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capping fees

Government to reduce childcare costs 'considerably' in the next Budget

Childcare fees will be capped at September 2021 levels if a deal can be done on pay and conditions.

THE GOVERNMENT IS planning to focus on reducing the rocketing cost of childcare in the Budget in October, senior sources have said. 

This year’s Budget will “be hopefully more about helping parents with the actual costs,” one person with knowledge of the situation told The Journal. It follows attempts in last year’s Budget to increase wages for staff in the sector. 

Budget discussions and kite-flying by ministers don’t usually begin until the summer, but due to the increased demands on the purse strings, there will be a lot of competing demands come October as departments jostle to get their share.

Pay and condition discussions are underway with the sector and if agreed to and signed off on, it will result in childcare fees being capped at what they were in September 2021, regardless of whether they have increased over the last year.  

The Government has already rolled out two package of measures to help ease the rising cost of living, but there are fears that tinkering around the edges could make inflationary matters worse. 

One way of attempting to put more money in people’s pockets is through increasing State supports and reducing the cost of services. 

Tánaiste Leo Varadkar said last week that increased subsidies should be used to reduce the cost of childcare “considerably” for parents. 

Capping fees

Giving a speech at the Royal College of Surgeons, Varadkar said:

“We can reduce the cost of services that are influenced by Government. Childcare is already subsidised in Ireland. The focus of additional subsidies this year has been on paying staff better and improving quality.

“Next year, increased subsidies should be used to reduce costs considerably for parents. This will increase disposable family incomes and make it more attractive for parents to return to the labour market thus helping to fill vacant positions and moderate wage inflation.”

Taoiseach Micheál Martin has said that there is a need for universal access to childcare.

Speaking on International Women’s Day this year, he said childcare remains an issue which primarily impacts on women and their ability to participate in not just the labour force but in all aspects of our society.

“I am determined that we will significantly improve the range and quality of childcare available in Ireland,” he said. 


The Department of Children is currently working on a proposal that will be sent to the Department of Public Expenditure this summer ahead of Budget 2023 in October.

“The main focus is the affordability of it. There is core funding there now that should really make a big difference,” said one source. 

The idea of core funding was introduced last year by Children’s Minister Roderic O’Gorman, which he said at the time was the key to unlocking some of the most challenging issues in the current funding system and offers a new basis on which to build partnership between the State and providers.

Core funding to the tune of €220 million will help improve pay and conditions in the sector, and in turn, enable parental fees to be controlled by the State, so that the full affordability benefits of the Early Childhood Care and Education Programme (ECCE)  programme and the National Childcare Scheme (NCS) can be realised.  

Help with the cost of living

Senior sources have said the Government is limited in the further action it can take to reduce the rising cost of living, but said a reduction in the cost of childcare “will help with cost of living, reduce inflation and might encourage and enable more parents to re-enter or stay in the labour market”.

They said this would help with wage inflation and the recruitment problems firms are facing, as well as having a knock on impact on gender pay and the pensions gap. 

The Government is well aware that people are also struggling with rent while saving for a mortgage and it is hoped a reduction in childcare fees could help.

Plans are yet to be firmed up but will be in the coming weeks, they added, stating that the systems are in place now to make it doable for October. 

However, those in Government circles have said it would be better if the Joint Labour Committee (JLC) for the Early Years’ Service sector, which was set up last year to discuss and agree proposals for terms and conditions for childcare sector workers, would be completed first.

Sources state that the discussions are “coming to a head” and should be ready shortly.

Ensuring there is a deal on pay is vital to being able to pass savings onto parents, said another source, who said the pay right now is not reflective of the work being carried out by childcare workers. 

Once an agreement is struck, the focus by Government will be on increasing funding to the NCS, as in the past when that has been done it has been “eaten up” with staff pay and resourcing.

State control of fees

“Just putting core funding into NCS wouldn’t have a benefit for parents as without having control on fees they wouldn’t see it,” said the source who added that if salary payments are agreed and signed up to, it would result in the capping of fees.

All going to plan, fees in the coming autumn would reduce to September 2021 levels, they added.

They said this would be significant as it would be the first time the State would have control of childcare fees

“It has to come down — all three parties are agreed on that,” they added.

Currently the National Childcare Scheme currently provides financial support to help parents to meet the costs of early learning and childcare.

Universal subsidies are available for all children under three years of age, giving up to €1,170 to parents towards the the cost of childcare, regardless of income.

Further targeted subsidies are available for children aged six months to 15 years old, but vary depending on your income, your child’s age, and whether you are working or studying.

It is understood that Fine Gael will be pushing for a big increase in the universal subsidy so all parents will benefit from a substantial reduction in fees.

However, it is believed the Green Party and Fianna Fáil favour more targeted subsidies for lower income families rather than across the board. 

In recent weeks, Labour’s Ivana Bacik said a “Donogh O’Malley moment in early years education and care” is needed, describing the Minister for Education who 50 years ago introduced free secondary school places for every child, and adding that the Government should now be seeking to implement and introduce a free childcare place for every child.

Green Party leader and Transport Minister Eamon Ryan said Minister O’Gorman has already done a huge amount of work on the matter, stating ”that it is along the lines and of the scale of ambition that Deputy Bacik speaks about”.

“We want that sort of moment whereby we make it really easy in this country for people to be able to raise a child in the best way possible and that that fits with the various and different family circumstances. That is going to be a budget measure,” he said.

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