Roderic O'Gorman (Dublin West, Green Party)
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I propose to take Questions Nos. 303 and 311 together.

An Independent Review of the Cost of Delivering Childcare in Ireland, undertaken by Crowe in on behalf of my Department, was published in November 2020.  The project was designed to provide a robust evidence base for the further development of high quality Early Learning and Care (ELC) and School-Age Childcare (SAC) in Ireland.

This Review found that approximately 40% of the total income to the sector comes from parental fees. The remainder came from State funding. This percentage was found to vary significantly across services. Many services rely entirely on State funding while others services rely exclusively on parental fees. In a sustainable service, it is expected that the income to services (from both parental fees and State funding) exceeds the costs of delivering services.

The income and costs data captured as part of the Review have underpinned the substantial Covid-19 supports secured including the exemption for employers in the ELC and SAC sector to the rule in the Employment Wage Subsidy Scheme (EWSS) of having to demonstrate the reduction in turnover that was required of other employers.

Data for this Review was collected prior to the Covid-19 pandemic so the analysis of the breakdown of services' income between State funding and parental fees does not take account of the special financial supports that were made available to the sector from March 2020.

However, data available through the Annual Early Years Sector Profile survey shows that fees have remained largely static since the onset of Covid-19.  At the same time, numbers of children attending services have reduced.  This may rebound as parental working patterns change.  

My Department is committed to the importance of collecting high quality income and cost data. In 2021, a new supplementary income and costs survey was circulated to all providers alongside the Annual Early Years Sector Profile survey, administered by Pobal on behalf of the Department. In 2022, the income and cost survey has been incorporated in to the Sector Profile and I am pleased that 83% of services have already completed this. This up to date sectoral data will provide a strong basis to inform future policy development and investment decisions.

With regard to State spending in 2020 and 2021, it is important to note that these were distorted years, due to Covid-19 effects.  Expenditure data in relation to the sector from my Department is as follows:

As we are only partially through 2022, I cannot provide State spending, but can advise that the allocation in Budget 2022 was €716.7 million.  

This expenditure data does not include, for example, expenditure on the EWSS, which has been available to ELC and SAC employers in the sector between August 2020 and April 2022. The EWSS at enhanced rates (from October 2020-January 2022) equated to €34 million per month for the ELC and SAC sector, covering on average 80% of payroll costs and 50% of total operating costs for providers.  Standard EWSS (from August 2020-October 2020 and for February 2022) equated to €22 million per month , covering on average 50% of payroll costs and 38% of total operating costs for providers, and a flat rate of €100 from March-April  2022, amounting to €11 million per month, covering on average, 25% staff costs or 11% total operating costs.This expenditure data also excludes the Temporary Wage Subsidy Scheme (TWSS) that was operated by Revenue in 2020.

Given the significant distortion that occurred in the sector throughout 2020 and 2021, in terms of both income from fees with reduced attendance of children, and public income, with various exceptional funding arrangements in place, it is not possible to make robust estimates about the split in services’ income from public and private sources during this time.  

Core Funding, with a total full year cost equivalent to €221 million, will be of particular interest with regard to the relationship between State investment and parental fees. Core Funding is the new funding stream to start a partnership between the State and providers to support delivery of ELC and SAC for the public good, for quality and affordability for children, parents and families. 

Core Funding will introduce a fee freeze for the September 2022-August 2023 programme year. This will stabilise the fee levels and ensure the affordability benefits of the NCS and ECCE subsidies are felt by parents, particularly the new extension of the universal NCS payment to all children up to 15.

Core Funding will give providers a stable income source based on the nature of the service they deliver. A provider’s income will now consist of Core Funding, NCS and ECCE subsidies, and parental fees. Structuring Core Funding primarily based on capacity means that services will have an allocation each year that will not fluctuate in line with children’s attendance. 

Roderic O'Gorman (Dublin West, Green Party)
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I propose to take Questions Nos. 304 and 305 together.

A total €716.7 m has been allocated to  Early Learning Childcare and School Age Childcare in 2022. Please see below in tabular form the combined allocation and expenditure figures for the years 2020 to 2022:

*2020 was a revised figure

**2021 Expenditure figures are provisional and yet to be finalised

Roderic O'Gorman (Dublin West, Green Party)
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As the Deputy is aware the National Childcare Scheme (NCS) provides financial support to help parents meet the cost of childcare and to support better outcomes for children. There are two types of supports available under the Scheme:

- The Universal Subsidy is available to all families with children under 3 years. It is also available to families with children over 3 years who have not yet qualified for the free preschool (ECCE) programme.

- The Income Assessed Subsidy is available to families with children aged between 24 weeks and 15 years. It is means tested and will be calculated based on individual circumstances. Those on the lowest incomes will receive the highest subsidies. 

