Almost 900 government-funded childcare providers have been approved to increase their fees this year, undermining efforts to reduce childcare costs for parents despite substantial state investment in the sector.
The Department of Children received 1,145 fee increase applications for the 2024/2025 program year, with 898 services approved to increase at least one fee following the assessment process and appeals. This represents 78.7% of all applicants and 20.2% of all services participating in the core funding scheme.
The fee increases have significantly reduced or eliminated the benefits of increased national childcare subsidies introduced last September, which were designed as the second phase of a plan to cut childcare fees by 50%. Many providers argued that frozen fees had become unsustainable due to rising operational costs.
Under the government’s core funding model, childcare providers have been prevented from raising prices in recent years. However, services can apply for fee increase assessments if their charges were “frozen at a level that may not be sufficient to sustain their business, even with the increased funding available through core funding.”
The department established county-based thresholds to identify services charging below average rates in their areas. To qualify for assessment, providers had to demonstrate at least one fee below their county threshold and show “objective need” for increases.
The highest average fees currently being charged are in the Dún Laoghaire-Rathdown area of Dublin at €258, highlighting significant regional disparities in childcare costs across the country.
The department defended the process as balancing “the need of parents for stability with their early learning and childcare costs and the need for providers to operate viable businesses.” Services with fees supporting expenditure by more than 15.18% were denied permission to increase charges.
The developments raise questions about the effectiveness of government childcare affordability initiatives as providers struggle with sustainability challenges despite receiving core funding support.