National Childcare Scheme and Core Funding

The Childcare Support Act 2018 established the statutory framework for the National Childcare Scheme, providing for income-linked subsidies for childcare costs. The Act replaced the earlier Community Childcare Subvention, Training and Employment Childcare, and after-school programmes with a single scheme administered by the Department of Children and Youth Affairs through Pobal. The Act provided for a universal subsidy element as well as an income-linked element, and established an NCS parent portal for applications.

The National Childcare Scheme was formally launched in November 2019, providing income-linked subsidies for children from 24 weeks to 15 years in registered childcare settings. Subsidies were calculated on a sliding scale based on household income, with the highest subsidies going to the lowest-income families. The NCS was administered through an online portal at ncs.gov.ie. Take-up in the first year was lower than projected as awareness of the scheme and the online application process presented barriers for some families.

The Early Childhood Care and Education (ECCE) programme, which provides two years of free pre-school for children aged 2 years and 8 months to 5 years and 6 months, continued to operate in parallel with the NCS. ECCE provides a capitation payment to registered pre-school providers to deliver a minimum of 15 hours per week free pre-school. Approximately 100,000 children access ECCE annually. ECCE is universally available regardless of income. The ECCE programme is the single largest publicly funded early learning provision in Ireland.

The Department of Children published 'Together for Better', the national action plan for the Early Learning and Care (ELC) and School-Age Childcare (SAC) sectors for 2021–2028. The plan set out a vision for a publicly funded, privately-delivered childcare model with significantly increased State subsidy, improved workforce pay and qualifications, and a new funding model. Core Funding — a universal per-hour provider payment — was identified as the primary new instrument to shift the funding model away from parental fees.

Core Funding, a new universal per-hour funding stream paid to childcare providers participating in the scheme, was launched in September 2022 at a cost of €259m for Year 1 (2022–23). Providers who accepted Core Funding were required to hold or reduce parental fees. Core Funding provided a base rate per hour per child for each category of care (baby, toddler, pre-school, school-age). The introduction of Core Funding represented a significant structural shift in childcare funding, with the State directly subsidising provider operating costs rather than only paying per-child subsidies to parents.

The Access and Inclusion Model (AIM) programme, which provides additional supports to enable children with disabilities to access mainstream childcare settings, was expanded from August 2023. AIM provides a range of universal and targeted supports including expert advisory visits, therapeutic consultations, equipment grants and additional capitation for settings requiring enhanced support. The expansion was funded by the Department of Children as part of the broader childcare action plan.

Core Funding Year 2 (2023–24) was funded at €287m, an increase of €28m on Year 1. NCS income-linked subsidies were also increased in Budget 2024, with the maximum hourly NCS subsidy raised to €1.40 per hour for universal NCS and higher rates for income-qualified families. The combined annual expenditure on ECCE, NCS and Core Funding exceeded €1bn for the first time in 2024. Despite the increased investment, average parental fees for full-time childcare remained above €700 per month in most urban areas.

In 2025, the early years and school-age childcare sector reported a significant capacity crisis, with providers unable to recruit and retain staff at the pay rates made possible by Core Funding allocations. The average pay for early years workers was approximately €12.90 per hour — well below comparable roles in primary education (where a newly qualified teacher earns approximately €35,000 per year starting). The Early Childhood Ireland annual survey documented high vacancy rates and service closures in some areas. The Department of Children commissioned a workforce development plan to address pay and qualifications.

As of May 2026, the National Childcare Scheme and Core Funding are operating, with combined State expenditure on ECCE, NCS and Core Funding exceeding €1bn per year. However, parents in full-time employment with children under 3 not qualifying for the maximum NCS subsidy continue to pay approximately €750 per month on average for full-time centre-based childcare. Workforce pay, capacity and geographic availability remain the primary challenges for the sector. The Childcare Action Plan 2024–2028 is in delivery.

The Department of Children published the Childcare Action Plan 2024–2028, setting out a roadmap for reform of the Early Learning and Care sector over five years. The plan included commitments on workforce pay (a sector pay deal framework), qualifications (a new professional qualification framework for early years workers), governance (new childcare legislation to replace the Child Care Act 1991 for regulation of services), and further increases in Core Funding and NCS rates. The plan was accompanied by commitments in the Programme for Government 2025 to increase the State's share of childcare costs.

