A new report by the NDNA has revealed that LEAs have underspent £62 million of early years government funding.

The report states that 55 councils, representing 51%, reported an underspend totalling £30m – and more councils used their unspent funding to offset deficits elsewhere, this is up from a quarter to a third. The highest underspend (£3.7m) was recorded from Surrey Council.

The report also reveals that only one fifth of LEAs gave any of the underspent funds to providers (£12.976m).

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 £62m with only a limited number of councils setting out plans to use this to support providers.”

This new data comes from a Freedom of Information request NDNA sent to 149 English local education authorities in November 2020. Out of the 149, only five councils did not respond.

Ms Tanuku said: “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 funding for the sector reaches providers as they struggle to keep their businesses sustainable.”

Also in the report, NDNA found 55 LEAs (51 per cent) put their underspent money (£30.228) into their reserves or rolled it forwards within their Designated Schools Grant budget (DSG).

Thirty-six LEAs (34 per cent of those with an underspend) used their underspent funding to offset deficits elsewhere in their DSG budget (£14.234m)

Below is a list of the National Day Nurseries Association analysis key findings.

  • £1m underspend list for the previous year was made by seven LEAs
  • 57 LEAs (39 per cent) reported contingency budgets for 2020/21 totalling £18.274m. Seven LEAs gave no information about contingencies
  • Essex LEA reported a contingency budget of more than £1m. A further nine reported contingencies of more than £0.5m
  • 26 LEAs reported an overspend for 2019/20 totalling £9.256m
  • Barking and Dagenham and Central Bedfordshire LEAs overspent their budgets by more than £1m
  • Eight LEAs said they had balanced their books perfectly, left with neither an overspend nor an underspend

The full story from the NDNA can be found here.



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