A sector in crisis: the reality of providing early learning and care in Ireland

The reality facing many parents accessing early learning and care service across Ireland this September is either a significant increase in fees or a serious lack of options.

Never has public investment in early learning and care been so high, yet never have providers been so uncertain about their futures.

Despite record investments, many providers are faced with the prospect of closing their doors or pulling out of core funding, which risks dramatically increasing parents’ fees for early learning and care.

According to our latest polling, 40% of Childcare Services Ireland (CSI), the Ibec group representing the sector, members have indicated that they won’t be entering core funding in 2024-2025.

The government introduced core funding to early years services two years ago as part of its First Five Strategy for children.

The goal was to create and support high-quality early learning and care while offering stability to the sector.

Providers who signed up for core funding agreed to a fee freeze under the understanding that core funding would provide a stable source of income for their services.

Many providers had not increased their fees prior to the pandemic.

Since services entered core funding, however, there has been a significant increase in their operating costs which core funding has failed to match.

Since core funding commenced, the government has passed legislation such as mandatory sick pay and auto-enrolment pensions, creating significant increases in operating costs for providers.

In addition, inflation has increased cost pressures on goods and services, as banks raise interest rates to control inflation.

Each of these developments has increased the cost of delivery for providers, but core funding has not increased to make up the shortfall, with some services reporting a loss for the year.

Over 74% of early learning and care provision in Ireland is private for-profit.

These businesses deliver the majority of early learning and care and school-age care services across Ireland.

They need to stay profitable to keep their doors open and continue investing in the quality of the services they provide.

Our government has produced a number of research documents highlighting the economic and social benefits of early learning and care, noting that high quality is essential to ensure positive benefits for children, the economy, and society.

Historic investment in services

From this research, they launched the First Five Strategy for children and the Partnership for the Public Good policy, which has resulted in historic investment in early years and programming for children.

Yet, the target is still off the mark.

There is a disconnect between policy and policy-in-practice.

The goal of the Partnership for the Public Good was to ensure quality in the sector.

The expert group recommended a supply-side payment (one directly to providers) to assist with staff costs, particularly those required to improve pay and conditions for staff to reduce turnover rates, which would improve quality.

The condition for providers was that they could not increase their fees if they signed onto core funding, to create affordability for parents.

In theory, it seemed like a great policy, but in practice, we are not seeing the stability. Workforce recruitment and retention are still significant challenges for providers.

Some providers are losing staff because other services can pay higher wages.

New services are able to recruit staff away from existing providers because they can charge higher fees.

The new worker protections have created additional staff costs for providers, with a limited increase in core funding and no way of meeting the additional costs through increases in parental fees.

The sector has become noncompetitive. These businesses are finding it increasingly difficult to raise revenue due to limitations imposed by the government.

Moreover, the stabilising funding they receive from the State is failing to meet their financial needs.

The reality facing many parents across Ireland this September is either a significant increase in fees or a serious lack of options.

It is already nearly impossible to find a space for a baby under the age of 12 months, with some services reporting that they’ve closed baby rooms because they cannot afford to keep them open or cannot staff them to ratio.

Now, spaces for wobblers and toddlers may also become scarce or very expensive.

The challenges need to be addressed meaningfully to keep services open.

Call to increase core funding by 35%

In publishing our pre-budget submission to the Government, CSI called on the Government to increase core funding by 35% or remove the fee freeze to prevent providers from getting into serious difficulties.

Citing the Danish model, CSI has asked for an increase in the National Childcare Scheme subsidy to 70% of the cost of childcare (subject to a maximum).

Providers across Ireland anxiously await the Department of Children’s response.

The next round of core funding needs to be co-created by the government and providers. Having a seat at the table during its development is essential to ensure that providers’ voices are reflected in any policy aimed at early learning and care.

The sector has become less stable over the last two years and is heading for a crisis in the coming months.

Immediate action is required, whether that involves an increase in core funding, an end to the fee freeze, or a combination of both, to stabilise the sector.

• Stephanie Roy is the director of Childhood Services Ireland