The figures are based on a Freedom of Information (FOI) request to local authorities about childcare funding, which almost all (144 out of 149) have responded to.
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The total underspend of £62m includes 19 councils underspending by more than £1m each. Of these seven also underspent by a similar amount the previous year. Just under three quarters (74 per cent) of councils underspent their allocation.
The latest figures update analysis released last month by the NDNA, based on responses from 93 councils. The total based on these responses was £55.5m.
The biggest underspend was by Surrey Council, which failed to spend £3.73m of its funding allocation.
The London Borough of Greenwich’s underspend was £2.18m and in Hertfordshire it was £2.33m.
Meanwhile, in Hampshire it was £2.33m, Gloucestershire failed to spend £1.06m of its funding, while the underspend for West Sussex was £1.4m.
Around half of councils reporting an underspend put the money into their reserves but a third used their underspend funding to offset deficits elsewhere. Just a fifth of councils gave any of their underspend back to providers.
The NDNA says that despite raising the issue with government last year, childcare funding is still not reaching providers. The sector body is also concerned that the continued underspend is taking place amid the Covid-19 pandemic, when many nurseries are facing additional costs to protect staff and children.
“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 2019/20, just as the pandemic was really hitting,” said NDNA chief executive Purnima Tanuku.
“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.
“More than ever it is crucial that funding for the sector reaches providers as they struggle to keep their businesses sustainable.”
Tanuku called on the government to “simplify the way it funds early education and childcare places”.
This includes introducing a childcare passport to reduce red tape and ensure the funding follows each child “wherever they take up a place”, she added.
Among councils that responded, 26 reported an overspend on their funding allocation, totalling £9.25m. Of these Barking and Dagenham and Central Bedfordshire councils overspent their budgets by more than £1m.