The Deputy will also be aware that as part of Budget 2022, I announced a number of changes to the NCS, which will be of significant benefit to many parents. These changes will result in more parents getting additional subsidised hours for early learning and childcare in Tusla registered services by extending the NCS universal subsidy to all children under 15 - benefitting up to 40,000 children. A further change will remove the practice of deducting hours spent in pre-school or school from the entitlement to NCS subsidised hours, benefitting an estimated 5,000 children.

Please see below in tabular form the figures you have requested;

* 2020 Allocation was a revised figure

**2021 expenditure figure is provisional and yet to be finalised.

Roderic O'Gorman (Dublin West, Green Party)
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As the Deputy is aware the National Childcare Scheme (NCS) provides financial support to help parents meet the cost of childcare and to support better outcomes for children. There are two types of supports available under the Scheme:

- The Universal Subsidy is available to all families with children under 3 years. It is also available to families with children over 3 years who have not yet qualified for the free preschool (ECCE) programme. 

- The Income Assessed Subsidy is available to families with children aged between 24 weeks and 15 years. It is means tested and will be calculated based on individual circumstances. Those on the lowest incomes will receive the highest subsidies. 

The Deputy will also be aware that as part of Budget 2022, I announced a number of changes to the NCS, which will be of significant benefit to many parents. These changes will result in more parents getting additional subsidised hours for early learning and childcare in Tusla registered services by extending the NCS universal subsidy to all children under 15 - benefitting up to 40,000 children. A further change will remove the practice of deducting hours spent in pre-school or school from the entitlement to NCS subsidised hours, benefitting an estimated 5,000 children.

Please see below in tabular form the figures in relation to the National Childcare Scheme.  My Department does not have available a breakdown between the Early Learning Childcare allocation and expenditure and those of School Age Childcare.

* 2020 Allocation figure was a revised figure

**2021 expenditure figure is provisional and yet to be finalised.

Roderic O'Gorman (Dublin West, Green Party)
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The Access and Inclusion Model (AIM), is a programme of supports designed to ensure that children with disabilities can access and meaningfully participate in the Early Childhood Care and Education (ECCE) pre-school programme. 

75% of expenditure is on Level 1 and Level 7 with the remaining expenditure on training, equipment, communications and advisory supports. Level 1 is provision of funding for training under the LINC training programme and employment of Inclusion Co-Ordinator (INCO) positions in ECCE sessions. Level 7 is funding for additional assistance in the preschool room to ensure a child’s participation in the ECCE programme. AIM provides financial support to the pre-school provider where needed, which can be used either to reduce the adult to child ratio in the pre-school room or to buy in additional assistance. Level 7 assistance is a shared resource for the preschool setting.

The allocations and drawdowns for the Access and Inclusion Model (AIM) are set out in the table below.

The number of applications received for the 2020/21 programme call was significantly impacted by the Covid-19 pandemic which resulted in 40% fewer applications during the 2020/21 call compared to the 2019/20 call. Another contributing factor were the large number of services opting to apply for the Employment Wage Subsidy Scheme (EWSS) as an alternative to AIM funding.  As a result there was an underspend in both 2020 and 2021.

Roderic O'Gorman (Dublin West, Green Party)
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I am very conscious of the need for significant improvement in pay and working conditions for early years educators and school age childcare practitioners. The level of pay they receive does not reflect the value of the work they do for children, for families and for the wider society and economy. I am also aware that this issue is a sector-wide one and does not solely relate to those working in the sector who hold a level 5 award in early learning and care.

As the State does not employ early years educators and school age childcare practitioners, my Department does not set wage levels or determine working conditions for staff in the sector. The cost estimates below would arise for early learning and care (ELC) and school-age childcare (SAC) service providers.

On the basis of 2021 data from the Annual Early Years Sector Profile, it can be estimated that the annual cost of raising the wages of all early years educators and school-age childcare practitioners to at least €13 per hour would be approximately €26.2 million. The additional cost to employers for this in terms of other employer costs is estimated to be approximately €5 million, bringing the total cost to €31.1 million.

In relation to the estimates above, the following should be noted:

- The cost estimate only relates to staff who recorded an hourly wage in their response to the 2020/21 Annual Early Years Sector Profile. It does not include any costs that might arise to adjust wages for those who instead report an annual salary or draw profits as owner-managers.

- The cost estimate only relates to staff and managers who work directly with children. It does not include wages for managers who do not work directly with children or wages of ancillary staff.

- The cost estimate is not limited to those staff and managers whose highest level of qualification is Level 5 on the National Framework of Qualifications. It includes the cost of raising the wages of staff with higher qualifications who earn less than €13 per hour.

- The cost estimate is the additional cost of bringing staff from their current wage up to at least €13 per hour. 

- The cost estimate does not attempt to look at the potential cost implications for the wages of staff currently earning more than €13 per hour.

- The methodology used in estimating the above costs is based on analysis of the Annual Early Years Sector Profile data and differs from the allocation mechanism for Core Funding, which is based on a service's capacity and not on a service’s individual staff wage rates.