A report by the Public Accounts Committee found that the department had 'a limited understanding of how the funding it provides for early education is spent'.
More than a third of local authorities stated that they had limited knowledge of the costs associated with delivery and one in ten admitted they did not pay sufficient amounts.
Committee chair Margaret Hodge said that while early years provision had 'expanded significantly', with more than 800,000 threeand four-year-olds accessing the free entitlement, the department had done little to understand the costs and outcomes in different local authorities.
Around £1.9 billion was spent on funding the three and four-year-olds offer in 2011-12.
Ms Hodge said that while results for children at the age of five had improved, the department needed to 'get to grips with why there is little improvement at the age of seven and what happens between the ages of five and seven to lessen the effect.'
She also said that too many parents were missing out because they did not have the right information and that the department must take steps to remedy this. She said that it was completely unacceptable that some parents were not able to take up the offer unless they agreed to pay 'top-up' fees for extra hours and that the department must take action to prevent this.
She was also concerned that there was low take-up among disadvantaged families and that poorer areas had lower levels of take-up of the entitlement.
Ms Hodge said, 'The department should identify which local authorities have successfully increased take-up in disadvantaged groups and encourage other authorities to follow suit. It also needs to say how it will use the funding system to improve services in deprived areas.'
Neil Leitch, chief executive of the Pre-School Learning Alliance, said the report's findings 'support the fact that early years settings have consistently told us that they have not received enough money under the free early years entitlement to cover the cost of supplying places for threeand four-year-old children.'
He added, 'Margaret Hodge says it is unacceptable for any parent to be charged for the free entitlement and unacceptable that some parents cannot access the free education unless they agree to pay "top-up" fees for more hours. We entirely agree, but it is equally deplorable that providers and parents who purchase additional hours are expected to subsidise the scheme.'
- Parents in London are struggling to pay childcare fees, a survey by the Daycare Trust has found. Half of the 400 early years settings and out-of-school clubs that took part said that parents not being able to afford fees was a key issue. The charity is calling on London's re-elected Mayor, Boris Johnson, to tackle the crisis by lobbying for a reversal of cuts to tax credits and promoting childcare vouchers.
