'We are actually paying more than before subsidy was introduced' - creche crisis as fees rise by €600
Outcry from parents over rising childcare costs as research shows average fees increased by €5 a week, writes Maeve Sheehan
When Katherine Zappone launched her much-welcomed €20-a-week universal childcare subsidy for hard-pressed parents last September, she appealed to creche providers not to spoil things by hiking their prices. Not everyone complied.
Creche fees have increased for the second year in a row, with parents paying an additional €5 week on average for full-time childcare, on top of an average €7 increase last year, according to a briefing note prepared for the Children and Youth Affairs Minister.
The document says preliminary data from the independent agency Pobal shows the average weekly fee for full-time childcare is now €5.26 higher than it was in the 2016/2017 school year. This brings the average weekly cost to €179, up from €174 the previous year and €167 the year before that.
The increase further erodes the value of the Government's €20 universal subsidy, which is now effectively worth only €8 to parents.
The minister's intention was to ease the financial burden for parents. Irish people pay some of the highest childcare costs in Europe. The subsidy was an initial step in her ambitious plans - which involve a €485m investment this year - to bring down childcare costs in the chronically under-funded sector
However, her department has received a raft of complaints from frustrated parents providing further evidence of hikes in creche fees.
Copies of the correspondence were released to the Sunday Independent last week, but with the identity of the offending creches redacted. Most told the same story.
One "middle-income" mother living with her husband in Dublin reported her creche for hiking its fee by €100 a month in January, swallowing up her entire €20 a week subsidy and more.
"It is with great regret that I inform you that, instead of benefiting from a subsidy, we now find ourselves in a position where we are actually paying €15 more than before this subsidy was introduced," she wrote.
"Before this subsidy was introduced we were paying €750 a month for our 16-month-old daughter… We received absolutely no indication that an increase was on the way and then on November 29, 2017, an email was circulated to parents informing us of an increase as of January 1, 2018. The increase for our daughter amounts to €100 a month, bringing the total to €850 a month, meaning that after the subsidy we will now be paying €765 a month."
A mother of two children complained that her daughter's creche increased its fees from €750 last year to €850 in 2018. "I was buoyed up by the recent subsidy introduced by Minister Katherine Zappone only to be dismayed in the last few days with the news that the creche fees are going up, effectively cancelling out the benefit of the subsidy."
Another mother-of-two - one in creche with her six-month-old due to start soon - emailed the minister in frustration in December. "Recently we got a letter from the owner of the creche that they are pushed by Government to push up the creche fees as they have to start paying more [to] their staff. I should also mention that last year they already put up the fees and now they have an excuse to look for more money from us as they have to pay more to the child minders. My point is that whatever Government is giving us parents the creche is going to take it away. My question: is that OK?"
Another parent emailed the minister to ask: "I'm just wondering what your opinion is on my daughter's creche imposing 12.43pc increase on all creche fees with one month's notice, just after they have agreed to the subsidy which you fought to get through?"
Another reported paying monthly creche fees of €1,945 for two children. The subsidy reduced the monthly bill to €1,771.68 per month - a significant saving of €173.22. However, the parent said that last November the creche announced that it was increasing its fees and the family is now paying €1,911.68 per month. The parent, who stood to gain €173.22 a month thanks to the subsidy, is now saving "a mere €33.32".
"Not even three months after the introduction of a much-needed relief on childcare fees we have been notified of a price hike which effectively eliminates any benefit we receive from the scheme," the parent wrote.
Ms Zappone launched her More Affordable Childcare Scheme last September, promising to knock up to €20 a week, or €1,040, off the cost of childcare for parents. At the time, parents complained that as the subsidy was paid to childcare providers and not to them, providers could cancel out the benefit by increasing fees.
The minister appealed to creche owners planning to raise their fees to "show restraint", promised to take action against "unreasonable increases". She commissioned independent consultants Crowe Horwath to conduct a review of creche fees, and invited parents and providers to send in "evidence".
According to the briefing note for Dr Zappone, released to the Sunday Independent under the Freedom of Information Act, parents should brace themselves.
Dated September 28, the briefing document quoted unpublished data from independent agency Pobal, which asked just under 900 creches last summer if they planned to increase their fees for the 2017/2018 school term.
