Parents to see cuts to childcare costs and double payment of child benefit in Budget 2023

Proposals from Children’s Minister Roderic O’Gorman to reduce childcare fees by 50% over the next two budgets have “been accepted” and have been described as the “number one budget priority” aside from the cost-of-living package of once-off measures.

Three Cabinet ministers, speaking to the Irish Examiner, have confirmed that the Coalition parties are agreed that reducing childcare costs will be a centrepiece of this month’s budget.

Fine Gael and Fianna Fáil have signed up to Mr O’Gorman’s proposals, with one minister saying: “It is now effectively the Government’s position.”

A recent survey revealed that, on average, parents pay out nearly €800 per month per child for childcare, though in many regions the cost is substantially higher.

Mr O’Gorman said a new deal for childcare workers bringing in minimum pay of €13 per hour will be signed off in the next few weeks.

Parents will also likely see a double month’s payment of the child benefit allowance under the Government’s plans to help families with the cost-of-living crisis.

A senior Government source has said one “strong option” on the table is a one-off payment before Christmas, which will be a cost-of-living measure the Government has been signalling.

Child benefit is €140 a month for each child and is payable to the parents or guardians of children under 16 years of age. It is also paid to the parents or guardians of children aged under 18 if the child is in full-time education.

It is also understood that there could be a double payment of pensions and other welfare payments before the end of the year.

When asked about an increase in core social welfare payments and children’s allowance in the budget, Taoiseach Micheál Martin said the Government will focus on helping families financially. He said: 

We’re looking at all mechanisms by which we can get funding to people as efficiently as possible.

“Certainly, we’re looking at families and children in particular because obviously the costs will be higher there for families — and obviously child-related costs — and there are two elements to it; the cost-of-living package and we want to allocate as much as we possibly can in 2022 financial year to try and give, as quick as possible, ease to people. 

“Then there are the budgetary measures where we do have to look at it from a policy perspective, a more sustained improvement for example.”

It has also been confirmed that people are set to receive at least one but possibly as many as three energy credits of at least €200 this coming winter as part of a cost-of-living package which is now likely to top €3bn.

Officially a proposal for a cap on energy prices is still under consideration, though it is clear the option of the energy credit is the “preferred option”.

Public Expenditure Minister Michael McGrath, Finance Minister Paschal Donohoe, and the three Coalition party leaders — Taoiseach Micheál Martin, Tánaiste Leo Varadkar, and Green Party leader Eamon Ryan — will meet on Tuesday evening to decide on the plan.

Mr McGrath has made clear that the energy credit option is “a very live option” and senior Government sources have confirmed that while it would kick in this year, its benefit could stretch into 2023. Mr McGrath said: 

An electricity credit is obviously a very, very live option because it has worked already and it is something that system could administer quickly.

The previous energy credit scheme — which saw €200 given to every household — cost €400m, and indications are a “much greater pot of over €1bn” is now in play for this year.

Mr McGrath said the Government is also developing a suite of options around direct supports for households and businesses.

“I think that is the most likely scenario,” he said. “But we’re not ruling out any option at this stage.”

The Government also plans on implementing a windfall tax on energy companies, even if one is not signed off by the EU before September 27, Mr Ryan said.

The Green Party leader said that there is “absolute agreement” on the tax in Europe, which will claw back excess profits from fossil fuel-burning energy companies.

Budget negotiations 

Tough budget negotiations are expected to take place in the coming days, but soundings suggest Health Minister Stephen Donnelly may suffer a spending blow.

Michael McGrath has admitted health spending generally is an issue, which his and Mr Donnelly’s officials are working through at the moment.

He also said relations between officials are “workman-like” and “very professional” but added that budget discussions can be “complex and challenging". 

He said: “The negotiations would be tough, because the scope for new measures is tight.

“I recognise everyone has legitimate ambitions, and I’ll be as flexible and as supportive as they possibly can be, but there is a constraint and there has to be a constraint.”

But Mr McGrath said health has “fallen short” in completing the level of recruitment that it received sanction for, despite being given the budget.