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NEWS: Investigation reveals underspend of childcare funding

Following an investigation by NDNA and a Freedom of Information (FOI) act request to all English local education authorities (LEAs), it has been revealed that three-quarters of LEAs in England underspent their childcare funding for three- and four-year-old places. 

According to NDNA, the request revealed:

  • 95 LEAs (74 per cent of those who submitted clear responses) reported an underspend for 2018/19 totalling £63.527m).
  • 15 LEAs reported underspends of more than £1m.
  • Only one in five LEAs said they used any of this underspent money to increase the rate for providers. 
  • 42 per cent of LEAs kept £18.882m underspends in their reserves
  • Ten LEAs used £8.661m to offset overspends in their High Needs Block which covers children aged 0 - 25.
  • 72 LEAs reported contingencies for 2018/19 totalling £32.013m
  • 68 LEAs reporting contingencies for 2019/20 totalling £26.436m
  • Nine LEAs reported contingency budgets of more than £1m in 2018/19 
  • 24 LEAs have not decided what to do with £7.823m of contingency money if unspent

Liz Bayram, Chief Executive at the Professional Association for Childcare and Early Years (PACEY) comments:
"With most providers reporting significant shortfalls in the funding they receive to deliver the funded early education entitlements for three- and four-year-olds, this latest investigation reveals the current funding system is in chaos and urgently needs overhauling. We know that many providers are struggling to provide the funded places families need and cover their delivery costs; that other providers are limiting the number of funded places they offer because they simply cannot sustain their business and offer every entitled family a funded place. Local authorities should be doing more to ensure their funding levels are adequate and providers are being supported.

Government needs to urgently intervene where significant underspends such as these are reported and review its early education funding strategy so these on-going issues are addressed. We know it is possible because – in the main – funding for disadvantaged two-year-olds is covering provider costs and is working well. If we can do that for two-year-olds we should be able to do so for three-and four-year olds too!”