The data "indicates that the average weekly fee for full time childcare is €5.26 higher than the average weekly fee in the same services 12 months previously" the document said. Some of the fee increases may be attributable to childcare providers "attempting to absorb some of the increased subsidies through raising fees" or to cover the administrative costs of participating in the subsidy scheme, according to the briefing note. However, it said that part of the increases were likely due to other factors.
The briefing document suggested there was little to worry about. The €5.26 was "in line" with the €7.13 increase for the 2016/2017 school term and indicated "no rapid increase in fees between May and September".
It said that parents were still getting "most" of the benefit of the universal €20 subsidy "through reducing net fees (which, for under threes, will fall on average €13 per week, given a €7 increase)."
Pobal's figures - based on one fifth of all childcare operators in Ireland - are preliminary but they suggest a trend.
According to Pobal's last analysis, fees rose by 4pc last year - the first increase in five years - but with huge regional variations. The cost of part-time childcare - three-and-a-half to five hours a day - fell by 1pc overall but still increased in Dublin.
Fees for full-time childcare increased in 19 counties, most notably in Limerick where they shot up by 9pc, surpassing even Dun Laoghaire - the most expensive region in Ireland for childcare - where they rose by 6.7pc.
New research on the affordability of childcare by economist Ciaran Nugent of the trade union-funded Nevin Economic Research Institute did further analysis of Pobal's data and found dramatic movement in creche fees in different parts of the country.
This translates to dramatic variations in the value of the €20 subsidy to families. A young Leitrim parent on a median wage pays almost 50pc of take-home pay on childcare.
In Cork city, South Dublin, Fingal and Wicklow, parents over 35 on a median wage pay 60pc of their take-home pay for two children.
According to Mr Nugent, the under investment in early childcare "has translated into higher market prices" for Irish families, who spend three times what Germans spend on childcare.
Dr Zappone, came to office declaring her ambition to "transform the Irish childcare system from one of the most expensive to the best and this weekend claimed to be making "good and steady progress" after decades of under-investment by successive Governments.
Progress is evident. More than 33,000 families are benefiting from the universal subsidy, which adds up to six weeks' free childcare, according to the Department of Children; more than 100,000 children are availing of the "free pre-school year"; and 35,000 children are getting targeted supports of up to €145 per week.
Three years ago, childcare costs for a single parent working full time were the highest in the OECD. The OECD is expected to revise Ireland's ranking to 11th (of 35), because of the affordable childcare scheme's impact on costs. The potential for rising costs remains a worrying issue. An internal department memo on fee increases, prepared for the minister seven months ago, weighed the case for capping them. The memo noted a "12pc" increase in the average cost of full-time childcare since 2016, (considerably more than the €5 a week increase suggested in the briefing document).
The memo went on to suggest introducing price caps as a "condition" of childcare providers participating in state-funded schemes, which would allow them the freedom to opt out. "An alternative approach would be to introduce a legal requirement on providers. Such an approach could guarantee affordability but would involve an even greater restriction on the freedom to operate of childcare providers" the memo said, adding that further legal advice would be required.
In a statement to the Sunday Independent this weekend, the minister outlined the progress that has been made.
"Cost is one area which needs more, along with quality and accessibility. Costs are monitored by my department through Pobal," she said.
"Since September, my department has received 41 representations from, or on behalf of, parents who have experienced a rise in the cost of their childcare. I have been clear that we will monitor such rises closely, but I am satisfied that the families of more than 68,000 children are receiving childcare supports worth up to €145 per week for families that need it most."
Dr Zappone expects an interim report from the Review into the Cost of Delivery of Quality Childcare in the coming weeks.
"This review, together with the contacts made to the minister's office by both providers and parents, will provide the evidence to seek more investment in Budget 2019," she said.
"I fully accept and have made clear from the first days of our efforts to change childcare for ever that there is no quick fix solution. We have however taken the first steps and there can be no going back."
Those in the industry point out that early childcare is a vast and diverse sector that spans profit-driven private childcare chains at one end and not-for-profit community enterprises at the other.
The industry group Early Childhood Ireland found that the average private childcare provider is barely breaking even at best and many staff are low paid and working part time.
These are all issues that need to be addressed. Tanya Ward, chief executive of the Children's Rights Alliance, welcomed the investment that was "starting to channel into early childhood care and education".
"We need to think about introducing caps on childcare fees, but at the same time ensure that quality services are appropriately funded so children can flourish. The Government is commissioning a cost analysis for early childhood care and education. That will help inform how we need to fund this sector going forward," she added.
Additional reporting by Antonio Heras