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£600m underspend on tax-free childcare will be sent back to Treasury

Labour analysis has revealed that projected government spending on tax-free childcare will be £600 million lower than expected in the next four years, due to low take-up of the scheme.

However, the £600m underspend will not be re-allocated to the childcare budget, but returned to the Treasury, despite ongoing concerns about underfunding of 30-hour childcare.

Early years organisations have responded by saying that the decision 'beggars belief' when the sector is in crisis and have called for the funding to be used to support families and struggling providers.

The figures are contained in the detail of documents published by the Office for Budget Responsibility following the Chancellor’s budget last week.

The OBR’s Economic and Fiscal Outlook updated projected spending on TFC shows a shortfall of £100m for 2018-19, followed by £200m in both 2019-20 and 2020-21, and a further £100m drop in 2021-22.

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