Review of the cost of providing quality early learning and care in Ireland

On October 19, the Department of Children, Disability, Equality Integration and Youth launched the “Independent Review of the Cost of Providing Quality Early Learning and Care in Ireland”. Crowe, an audit, tax and business advisory firm, in association with Apteligen, was commissioned by the Department to undertake the project. The objectives of the review were threefold: to analyse the current costs of providing ELC/SAC and the factors that impact on these costs; to develop a model of unit costs that allows analysis of variation in cost-drivers, for example, of how professionalisation would impact costs; and to provide a market analysis of the sector.

The report used mixed methods, including engagement with key stakeholders, including providers, the Early Years Forum, CCCs, statutory bodies, academics and others. A survey was also administered to all centre-based providers nationally and had a response rate of only 19%. The authors were questioned about the low response rate at the launch.  They argued that statistical methods were applied to ensure that the results were representative. It was also asserted that the findings were in line with cost data found in other countries, such as Scotland and New Zealand, which suggested that the data were robust.

From the data supplied by providers, a cost modelling tool was developed, which showed that the unit cost per hour of ELC/SAC provision was €4.14. This is averaged across all age groups, staff ratios, service types and so on. The authors remarked that there is wide variation across the sector, with most providers being situated in a range that goes from €2 to €6.

The calculated average unit cost for providers with designated quality standards (i.e, Síolta accreditation and/or excellent scores in DES inspections) was €4.26. However, the sample had few providers in this cohort, so wider conclusions cannot be drawn. Average unit costs per hour in urban settings corresponded to €4.37 as opposed to €3.74 in rural settings. Regarding school-age childcare, if a 1:12 staff-child ratio is used, the average unit cost per hour was €4.22.

Other results show that larger services had lower costs. Other characteristics associated with lower costs were: not having a formal lease agreement; being a sole trader; offering ECCE; being able to fill more of available hours, and operating most of the year. In addition, receiving ECCE higher capitation, the only afternoon sessional provision and having a higher percentage of staff time on non-contact work were factors associated with higher cost.

As expected, an analysis of the main components of cost shows the dominance of staff costs in the make-up of overall cost figures (68%). The overall breakdown is shown below:

These findings have been used by the Department to calculate its support to providers during the COVID-19 crisis and will be used in future policy considerations. The report was the first in a series of releases from the research project. Early Childhood Ireland will continue to monitor and analyse these reports.