Councils underspent early years funds

Councils in England left at least £115 million of early years funding unspent in 2024/25, according to a new analysis based on Freedom of Information responses. (ndna.org.uk)(ndna.org.uk) The National Day Nurseries Association said 129 councils gave full responses and three gave partial ones, with 99 of 132 reporting an underspend. One council said it had underspent but did not disclose the amount, so the total is likely higher. (ndna.org.uk)(ndna.org.uk) The trade body said 37 councils retained more than £1 million and 17 retained more than £2 million. Nursery World reported that about three-quarters of local authorities withheld money from providers last year. (ndna.org.uk)(ndna.org.uk) (nurseryworld.co.uk)(nurseryworld.co.uk) This sits inside England’s childcare expansion, which began in April 2024 for eligible two-year-olds and widened in September 2024 to children aged nine months to two years. The House of Commons Library said the rollout is due to reach 30 hours for eligible children aged nine months to three years from September 2025. (commonslibrary.parliament.uk)(commonslibrary.parliament.uk) The money moves in two steps: the Department for Education pays councils through the early years block of the dedicated schools grant, and councils then set local funding formulae for nurseries and other providers. The Department for Education said councils should follow its 2024/25 operational guide when passing funding on. (commonslibrary.parliament.uk)(commonslibrary.parliament.uk) (gov.uk)(gov.uk) For 2024/25, the government set a minimum pass-through rate of 95% on each early years dedicated schools grant funding stream, with a plan to raise that to 97% after the rollout of the new entitlements had progressed. The 2025 finance regulations said councils had been required to pass through at least 95% in 2024/25. (assets.publishing.service.gov.uk)(assets.publishing.service.gov.uk) (legislation.gov.uk)(legislation.gov.uk) The National Day Nurseries Association said 56 councils used early years money to offset wider education deficits and 37 carried unspent funds into the next financial year. It also said only five councils redistributed any leftover funding to providers. (ndna.org.uk)(ndna.org.uk) Providers have argued for months that official hourly rates do not cover rising costs. A House of Commons Library briefing, citing Department for Education analysis published in November 2024, said the median provider in 2023 had £1 of income for every £1 of cost. (commonslibrary.parliament.uk)(commonslibrary.parliament.uk) The same trade body reported more than £65 million of underspends in 2023/24, also with about three-quarters of responding councils underspending. Across its annual investigations since 2018, it says cumulative underspends have reached £472 million. (nmt-magazine.co.uk)(nmt-magazine.co.uk) (ndna.org.uk)(ndna.org.uk) The Department for Education said in its 2023 consultation response that the funding framework was meant to ensure money reached providers “in a fair and transparent way.” The new figures suggest that, in 2024/25, a large share of that money still stopped at council level. (assets.publishing.service.gov.uk)(assets.publishing.service.gov.uk)