Additional reporting by Jess Casey and Juno McEnroe

Creches are to be given a financial bailout after the Government bowed to pressure to intervene in the insurance crisis that is threatening childcare providers.

In a significant u-turn Children’s Minister Katherine Zappone has announced once-off funding of up to €26,000 to creches that have seen insurance quotes soar by up to 300% after one of only two insurers in the Irish market pulled out.

However, Ms Zappone is still unable to promise parents all childcare facilities will reopen in the new year, but said the risk has now “decreased significantly”.

Her announcement directly contradicted Taoiseach Leo Varadkar who said it would be “reckless” to set up an emergency fund for creches that have been left in a precarious situation in the week before Christmas.

Just hours before the payments were announced, Mr Varadkar told the Dáil: “If an insurer is unable to provide cover for a particular facility, be it a creche, a childcare provider or anything else, there may be a good reason for that. There may be a very high risk attached to insuring it.

For the State to wander in blindly and offer to cover the bills of a private company or even a public body, no questions asked, would be entirely reckless.

Finance Minister Paschal Donohoe had also ruled out an emergency fund, which had been suggested by Ms Zappone earlier this week, stating the budget figures for 2020 had all been set.

Ms Zappone, however, denied she was being reckless and confirmed the €7m allocation will be found from within her department’s existing budget.

The last-minute intervention is likely to spark anger among small businesses and other service providers who have also been hit with massive insurance hikes as well as farmers who have been forced to go on protest over the low cost of beef.

Fianna Fáil’s business spokesperson Robert Troy said the payment is simply a “sticking plaster” that will not bring insurance premiums down.

“We shouldn’t have to be using tax resources to supplement the insurance industry and that’s what’s happening now,” he told Ms Zappone when she appeared before an emergency session of the Oireachtas committee on children yesterday.

Labour TD Sean Sherlock said the payment does not address the core issue of the crisis and claimed a €1,500 support wouldn’t meet the financial challenge now being faced by creches.

He said long-standing providers whose risk has not increased are still facing a significant jump in their premiums in 2020.

“In some cases, this is as high as six times what they are paying now. A lot of providers have also put themselves into debt due to the capital costs of becoming fully compliant in order to continue their operations,” he said.

Ms Zappone claimed the payments, which will be made before December 28, do not constitute “state intervention”. She also denied it was an “emergency fund” to assist providers with the soaring cost of insurance but instead said the money will be paid in recognition of the “additional administration” that childcare providers were tasked with in 2019.

Creches will receive an average of €1,500 but some childcare services are set to get as much as €26,000 depending on the number of children in their care.

More than 1,300 facilities have been left scrambling to secure insurance after Ironshore Europe announced it was quitting the Irish market. Many who have claims outstanding have not been offered a quote.

It is hoped each of the affected creches will have received a quote from remaining provider Allianz by this afternoon, although there will be a number of “high-risk” creches who will not get one, the minister said.

Creches who still find themselves facing “grave difficulty” and “sustainability issues” should contact the childcare committee and Pobal, she added.