Councils face DfE 'clawback' of millions in Sure Start grants

Answering a question in parliament on children's centres, childcare minister Sam Gyimah said the Department for Education has a "thorough process" in place for considering whether to claim back money from councils that have axed children's centres that were set up with government cash.

An initial £540m was allocated by Tony Blair's Labour government between 1999 and 2002 to establish a nationwide network of Sure Start children's centres.

But under a contractual 'clawback' system, local authorities that "dispose of or change the use of buildings or assets funded wholly or partly through Sure Start capital grants" risk being told to pay back the money.

Local authorities are required to notify the DfE of proposals to change services, and must provide details of the level of early years services that will continue. The DfE then decides whether the council is continuing to provide a sufficient level of early years services to meet the original aims of the grant.

The clawback clause lasts for 25 years, meaning that councils could be asked to repay money if they mothball buildings or reduce services until 2024 at the very earliest.

It is unclear whether the DfE has reclaimed grant funding in this way, but CYP Now has learned that a number of councils are actively seeking to avoid the prospect in relation to 2016/17 budget decisions.

A report by Luton Borough Council, which is considering reducing the number of children's centres it provides from seven to just one, states that the authority should "consider continued use of decommissioned designated premises to avoid capital grant clawback".

Derby City Council, which has said that seven of its 17 children's centres are at risk of closure, is in discussions with local schools about keeping the children's centres running.

A report detailing the proposals calculates the authority could face a potential clawback bill of £3.2m.

"In order to avoid capital clawback we would need to prove to the DfE that there is still an appetite to deliver services for under-5s," the document states.

Gloucestershire County Council, which plans to reduce the number of children's centres it provides from 39 to 30, has also said the clawback clause "has implications for the use and allocation of buildings and resources".

"Any future service delivery model has to consider this," a council report states.

Numerous local authorities are currently preparing to cut children's centre provision as they grapple with reductions in central government funding and increases in demand for child protection services.

The pace of children's centre closures has quickened in recent years. In the first six months of 2015, there were more children's centre closures than for the whole of 2014.