Universal childcare payment to be unveiled in budget

All parents with children aged between six months and three years in childcare will be entitled to up to €900 in State subsidies a year, in budget measures to be announced today.

The poorest families will receive €8,000 annually under the budget’s childcare arrangement. Minister for Children Katherine Zappone’s plan will see all parents, no matter what their income, receive some subsidy from the State.

The targeted subsidies for the poorest will also apply to after-school care for children up to the age of 15.

Sources said the plan also includes the two free years of pre-school that apply from the age of three.

The move will be one of the centrepieces of the minority Fine Gael-Independent Government’s first budget, to be delivered by Minister for Finance Michael Noonan and Minister for Public Expenditure Paschal Donohoe. It will be passed through the Dáil with the acquiescence of Fianna Fáil, who will honour the confidence and supply agreement struck with Fine Gael earlier this year.

Fianna Fáil and the Government last night agreed the shape of a welfare package that would see the old age pension rise by €5 a week from March. The start time and size of increase in a number of other payments, such as disability and carer’s allowances were under discussion last night.

Secured a reduction

The Independent Alliance secured a reduction in prescription charges for the over 70s. A packet of cigarettes is due to go up by 50 cent.

Ms Zappone’s plan is to be heavily weighted towards those on lower incomes. Fine Gael had argued for greater access to the scheme for the so-called squeezed middle of people earning up to €70,000. All families, no matter what their income levels, will be entitled to as much as €900 a year, if the child is in 40 hours per week of childcare. The payment will apply on a pro-rata basis of a State subsidy of 50 cent an hour of childcare. This will be paid directly to the childcare provider. This would mean a child in care for 40 hours a week would receive an €80 subsidy a month.

More children

The universal payment will kick in when the joint net parental income rises over an income threshold of about €47,000 for a family with one child. The threshold will rise if there are more children. Those below that threshold will receive a greater subsidy the lower their income is. Ms Zappone received a total increase in her departmental budget of about €150 million, according to sources.

The measures will be contained in a €1.2 billion budget package, split between spending increases and tax cuts on a 2:1 ratio. The taxation measures will include:

A 0.5 per cent cut in the 1 per cent, 3 per cent and 5.5 per cent rates of universal social charge (USC).

An increase in the inheritance tax threshold from €280,000 to €310,000 for gifts between parents and children.

A first-time buyer’s scheme will see income tax refunds at a maximum of €20,000 on homes worth up to €600,000.

A €100 increase in the home carer’s tax credit.

A €400 increase in the earned income tax credit for the self-employed.

Mr Donohoe is also to release funding for 800 extra gardaí, 1,000 nurses and 1,400 new teachers, including resource teachers and special needs assistants. This will not reduce the pupil-teacher ratio but will keep pace with demographic demands.