Minister O’Gorman publishes Independent Review of the Costs of Providing Quality Early Learning and Childcare in Ireland

From Department of Children, Equality, Disability, Integration and Youth 

Published at 19 October 2020

Last updated 19 October 2020

The Minister for Children, Equality, Disability, Integration and Youth, Roderic O’Gorman, T.D., today launched the Independent Review of the Cost of Providing Quality Early Learning and Childcare in Ireland.

The Review, undertaken by Crowe in association with Apteligen in 2018, is part of a wider commitment by the Minister to establish an evidence base for the development and support of high-quality, accessible and affordable early learning and childcare provision in Ireland.

The Independent Review set out to:

  • analyse the current costs of providing early learning and childcare and the factors that impact on these costs;
  • deliver a model of the unit costs of providing early learning and childcare that allows analysis of policy changes and variation in cost-drivers, and
  • provide a high-level market analysis of the sector in Ireland.

The process involved engagement with key stakeholders from the sector, and the administration of a survey to centre-based providers nationally.

The Independent Review provides a) an hourly unit cost for delivering childcare for all services, b) an hourly unit cost for delivering childcare across service types and location, c) key costs drivers, and d) an average breakdown of operating costs in childcare services.

Unit Cost

The average hourly unit cost for delivering childcare across all services was €4.14. This average hourly unit cost varied across service type and geographic area.

Cost Drivers

Service type and service location were identified among the key cost drivers in the Review. Other key cost drivers included occupancy levels and service size.

Differences in the average unit cost highlight that early learning and childcare may be generally cheaper to deliver in some areas (e.g. rural areas: possibly due to local premises costs) and in some services (e.g. school-age childcare services: possibly due to lower ratio requirements; and sole traders: possibly due to lower premises costs). Differences also highlight how early learning and childcare can be delivered more efficiently (e.g. larger services: possibly due to economies of scale; and services with higher occupancy rates). There is also evidence of higher costs for higher quality (e.g. services employing graduates: possibly due to higher staff costs).

Cost breakdown

The broad components of early learning and childcare services’ operating costs were also identified through the Review. This suggested a pattern consistent with those found in other countries, with staff costs accounting for almost 70 percent of the overall operating costs.

Speaking at today’s launch, Minister O’Gorman said:

“I warmly welcome the publication of the Independent Review of the Costs of Providing Quality Childcare in Ireland. I would like to extend my gratitude to the report authors Crowe and Apteligen, and to the providers who gave so willingly their time to participate.

“The findings from this Review provide us with a rich and detailed understanding of the childcare market and a sound analytical underpinning to inform future funding decisions.

“An output of the Review was the development of a cost calculator. This is a powerful tool that will assist my Department to accurately estimate the impacts of potential future policy changes on the cost of delivering a service.

“Already, this has been used successfully to inform my Department’s approach to funding services during COVID-19 closures in the sector, and through the phased reopening of services since 29 June.

“In the future, it will form a key input into the setting of future funding rates and will be considered by the Expert Group convened by my Department to develop a new funding model for the sector.”

Minister O’Gorman added:

“While the findings on unit cost give us some confidence in our current levels of State subvention, I am acutely aware that the unit cost is based on pay rates in the sector that are unacceptably low. I also acknowledge that the unit cost varies substantially across services and, for some services, their unit cost will be lower or higher than this.

“In First 5, Government has pledged to at least double investment in early learning and childcare by 2028.

“We have now assembled a robust evidence base to inform these future funding decisions and ensure fairness in the distribution of State supports”.

The Minister also used the opportunity of the launch to thank the sector again for their continued and tireless efforts to offer safe and nurturing services for children as the COVID pandemic endures.

The Independent Review of the Costs of Providing Childcare is available here. (Executive Summary)

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