Despite NCS and Core Funding, Ireland continues to have among the highest childcare costs relative to household income in the EU. OECD data consistently places Ireland in the top tier for net childcare costs as a proportion of family income after subsidies. Full-time centre-based childcare for a child under 3 costs approximately €750 per month on average as of 2026, compared with near-zero in countries such as Denmark and Germany where heavily publicly subsidised childcare is universal. The affordability gap affects workforce participation, particularly for second earners (predominantly women) in lower-to-middle income households.

Early Childhood Ireland and Childminding Ireland have documented that Core Funding rates, while representing a significant increase in State subsidy, are insufficient to cover the full operating costs of many childcare settings, particularly in urban areas with high rents and staff costs. Provider surveys indicate that many settings are cross-subsidising Core Funding revenue with parental fees above the fee freeze requirement, or operating at a deficit. Service closures, particularly in areas with high commercial rents, have reduced the number of childcare places available.

The average pay for early years workers in Ireland is approximately €12.90 per hour, compared with a starting salary of approximately €35,000 per year (€18/hour equivalent) for a newly qualified primary school teacher. This structural pay gap — despite the fact that ECCE and primary education are both publicly funded — reflects the different historical funding models of the two sectors. The pay gap drives high staff turnover, difficulty in recruiting qualified staff, and a quality risk for the sector. The Early Years Educator graduate profile requires a Level 7 qualification, yet the pay premium for qualification is minimal in many settings.

CSO labour force survey data and ESRI research have documented that high childcare costs are a significant factor in the decision of mothers — particularly second earners in couples — to reduce working hours or exit employment after the birth of a child. Ireland's female labour force participation rate, while rising, remains below the EU average for mothers of children under 5. The NCS income-linked subsidy is designed to reduce this barrier, but the residual cost of childcare after NCS subsidy still represents a significant proportion of net income for families at median wage.

The Childcare Support Act 2018 establishes a statutory entitlement to a childcare subsidy for eligible families with children from 24 weeks to 15 years in registered childcare settings. The Act obliges the Minister to maintain the NCS and to review subsidy rates regularly. Providers must be registered with Tusla (the Child and Family Agency) to participate in the NCS.

If breached: Legal proceedings by eligible families denied their entitlement; Oireachtas scrutiny.

The Work-Life Balance Directive requires member states to ensure access to childcare for children from birth to school age, with the aim of facilitating parental employment. Article 11 requires member states to take active measures to increase availability and affordability of childcare services. Ireland was required to report on progress in implementing these measures. The Directive reinforces the policy rationale for NCS and Core Funding as instruments to meet EU obligations on childcare access.

If breached: European Commission infringement proceedings for failure to implement; reputational consequences in EU peer review.

EU member states committed at Barcelona in 2002 to provide childcare for at least 33% of children under 3 years by 2010. The 2022 European Care Strategy updated this to a target of 45% of children under 3 in formal childcare by 2030. Ireland's participation rate for children under 3 in formal childcare has increased with NCS and Core Funding but remains below the 45% target. Ireland must report progress against the updated target to the European Commission.

If breached: Political consequences at European Council level; failure to meet EU gender equality commitments.

Parent advocacy organisations raised at Oireachtas committee hearings that despite NCS and Core Funding, childcare costs for families with children under 3 remain prohibitively high. The objection was that the income thresholds and subsidy rates in the NCS mean that a dual-income family at average wages — who are too wealthy to qualify for the maximum NCS subsidy — still faces full-time childcare costs of approximately €750 per month, representing a significant proportion of one parent's net salary. The call was for a universal free childcare model (analogous to ECCE for pre-school children) extended to children from birth.

Trade union and provider advocacy groups raised that Core Funding, while providing additional State subsidy to providers, did not include a binding requirement or mechanism for providers to increase staff pay. The objection was that Core Funding rates were set at a level that allowed providers to hold fees (the fee freeze condition) but did not provide sufficient headroom to increase early years worker pay. In the absence of a sector-wide pay agreement, individual providers were setting pay unilaterally, resulting in a competitive downward pressure on wages in some areas.

Rural TDs and advocacy groups raised that childcare availability — rather than cost — is the primary barrier for rural families. In many rural areas, there are insufficient registered childcare places to meet demand, and Core Funding and NCS subsidies cannot address a supply gap. The closure of rural childcare settings due to unviable operating economics — particularly where settings cannot achieve the occupancy needed to make Core Funding rates cover costs — was cited as worsening geographic inequity in access to early years services.