Underspent funding, which had been earmarked to fund childcare places for two- to four-year-olds under the government's free entitlement schemes, is instead being used to bolster council reserves or offset school budget deficits in most cases.
Just one in eight councils say they pass on the left-over money to childcare providers to help meet costs.
The research has been carried out by the National Day Nurseries Association (NDNA) based on Freedom of information responses from 137 councils for the 2022/23 financial year.
Of those responding, 104 are reporting an underspend.
The area with the largest underspend is Essex, which had £4.9mn left over at the end of the year.
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