger Time Limited services are identified as having attracted a Core Funding allocation across at least 1 year of the scheme.

In addition to the year-on-year increases, here are also wider financial supports available where a service is experiencing financial difficulty or has concerns about their viability. These supports can be accessed through the Department’s case management process, which can be accessed while remaining in Core Funding.

The Department is 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.

I would encourage any service experiencing financial difficulty and who would like support to contact their CCC to access case management supports. Contact details for the CCCs can be found at: www.gov.ie/en/department-of-children-disability-and-equality/campaigns/city-and-county-childcare-committees/.