Government to give €7m to creches but denies it's a bailout

The Government is to provide immediate extra funding to creches  but has denied that the payment is a bailout to deal with rising insurance costs.

Creches are to receive average funding of €1,500 in the coming days to assist with administrative costs.

The announcement came after the sector warned that many operators would have to close because their insurance costs had rocketed when one of the two insurance providers announced it was leaving the Irish market.

“Let me be perfectly clear: this is not a State intervention in relation to insurance,” Minister for Children Katherine Zappone said after announcing the scheme. She repeatedly denied that the payment was a bailout to deal with insurance costs.

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But she said that the Government had been “listening” to childcare providers and “understanding” their difficulties.

Ms Zappone also said that she would consider a review of insurance in the childcare sector with Minister for Finance Paschal Donohoe on compliance with regulations and managing risk.

Targeted response

Mr Donohoe said the payment would cost about €7 million and this money would be provided from the budget of Ms Zappone’s department.

“We believe this is a very proportionate and targeted response,” he said. “What has motivated the decision by Minister Zappone is the desire to ensure that as we move into Christmas and beyond that parents can be assured that creches in which their children are looked after will be open in the new year and will be open for all of the new year.”

The Opposition has called for the State to introduce a not-for-profit insurance scheme for the childcare sector. But Ms Zappone insisted the Government could not directly intervene. She said it could not “compel a private business to remain in the market nor can it directly intervene”.

Creche operators had warned the Government in recent days that many would have to close after the sector was confronted with higher insurance costs, with some operators unable to secure any quote at all.

Under the scheme, an average of €1,500 is being allocated to each service provider, in recognition of the “administrative burden” they faced this year due to issues such as re-registration with Tusla and registration with the National Childcare Scheme.

The amount of the lump sum will vary depending on how many children attend the provider, and whether those children attend in a part-time or full-time capacity.

Childcare operators can expect to receive the payment by December 28th, the Minister added.

Ms Zappone’s announcement came just hours after Taoiseach Leo Varadkar told the Dáil that it would be “totally reckless” for the State to cover insurance costs for creches. Mr Varadkar insisted, however, that the vast majority of creches would re-open after the Christmas break and would have insurance coverage.

Sinn Féin leader Mary Lou McDonald had called for an emergency fund for creches because of concerns that a number could be forced to close if they could not get insurance.

Serious risk

Last week, it emerged that the future of some 1,300 childcare providers was at risk due to their insurance provider, Ironshore Europe, pulling out of the Irish market.

On Tuesday, those providers were informed that an alternative underwriter could not be located by their original broker, and they were advised to contact Allianz in the hopes of securing insurance for the upcoming year.

Speaking at an emergency meeting of the Children and Youth Affairs Committee on Wednesday, Ms Zappone said the “vast majority” of services will receive an insurance quote from Allianz.

She said that as of lunchtime on Wednesday, all but 200 service providers across the country had been offered cover by the company.

She added that her department will receive an update on the situation on Thursday, and that only those with a “very serious risk” will not receive a quote.

However, Ms Zappone said she did not have the exact number of services who will be denied cover.

Ms Zappone said that providers who were previously insured by Ironshore will see a significant increase in the cost of their premium because “the policies they were previously on are not considered to be sustainable”.

Allianz will not take on a “loss-making” premium, she said.

“Ones who were with Ironshore, they are the ones that will face the increase. Our understanding is that there are a number facing 100 per cent increase. We understand that Ironshore were considerably lower than the market average,” she added.

The chairman of the committee, Fine Gael TD Alan Farrell, said more than 1,000 creches could face closure due to rising insurance costs.