Free childcare plan postponed for two years

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The rollout of nearly cost-free daycare is being delayed by the cabinet by two years. Instead of 2025, the new system will only go into action in 2027. Following a cabinet meeting, minister Karien van Gennip of Social Affairs stated that the allowance will rise ‘significantly’ in a number of smaller steps.

Van Gennip describes the challenges as follows: ‘You see in the market that there are a lot of personnel shortages, that places are not being filled, that there are long waiting lists and that quality is under pressure here and there.’ Thus, if supply does not keep up with demand, prices may increase.

There was already talk of extending the deadline. Players both inside and outside the industry are issuing warnings about a surge in demand for the already short-staffed industry. It was previously stated by the prospective implementing groups that they would not reach the 2025 deadline.

The process in stages
A ‘a step-by-step introduction’ has therefore been chosen. Van Gennip asserts that this is preferable as ‘you give the market two years to fill the demand’. Van Gennip commissioned research on the sector’s market forces and the potential effects of the planned system reform at the request of the House of Representatives.

Van Gennip will examine various measures to ensure good quality and accessibility for all parents, following the recommendations from those reports. These actions can include tariff regulation, whether temporary or not, as well as extending the right of assistance for parents and quality monitoring.

By raising the surcharge within the current system in 2025 and 2026, it is intended to boost demand more gradually. The distribution of this additional subsidy among applicant households is not yet known. The first costs for the new system, which will cost €2.2 billion fundamentally, were €1.6 billion in 2025 and €2.0 billion in 2026, respectively. When questioned, Van Gennip responded that those sums will not be spent exclusively on boosting the supplements; part of it goes back to parents.

To raise demand in a manageable way, Van Gennip will examine which income groups should receive a greater allowance. The maximum allowance, 96% of the maximum hourly rate determined by the government, is already given to households with the lowest incomes. Everyone is entitled to the same amount under the new system, and the daycare receives the subsidy directly. This is intended to prevent problems as occurred in the childcare allowance scandal, where parents had to pay back thousands of euros they had supposedly received in error.

Gradual increases in allowances should prevent childcare fees from soaring, owing to scarcity of places. After all, daycare facilities are permitted to charge more than the maximum hourly fee for which the government will pay. The lowest salaries cannot afford daycare even with their full stipend, since parents must cover the entire difference.

Lowering costs
The cabinet will utilise the ‘cheese slicer method’ to make cuts across practically all ministries to close the gaps in the national budget. Due to the conflict in Ukraine, the Ministry of Defense is exempt. The STAP budget a fund of €200 million per year, aimed at retraining workers and job seekers, will disappear two years after its inception as a result of the budget cuts. One of the most significant departments in terms of expenditures, the Ministry of Health, is also making reductions.

With the latest round of cuts, Finance Minister Sigrid Kaag is tightening the screws, but the overall result is that the budget deficit will once more fall below 3% of GDP. Kaag is anticipated to inform the House of Representatives that tax increases for wealthy individuals and businesses may be considered in the autumn, around Prinsjesdag. Insiders claim that efforts have been taken to limit the citizens’ suffering as much as possible: ‘That worked out pretty well, if you look at the gap in the budget.’

Written by Nicole Bea Kerr