Extending National Childcare Scheme could cost up to €121m annually, ESRI study finds

Extending the National Childcare Scheme (NCS) to childminders working in their own homes would save thousands of families almost €100 a month, afford parents more choice and provide other benefits, but would cost up to €121 million a year, according to a new study by the ESRI.

The report, compiled by Karina Doorley, Dora Tuda, both senior academics in Trinity College Dublin, and Luke Duggan, suggests better-off parents would disproportionately benefit from such a move, the cost of which would likely be low initially but then increase over a number of years as more childminders registered themselves with Tusla and parents availed of the subsidies.

The increased levels of registration involved, though, would be expected to have a positive impact on quality of care with improved standards of health and safety in what is largely a very informal care setting at present.

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The authors cite previous research which suggests such an expansion of the scheme could reduce demand for places in creches and other day care centres by up to 20 per cent, increasing availability for parents chasing places. It would, therefore, offer more choice to those with a preference for placing children with minders but also benefit parents struggling at present to access centre-based care.

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Overall, the report acknowledges that the potential cost would depend on the levels of take-up which, it says, are difficult to estimate. It models a number of possibilities resulting in expected annual costs ranging from €35 million to €121 million, which would represent an 8-29 per cent increase in the overall funding currently required for the scheme.

“Reform to the NCS which targets childminders would benefit middle-income households the most, reflecting the fact that households that use childminders have higher average disposable income than households using formal or unpaid care,” the authors of the report, Extending the National Childcare Scheme to Childminders: Cost and Distributional Effect, write. The paper is part of the ESRI’s Budget Perspectives 2024 series.

They add, however, that extension of the scheme to forms of currently unregistered care, specifically childminders, “could have wider positive societal impacts”.

The parents of 80,000 children could directly benefit and a significant number, mainly mothers, could be provided with the opportunity to make themselves available for work at a time of acute labour shortages in many sectors.

The basic economic benefit to the parents would be significant with the average subsidy involved estimated at €96 per month per child, representing about a third of the cost currently being incurred.

The National Childcare Scheme was launched by the government in 2019 in an attempt to address what were commonly regarded as some of the highest childcare costs in Europe. One report at the time put the average cost of day care for a child under three at €771 per month.

The scheme has had an impact on the sector but significant disagreements persist regarding its ability to deliver on its objectives at current levels of funding.

Industry group Childhood Services Ireland said last week in the context of unsuccessful talks regarding a pay claim by representatives of childcare workers that without increased funding, operators could have to increase fees paid by parents by 25 per cent, something it acknowledged would undermine attempts to make childcare more affordable.