As government pours more money into childcare sector, could it leak out?

Public investment in early childhood care and education is set to reach an all-time high under Budget 2027. 

Funding for providers of early learning and childcare will increase by more than €170 million, to more than €650 million for the next programme year, it says. 

This is to flow through the Core Funding scheme, which the government says subsidises the providers, while requiring better terms and conditions for staff, and capping fees for parents.

But once the money reaches the company running the creches or afterschool programmes, which can sit within complex corporate structures, how much control does the state have?

The Department of Children tracks dividends and drawings, “to monitor funds flowing out of the service to shareholders or owners”, a spokesperson says. 

The Department does not monitor dividends or drawings with a view to restricting "legitimate commercial activity", the spokesperson said.

"However, childcare providers who receive funding from DCDE (or any other state body), are also subject to grant funding conditions, including the requirement that public funding is used for its intended purpose and that any dividends or distributions are paid from legitimately earned profits rather than from grant funding," the spokesperson said.

That said, commercial providers receiving Core Funding “are not subject to conditions around dividend payouts and intercompany loans”, the spokesperson said.

Meanwhile, Pobal monitors compliance with childcare funding programmes, but its checks primarily concern individual services: attendance records, fee lists, parent declarations and other operational documentation. 

A Pobal spokesperson said broader financial records are “not generally within scope”.

Critics of this system say it sets up the wrong incentives for companies that own childcare providers.

Darragh O’Connor, head of strategic organising and campaigns at SIPTU says that, “The Minister for Children needs to decide if this sector is a public service for the public good, or an investment opportunity.”

Minister for Children Norma Foley, of Fianna Fáil, said in the Dáil on 7 September, that among the objectives of the Core Funding scheme was “ensuring taxpayers’ money is being used in a way that sustains services while not excessively increasing their private profit”. 

Millions in grants, profits and dividends

The accounts of Giraffe Childcare Limited and its connected companies provide one example of a big chains’ financials.

Giraffe Childcare Limited’s parent is Eagle Target Ireland Holdings Limited, which is part of the Busy Bees group, whose UK holding company is Eagle Superco Limited. 

And Eagle Superco’s accounts say its own controlling party is the Ontario Teachers’ Pension Plan.

Now, Giraffe’s turnover increased from €30.06 million in 2023 to €34.81 million in 2024.

During the same period, Giraffe got government funding of €5.97 million in 2023 and €8.18 million in 2024. 

And the company reported profits after tax of €3.90 million in 2023 and €3.83 million in 2024.

Across the two years, Giraffe paid €3.67 million in dividends to its equity holders: €1.97 million in 2023 and €1.70 million in 2024.

In its most recent annual return, Eagle Target Ireland Holdings Limited was the only shareholder in Giraffe Childcare Limited.

The figures do not establish that Core Funding from the Irish state was itself distributed as dividends. 

They do, however, show that substantial state funding entered a commercial provider during years in which the company generated millions of euro in post-tax profits and made multi-million-euro dividend payments.

There is currently no Core Funding condition specifically restricting such dividend payments, according to the Department of Children spokesperson.

Giraffe did not respond to queries sent on 13 October by the time of publication. 

Director’s remuneration

The accounts of Tiger Time Holdings Limited and its subsidiaries show some more of the complexities of these sprawling entities.

Tiger Time Holdings’ main subsidiary is Tiger Time Limited, which trades as Tigers Childcare. 

Tigers Childcare has 30-some locations across Ireland, including in Balgriffin, Ongar, Blanchardstown, Knocklyon, Leopardstown, and Ballybrack. 

Tiger Time Holdings also used to have a UK subsidiary, Tiger Childcare Limited. 

The group was backed by BGF, an equity investor focused on small and medium businesses, with more than €10 million in 2021.

The next year, the Irish parent company sold the UK subsidiary for net consideration of €743,088, according to Tiger Time Holdings’ accounts.

Then, earlier this year, the UK chain Kids Planet bought Tigers Childcare – in a deal the Irish Times estimated at more than €75 million – with investment from private equity firm Fremman, and BGF cashed out. 

During much of this period, Tiger Time Limited, the Irish company, was getting millions each year via Core Funding, Foley, the Minister for Children, said in the Dáil on 7 September.  

In 2022/23 it was about €2.6 million, in 2023/24 it was about €3 million, in 2024/25 it was about €4.2 million, and in 2025/26 it was due to get about €6.3 million, Foley said. 

Also during this period, the group was paying hundreds of thousands a year in “directors’ remuneration”. Again, this doesn’t mean that Core Funding was taken out as directors’ remuneration.

Michael Taft, an economist at SIPTU – speaking generally rather than about a particular company – says that directors remuneration is “another way of taking money out and putting it into private hands, because that's the amount of money that the directors of the company receive”. 

The Department has “no policy on directors’ remuneration, which can be quite substantial, by the way”, he said.

The company has not responded to queries sent on 9 October.  

A different financial reality

The corporate structures described in the accounts of some larger chains stand in contrast to the financial pressures facing some community childcare providers.

Moatview Early Education Centre in Coolock, a charity operating since 1992, recently warned parents that it had reached a “serious financial crisis”.

In a letter to families, the centre said some staff had gone unpaid and that employees had personally covered operational costs while the service operated with a skeleton workforce.

It's hard to run a viable one-off non-profit creche, a Dublin City Council working group looking at the sector found, according to a report presented to the council’s planning committee in June. 

