Underspend of early years Government funding by local authorities reaches £62m


National Day Nurseries Association finds even more millions of pounds of early education and childcare funding for three-and-four-year-old places are failing to reach providers.  Local education authorities (LEAs) underspend of Government early years funding has hit £62 million, analysis by National Day Nurseries Association (NDNA) has revealed.

In February, NDNA’s report into underspend funding for three and four-year old childcare places by LEAs in England showed that councils had underspent £55.5m for 2019/20.This figure has now risen by 6.5 million, with all but five local authorities in England having responded to the Freedom of Information request which NDNA sent to 149 councils last November.

  • A higher proportion of LEAs (74 per cent, totalling 107 councils) reported underspends.
  • The final figures show 19 LEAs in England underspent by more than £1 million in 2019/20, and of these, seven had underspent by a similar amount in the previous year.
  • Surrey County Council has the highest reported underspend of £3.7 million.
  • Just one in five LEAS that reported an underspend gave any of this unspent funding to providers.
  • More than half (55) of LEAs put their underspent money (£30.2 million) into their reserves or rolled it forwards within their Designated Schools Grant (DSG) budget.
  • More councils used their unspent funding to offset deficits elsewhere, up from a quarter to a third.
  • More than a third (34 per cent of those with an underspend) used their underspent funding to offset deficits elsewhere in their DSG budget (£14.2 million).

The report follows an investigation last year, which revealed some alarming levels of underspending. NDNA wanted to see what councils were now doing with the money allocated for childcare places in 2019/20.

The NDNA said that despite raising this issue a year ago with the Treasury and the Department for Education, with promises from the Government to look into the issue, ‘millions of pounds of early education and childcare funding is still not reaching providers’.

“Less money reaching childcare providers would lead to early years settings offering fewer places to families due to affordability. If money earmarked for childcare places is not being converted into creating places, children and families will suffer, particularly in areas of deprivation”

Purnima Tanuku OBE, chief Executive of NDNA, said: ‘With almost all local authorities now reporting back to us on their early years spending we have seen some alarming levels of underspent budgets at the end of 2019/20, just as the pandemic was really hitting. She called for the Government to ‘simplify the way it funds early education and childcare places’. “We have repeatedly recommended a single childcare account for families under our Childcare Passport proposal as part of this solution. It would reduce red tape and administration and ensure funding for a child follows that child wherever they take up a place.”

‘We have seen recent reports on the costs of childcare to parents and the precarious position nurseries are in. With millions still not reaching the front line this situation will only be getting worse until the system is fixed.’

Source Early Years Educator

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