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New report suggests more than £100m earmarked for early years education is not being spent

The National Day Nurseries Association (NDNA) has released findings of a new study highlighting significant LEA underspending on early years education.

The investigation focused on funding for early entitlement places for three and four-year-olds including the 15 universal hours and the additional 15 hours for eligible children of working parents. The study looked at funding for 2021/22 in the early years block overall and asked about adjustments made to early years budgets by the Department for Education (DfE) with responses received from 149 out of 150 LEA’s.

Headline findings were as follows:

  • 62% of LEAS (92) who responded reported an underspend totalling £45.8million meaning, over the four years NDNA has been conducting this research, underspends total £229 million.
  • 15 LEAs underspent by at least £1 million each – four of these also had £1m plus underspends in two previous years since 2018
  • When asked about use of underspend budget only 11 (12%) of LEAs reported that some or all of their underspends will be passed to providers
  • 30 LEAs put their unspent money (£15m) into their Dedicated Schools Grant (DSG) reserves (33% of respondents with underspends)
  • 72 LEAs said they had money “clawed-back” or “adjusted” by DfE in-year and a further 24 reported a negative adjustment post-year: total net adjustment was minus £59.3m
  • 11 LEAs who responded said they had balanced their books exactly or replied that it was not applicable to them
  • Over the four years of investigation, 43 LEAs (37% of all LEAs who gave responses each year) reported an underspend every year. These alone have amounted to £110.9m over four years.

NDNA chief executive, Purnima Tanuku, said “This is our fourth year investigating underspends in early years funding and once again, the results are shocking,”

“Lessons still aren’t being learnt, with too much of the funding meant for early education and childcare places being used to offset other deficits or put into reserves. Almost half of those who reported an underspend have done so since we started looking into this four years ago.”

Read the full report here.

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Published on 17th May 2023