Operating as part of a chain, with back-office services shared across sites, and the costs of those spread across sites, can make more financial sense. 

So the proposal, presented by Social Democrats Councillor Cian Farrell, suggested looking into the creation of a DCC Childcare Delivery Company, with centralised finance, HR, compliance, governance, and quality assurance. 

Also, unlike a large corporate group, a small community creche has fewer sources of capital to draw upon when costs rise or funding falls short.

Commercial providers can operate within corporate structures capable of moving capital between related companies or raising finance at group level.

How does the Department take into account the differing needs of different types of childcare operations?

How does it balance flat-rate grant allocations via Core Funding with the higher operational needs of non-profit community services operating in disadvantaged areas?   

“The Department is confident that the funding on offer will meet the costs associated with running non-profit community services operating in disadvantaged areas,” said the Department of Children spokesperson. 

The people behind the accounts

At creches and afterschools across the city, run by a variety of organisations, there’s a workforce under pressure to provide increasingly professionalised childcare on relatively low wages.

Budget 2027 in October pledged to reduce the maximum fees parents will have to pay for childcare, and increased subsidies to childcare providers. 

At the moment, the minimum hourly rate for early years educators is €15/hour. There have been discussions about a 6 percent increase this year. 

This isn’t enough, says Marta Spryszyńska, an early-years educator in her final year of a BA (Hons) degree in early childhood education and care. 

“We can't survive on that,” she said. “There is just, you know, living from one paycheck to another paycheck.”

“I know as well by talking to other people, even their children, you know, doing a part-time after-school work, they get way more money per hour than us, and we have such an important job,” she said.

Not only that, at these rates, educators lack meaningful financial or career incentives to pursue higher qualifications within the sector, Spryszyńska says. 

“Where I work, only three of the staff are pursuing further education, as in they want to have Level 7 or Level 8. Most of the staff is still on Level 5,” she says.

Laura Kavanagh has worked across Ireland’s early-years sector for 17 years. She holds a degree in early childhood education and has plans to pursue a  BA (Hons) degree in childhood education and a master’s.

She earns €15 an hour. “We genuinely want a professional, highly qualified workforce,” Kavanagh says. “That must come with professional salaries and a proper pay scale for educators.”

She also wants the terminology surrounding the profession to change.

“We are early years educators, not ‘babysitters’ – we never sat on babies,” she says. “Education and care are not separate; we educate while we care, and we care while we educate.”

After Budget 2027 was announced earlier this month, Early Childhood Ireland, which represents much of the sector, was quick to criticise the budget.

“While we understand that the government has made a commitment to parents to reduce fees, this will not expand places or improve wages for this essential workforce,” said Frances Byrne, director of policy at Early Childhood Ireland. 

Both Kavanagh and Spryszyńska said they were not happy with the Budget 2027 announcement.

“Here we are again, being asked to accept another small increase while qualified educators continue to struggle to make ends meet,” Kavanagh said. “As a SIPTU Early Years Union activist, I'm angry and deeply disappointed.” 

Said Spryszyńska: "I was very upset.” 

“I felt like, I said we should be going out on the streets as well, alongside with primary school teachers, secondary school teachers, and even higher education tutors," she said.

“I would like to be recognised the same as teachers in primary schools and secondary schools, to be on the same wages as them, to have the same entitlements system," she said. 

What the state’s watching

There are loads of terms and conditions that come along with Core Funding to childcare providers, setting out what it can be spent on.

The majority of Core Funding is distributed to services via the “Base Rate”, which is calculated based on a service’s staffed capacity – the opening hours, operating weeks, the age group for whom services are provided, and the number of places available. 

Childcare providers can spend Core Funding on staffing costs; professional development; administration; overheads such as rent, rates, utilities and insurance, the Department of Children spokesperson said.  

“All Partner Services must submit financial returns annually,” the spokesperson said. “These financial returns will only need to relate to the Partner Service’s Early Learning and Childcare business.” 

“Partner Services are not subject to conditions around dividend payouts and intercompany loans,” the spokesperson said. “Dividends & drawings are tracked explicitly under liability/equity classifications to monitor funds flowing out of the service to shareholders or owners.” 

Meanwhile, as the service provider submits these financial reports to the Department of Children, Disability and Equality, Pobal “can also provide reports to DCDE on funding values, service capacity, staff premiums and targeted measures, supporting oversight of how Core Funding is being used”, a Pobal spokesperson said. 

Compliance visits by Pobal focus primarily on service-level records, including attendance, fee lists and parent statements used to establish whether funding and subsidies are being applied correctly.

“Broader financial records are not generally within scope,” the spokesperson said.

What reform could look like

The growing scale of state investment in early childhood education has intensified calls for changes to how childcare is funded and regulated.

Taft, an economist with SIPTU, argues for a more fundamental restructuring of the system, including direct state funding of workers’ wages.

He estimates that wages account for roughly 70 percent of providers’ operating costs, and argues that paying wages directly could reduce pressure on households while ensuring more public funding remains within the service.

For Taft, the underlying issue is not whether commercial providers are behaving unlawfully – he’s not saying they do.

It is whether the state should continue outsourcing a core public service to a market in which companies are entitled to make profits, pay dividends, pay whatever directors’ remuneration they wish, and move capital through corporate structures.

Frontline educators aren’t “interested in making a profit, they’re not interested in distributing dividends, they’re interested in providing a service”, Taft says.