Last reviewed 16 April 2021

The total of unspent early years funding by local education authorities (LEAs) for 2019-2020 has risen to £62 million, according to an updated report by the National Day Nurseries Association (NDNA).

The report reveals that 107 councils (74%) reported an underspend, 55 councils (51%) put their underspends into their reserves and a third of councils used their unspent money for three and four-year old childcare places to offset deficits elsewhere. Only a fifth of councils gave any of their underspent funding back to providers.

Out of the 19 LEAs who reported underspends of more than £1million for 2019-2020, seven of these were in a similar position the year before. Surrey Council recorded the highest underspend of £3.7m for the year.

The NDNA say 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.

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 2019-2020, just as the pandemic was really hitting.”

“We have now seen that underspend figure rise to above £62m with only a limited number of councils setting out plans to use this to support providers.”

“There are a number of issues with the way early years funding works, from the spring funding decision to historic underfunding of the rates themselves. More than ever it is crucial that funding for the sector reaches providers as they struggle to keep their businesses sustainable.”

“The Government must 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.”

NDNA put out a Freedom of Information request in November 2020 to 149 English local education authorities and have now received responses from 144.