Dáil Éireann Debate, Tuesday - 7 July 2026
636. Deputy Cian O'Callaghan asked the Minister for Children, Disability and Equality the measures her Department are taking to ensure that no childcare provider will be adversely affected by a possible reduction in childcare fees; and if she will make a statement on the matter. [50973/26]
Amharc ar fhreagraMy understanding is that the Deputy is enquiring as to the impact of the new maximum fee thresholds to take effect under Core Funding from September of this year, and it is on this understanding that I have responded to the Deputy’s question.
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.
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 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.
Additional funding being made available in 2026 will see the allocation for Core Funding in the next programme year increase to over €480 million from September 2026. 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 over €21 million specifically set aside to support Partner Services in adhering to enhanced Core Funding fee management conditions, from September 2026. This brand-new funding will be distributed to all Partner Services through an enhanced Base Rate and will allow most services to maintain the fee freeze while offsetting a portion of the fee income reduction experienced by the minority of services that will be impacted by maximum fee caps. I am conscious of the importance of promoting affordability without compromising the viability of businesses in the sector. That is why the increased funding through the Base Rate will ensure that no service gets left behind on account of keeping their rates affordable for families.
A key condition of receiving the significant State funding that is available through the Scheme requires that a Partner Service adhere to the Core Funding fee management system, which includes a freeze on fees at 2021 levels and fee caps. This is to ensure that the State’s significant investment through the Scheme is not absorbed by unnecessary fee increases.
Fee Caps were first introduced in September 2024. The initial cap on high fees for First-Time Partner Services was incrementally reduced and extended to all new and existing Partner Services from September 2025.
In June 2026, the details of maximum fee caps for all Partner Services in Core Funding from September 2026 were confirmed. This will lower the maximum fees that can be charged by early learning and childcare services which participate in Core Funding. Approximately 12% of services will be required to reduce at least one fee.
Under the new maximum fee caps, the highest possible upfront cost for a typical full day place of 45 hours per week in Band E will reduce from €295 per week to €280 per week. With the maximum National Childcare Scheme universal subsidy this reduces further to €183.70 per week in parental costs.
As part of policy development for the new maximum fee caps, financial impact assessments were undertaken with consideration for annual place hours, average fees and service income-cost relationships. The Department is committed to ongoing engagement in this area, with any future refinements to fee management conditions forming part of the broader annual review of Core Funding policy.
In addition to increased funding, the Department has 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.
There 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.
All services have been encouraged to avail of these supports as an alternative to withdrawing from Core Funding and removing the benefit of Core Funding to children and their families.
