Complicated application processes and the short-term nature of the two-year fund have been blamed.
It is not clear exactly how much of the fund, intended for training and development of early years workers in the private and voluntary sector, has actually been spent but CYP Now understands it is around just 40m pounds.
Denise Burke, head of childcare at the London Development Agency, said: "The Transformation Fund hasn't worked. There is a lot of money sitting there unspent because we know it's short term."
Conservative MP Maria Miller, the shadow minister for families, added: "The fund is not being taken up because of complexities of how to apply for the money."
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