Councils divert £63.5m of childcare funding to plug gaps elsewhere

Figures published by the National Day Nurseries Association (NDNA) reveal that councils are “shortchanging children and leaving providers out of pocket” by moving early years funding to tackle overspending in other areas of education.

The early years group received Freedom of Information Act responses regarding education and early years budgets from 130 local education authorities (LEAs) across England.

Of these, 95 councils (74 per cent) reported an underspend on childcare for three- and four-year-olds in 2018/19, totalling £63.5m.

The 10 LEAs with the highest underspends are:

• Surrey - £5.15m
• Birmingham - £2.67m
• Hertfordshire - £2.5m
• Norfolk - £2.27m
• Islington - £1.99m
• Sussex - £1.84m
• Leeds - £1.82m
• Essex £1.8m
• Lincolnshire £1.71
• Nottinghamshire £1.67m

Among those councils underspending, almost half (42 per cent) kept the money in their reserves, totalling £18.8m.

Meanwhile, 10 councils used the money to offset overspending in their high needs block – for children and young adults with special educational needs and disabilities (SEND).

The NDNA is calling on the Department for Education to overhaul early years funding to ensure money is reaching providers and the young children it is aimed at.

“Our analysis shows an alarming discrepancy in the way that early years funding for three- and four-year-olds is being used and how much is not reaching providers across the country,” said NDNA chief executive Purnima Tanuku.

“We have unravelled the true scale of the disastrous funding system which, if not addressed urgently by the Department for Education, will create a further crisis within early years.

The NDNA says that the underspend total is likely to be higher as 21 councils did not respond to its FOI request.

“We know that council budgets are stretched to capacity, especially around high needs and SEND support - but this robbing Peter to pay Paul approach is recklessly short-sighted. It damages the quality of care children and families receive,” added Tanuku.

“Early years has been chronically underfunded for years now, and yet this is the place where investment in education can make the biggest difference." 

A Department for Education spokesperson said: “The government recently announced an increase in our hourly funding rates for councils so that they can continue to deliver high quality and free childcare places. In total, this government is now planning to spend more than £3.6 billion in 2020-21 to support these offers.

“The setting of local provider funding rates is a decision for local authorities in consultation with their schools forum. The free childcare offers for two, three- and four- year-olds are demand-led and local authorities will see an underspend in their funding if take-up of any of the entitlements has not been as high as the authority had forecast.”