Childcare costs to be cut by up to 25%, but how exactly does it work?

The Government has announced an increase in childcare subsidies which could see childcare costs cut by up to 25 per cent for families. The Coalition has pledged to cut childcare costs by 50 per cent over a two-year period. But how exactly does it work?

Q: Who can apply for the National Childcare Scheme (NCS)?

A: All families with children under 15 years can apply for a universal subsidy. This subsidy is not means tested, and is provided at €0.50 an hour or up to €22.50 per week, or €1,170 per year, off the cost of a registered childcare place. Now, under Budget 2023, this subsidy will rise to €1.40 per hour, increasing from €1,170 a year to up to €3,276 a year.

Q: What about those on incomes under €60,000?

A: Families with children under 15 years can apply for an income-assessed subsidy and this remains the same under the enhanced Government plans. Subsidy rates will depend on a person’s individual circumstances, such as their reckonable family income, number of children, child’s age and educational stage. Parents on the maximum subsidies, based on income assessment and the age of the child, can already receive up to €11,934 off their annual fee.

Q: Will the subsidy still be paid to the provider?

A: The subsidy will still be paid directly to a chosen participating childcare provider, once they have registered the child under the scheme.

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Q: When will the new subsidies kick in?

A: The changes to the NCS will be effective from January 2023. At this point, all families accessing registered early learning and care as well as school-age childcare will receive a minimum hourly universal subsidy of €1.40 off the cost of childcare, an increase of 90 cent.

Q: Won’t these increased subsidies just lead to higher fees?

A: The department says an agreement was reached in 2021 to freeze fees based on an agreement about core funding and, on that basis, they are confident that the NCS increases won’t be absorbed into fee increases. They say this is supported by the agreement of an employment regulation order which led to wage increases for a large majority of staff while there was also evidence of increased capacity.

Q: How much has the Government put aside for these increased subsidies?

A: Some €121 million will go towards the expansion of the childcare scheme and increased subsidies, out of an overall package of €360 million for the implementation of the scheme generally. There will also be €308 million to continue the ECCE (Early Childhood Care and Education) programme for almost 110,000 children.