Exclusive: LEA early years underspend hits £62m

All but five local education authorities (LEAs) in England have now responded to the Freedom of Information request, which NDNA sent to 149 councils last November.

In February, Nursery World reported initial findings that showed that councils had underspent early years funding of £55.5m for 2019/20, but this has now risen to £62m, with all but five local authorities in England having responded to the FOI.

A higher proportion of LEAs (74 per cent totalling 107 councils) reported underspends.

Surrey County Council has the highest reported underspend of £3.7 million. 

The final figures show 19 LEAs in England underspent by more than £1 million in 2019/20, and of these, seven had underspent by a similar amount in the previous year (see table below).

Just one in five local authorities that reported an underspend gave any of this unspent funding to providers.

Many more LEAs (55) than previously reported put their underspends into their reserves – equivalent to 51 per cent of those that reported an underspend – totalling £30m.

More councils used their unspent funding to offset deficits elsewhere, up from a quarter to a third.

The NDNA said that despite raising this issue a year ago with the Treasury and the Department for Education, with promises from the Government to look into the issue, millions of pounds of early education and childcare funding is still not reaching providers.

Less money reaching childcare providers would led to early years settings offering fewer places to families due to affordability. If money earmarked for childcare places is not being converted into creating places, children and families will suffer, particularly in areas of deprivation, it added.

Purnima Tanuku, chief executive of NDNA, said, ‘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.

‘We have now seen that underspend figure rise to above £62 million, with only a limited number of councils setting out plans to use this to support providers.

'There are a number of issues with the way early years funding works, from the spring funding decision to historic underfunding of the rates themselves. More than ever it is crucial that funding for the sector reaches providers as they struggle to keep their businesses sustainable.'

Key findings:

• 107 LEAs (74 per cent of those that responded) reported an underspend for 2019/20.
• 55 LEAs (51 per cent) put their underspent money (£30.2 million) into their reserves or rolled it forwards within their Designated Schools Grant (DSG) budget.
• 36 LEAs (34 per cent of those with an underspend) used 

Ms Tanuku added, ‘We have seen recent reports on the costs of childcare to parents and the precarious position nurseries are in. With millions still not reaching the front line this situation will only be getting worse until the system is fixed.’

* These LEAs also reported underspends of over £1m in 2018/19

Source: National Day Nurseries Association analysis