Plans for childcare bills to be slashed by 25 per cent ‘within months’

The taxpayer is set to take on the burden of childcare costs from parents through increased subsidies as Children’s Minister Roderic O’Gorman has vowed to cut the cost of childcare in half over the next two Budgets.

He is now pushing for increased funding for his department which would lead to, on average, a quarter reduction in monthly childcare bills for parents in the upcoming Budget.

The changes could take effect “within months” once the announcement is made on Budget Day and could ensure a reduction of almost €200 per month, according to senior Government sources.

Coalition leaders have promised that childcare will be a major focus in the upcoming Budget as a way of helping families with soaring bills.

Ministers are conscious families are struggling with very high childcare costs, and Taoiseach Micheál Martin has indicated several times there will be supports in the Budget to reduce these costs.

Nationwide, the average monthly cost of childcare for parents is currently €750.

However, it can cost more than €1,000 per month for parents in Dublin and other urban areas where there are also some shortages of places.

Minister O’Gorman is hoping to increase his Budget allocation and is due to meet Public Expenditure Minister Michael McGrath in the coming days.

Under Budget 2022, €221m was allocated to “core funding” of services as part of a total investment of around €800m.

It is understood Mr O’Gorman is seeking an increase but it is not clear how much higher this increase is.

Families will see the burden of the cost of childcare falling, through increased subsidies in the National Childcare Scheme (NCS) in the Budget.

Last September, creche providers froze their fees and this year, increased state funding will mean they will have to reduce their prices.

Previously, the subsidy was increased. However, fees were not frozen and so, costs increased.

The Government now hopes last year’s move to freeze fees will mean the increased subsidy will reduce childcare costs.

Around 4,000, or 90pc, of childcare providers have signed up to the scheme.

Yesterday, the new pay deal for creche workers kicked in, which means a five-tier pay increase for staff depending on their experience.

Around 70pc of staff in the sector will see their pay increase as a result of the deal.

Government sources hope lower fees for parents will kick in “as soon as possible” and are likely to be “within months”.

“It will not be an immediate change on Budget Day because providers will need time to go through administrative paperwork,” said one source. “But childcare fees are a huge cost-of-living issue so we hope that it’ll be within months, but it’s hard to say if it will be before or after Christmas.”

It will be part of a double Budget boost for families, who are also in line for a double payment of child benefit, at a cost of €180m to the taxpayer.

Meanwhile, Housing Minister Darragh O’Brien is pushing for the Help to Buy scheme for first-time buyers to be extended for at least another year.

Fine Gael is also supportive of extending the tax incentive for people buying their first home for another 12 months.

The Department of Finance received an independent review of the scheme by consultancy firm Mazars this week which also cleared the way for the scheme to be extended for another year.

However, it also suggested the tax incentive should be tapered back over the coming years.

Under the scheme, first-time buyers can claim a 10pc tax rebate up to a maximum of €30,000 on the purchase of a new home valued up to €500,000. The Mazars report suggested reducing the tax rebate over the coming years.

However, this is not expected to be reduced significantly in the Budget on September 27.

Mr O’Brien is also seeking funding to expand the cost rental scheme which sees the State provide tenancies to people based on their income.

A household with a combined income of €53,000 can apply to the scheme which provides rental properties with rents 25pc lower than the market rate.

The properties are managed by approved housing bodies.