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£55.5m underspend on childcare places reported by Local Authorities in lead up to the pandemic

New research has found that around three quarters of local education authorities failed to spend their allocation for government funded childcare places in 2019/20.

The research, conducted by the National Day Nurseries Association (NDNA), suggests that only a fifth of councils gave any of their underspent funding, for three and four-year-old places, back to providers. Almost half of LEAs who had underspent their funding said they rolled it forwards into their reserves and a quarter reported utilising them to offset deficits elsewhere within their schools budget.

Out of the 17 LEAs who reported underspends of more than £1million for 2019/20, six of these were in a similar position the year before.

Purnima Tanuku OBE, Chief Executive of NDNA, said: “Following on from our investigation last year, which revealed some alarming levels of underspending, we wanted to see what councils were now doing with the money allocated for childcare places in 2019/20.

“We were shocked to find very similar results, with even more local authorities reporting that they had more than £1million of unspent funding at the end of the year. The period covered by our research was just before the Covid-19 pandemic hit the UK.

“Over the years we have repeatedly asked the Government to ring-fence this money within the schools grant so that it can only be spent on funded places for three and four-year-olds. These places have been underfunded for years. Despite our ground-breaking report on this a year ago, lessons have not been learned and vital cash is still sitting in council coffers or being moved to pay for deficits in other areas.

Tanuka added, “This is just another example of where the Government has failed in its ambitions to level up. Giving all children a good early years education is the single most important step to take, which is why it’s crucial that funding rates are reviewed and that all this money actually pays for delivery of high quality places.”