A GALWAY CRECHE closed its doors yesterday after 17 years, with the owner describing government contracts as “death by a thousand cuts” for small, independent services such as hers.

Sheena Kenny and her eight or nine staff cared for 35 children aged six and under at The Village Creche on the outskirts of Ballinasloe. 

From Monday, subsidies under the National Childcare Scheme will increase, bringing fees down by thousands for many families whose children are in creche over the next 12 months, as announced in the Budget last year and flagged again by government last week.

However, an increasing number of creches are exiting the parallel “core funding” system so they can increase their fees, on the basis that the terms and conditions imposed by government to receive “core funding” are not financially viable for them. Another Galway creche, the Headford Road branch of Sonas & Spraoi, told The Journal this weekend this was the only way to remain viable and operational.

This weekend, the Department of Children said there were supports available to struggling creches and urged them to avail of these before leaving the “core funding” system, which will offer increased payments to childcare providers from Monday. It said “core funding” was worth €331m to the sector for the coming year.

‘Enough to keep going’ 

Kenny took The Village Creche out of core funding last December so that she could increase her fees to try and keep her business afloat. For most of her 17 years in business she said that while she “wasn’t making huge amounts”, she was able to bring in “enough” to keep her going.

When the pandemic hit, the government’s wage subsidy scheme helped keep the business going. But the pandemic also created a new norm of smaller ratios of workers to children, which became unsustainable for some.

“When the wages scheme stopped, I tried to scale back to the way it was before, and staff were obviously not happy, because they were busier,” said Kenny.

She said that the demands of the core funding contract, which she entered in September 2022, put further strain on the business.

Under this contract between the government and childcare providers, the businesses receive a grant towards their operating costs but they must agree to certain conditions in relation to the fees they charge, not least that for the first two years of the contract (from 2022 to the present) fees had to remain frozen. 

Kenny added that the state’s increasing involvement in the sector also brought increased paperwork and she had to largely stop working directly with the children herself, instead spending about four days a week in the creche’s office.

“I consider myself fairly tech savvy. I’m well able to keep up with everything, but I was beginning to struggle,” she said.

She said the state-funded free preschool scheme, Early Childhood Care and Education (ECCE), which has been in operation for several years now, has also brought an increasing number of “new rules and regulations and stipulations”.

“As an example, this year the ECCE brought in a new rule – if all of my staff rang in sick and I had no way of opening, I’m not allowed to apply for force majeure due to lack of staff,” she said.

That would mean staff wouldn’t get paid for that day.

“It would be very rare. It’s little needles like that…it’s death by a thousand cuts,” Kenny said.

The Journal has consulted Tusla inspection reports for The Village Creche, which portray a well functioning service. Unannounced inspections in both January and September 2023 found the service fully compliant in all areas, including staffing levels, facilities for rest and play, food and drink, health and safety, and first aid.

The inspectors described the environment provided to children as “comfortable, inviting and laid out to accommodate the needs of all children”, praising how it provided “a range of challenging, diverse, creative, and enriching experiences for all children in line with their stage of development”.

Staff responded to children’s needs and “listened to children in a caring, gentle way”, as well as making sure children were included and engaged in activities. Food was varied, healthy and plentiful, with a hot meal prepared on site by the service’s designated chef.

‘I should be able to survive’

In December 2023, Kenny left the core funding contract, choosing instead to increase her fees from €36 per day per child to €45, which she said would have kept the business afloat had she been able to keep the headcount at 35 or higher.

“I thought that that would solve it, but actually what happened was, because my fees had gone up and nobody else’s in the area had gone up, parents were pricing and I was more expensive so they were just going to the cheaper place.

“Then my numbers started to go down, and my wage bill stayed the same.

“I tried my best to recruit as many children as I could [but] parents were just going with a cheaper option, which is fair enough.”

Kenny believes that in order for a childcare business to be feasible on a core funding contract, it would have to have at least 70 children. The maximum capacity of her facility was about 45 children.

“At the end of the day, it is a business, and I should have enough at the end of the year to pay myself a wage and to have a little bit of extra profit to put into the business equipment, to replace equipment,” she said.

“I should be able to survive. I almost feel like a failure that I can’t.”

Fee increases

The government said this week that from Monday, higher subsidies under the NCS will bring creche fees down for thousands of families.

However, The Journal was contacted by one family whose fees are set to increase, as their service, like Kenny’s, is leaving the core funding system.

The fee the family will have to pay the Headford Road branch of Sonas & Spraoi, a chain of creches also based in Galway, is about to increase from €197 to €260 per week. The mother said she she felt the government was trying to “fool” parents with its announcements about reduced fees.

“This is a very sad situation for us parents,” she said.

In a statement, Sonas & Spraoi said its wage rates and other operating costs had all increased in the past four years, but it has not increased its fees since it opened the creche in question in August 2020.

“Most significantly the costs which accompany the introduction of paid sick days by the Government in 2024 have made our childcare centres much more expensive to run,” the business said.

“In childcare, additional staff have to be employed at full cost to cover sick days which are now paid at 75% to the staff member who is ill. This is a new and very significant cost in our sector. Also, from January 2025 the number of paid sick days will be increased to 7 and additional costs with new pension entitlements are coming.”

“It is essential that each creche is financially viable to ensure continuity of service for children and parents and for the job security of staff. At present, core funding with the fee freeze rule has meant that at services where fees are being charged at historical rates which are below those charged in newer services and below even the County average rate of fees, there are serious viability concerns.

“In our other locations which are not bound by historically low fee rates we do not have viability concerns and so we are staying in [core funding] and fees are not increasing for parents.”

It added that this branch’s central location brought particular cost pressures. It called on the government to change the core funding rules to allow “modest increases in fees to meet increasing costs of operating”. It said a 10-15% increase over four years would be “altogether reasonable”. It hopes to keep all of its locations viable and open.

Department responds

The Department of Children said that after the past two years of frozen fees, services whose fees have been frozen at a level that may not be enough to sustain them even with increasing core funding have the opportunity to apply for a “fee increase assessment”.

However, to do so creches must be charging less than the average in their county, and the Department will limit increases to ensure “parents receiving the universal NCS subsidy for the full hours offered in these services will not face higher costs”, the Department said.

It added that all childcare providers signed up for core funding will receive “a higher payment” from Monday “to support their day-to-day costs”, with funding increasing in particular for places offered to children under the age of three, and for services offering pre-school only.

It added that in addition to these measures there are “wider financial supports available from the Department where a service is experiencing financial difficulty or has concerns about its viability, which can be accessed while remaining within core funding”.

“Services are strongly encouraged to avail of these supports as an alternative to withdrawing from core funding and removing the benefit of core funding to children and their families,” the Department said.