Question to the Department for Education:

To ask the Secretary of State for Education, with reference to the finding by the National Day Nurseries Association that £55 million of early years funding was unspent or allocated to other budgets in 2020-2021, what assessment his Department has made of the implications of that finding for his spending on early years education; and if he will commit to (a) reviewing the funding of early education and childcare and (b) ensuring that funding follows the child it was intended to support.

The department has spent over £3.5 billion in each of the past three years on our early education entitlements and the government will continue to support families with their childcare costs.

The Early Years National Funding Formula (EYNFF) has been designed to allocate our record investment in early years (EY) entitlement funding fairly and transparently across the country. The department will continue to review the data underpinning the formula.

Local authorities can set aside contingency funding as part of their local budgetary process to help manage fluctuations in take-up. The amount of contingency funding set aside within local EY budgets has reduced year on year since the introduction of the EYNFF in 2017. Nationally, this accounted for less than 1% of the budget for the EY entitlements in the 2021/22 financial year.

Any underspend from a local authority’s EY budget is carried forward to the next financial year and must remain within the education budget. Funding allocations for local authorities for the EY entitlements in financial year 2020-21 (the same period as covered in the National Day Nurseries Association report) can be found here: https://skillsfunding.service.gov.uk/view-latest-funding/national-funding-allocations/DSG/2020-to-2021.

The downward adjustment between the March 2021 and November 2021 updates reflects a demographic dip in the number of children eligible for the entitlements based on January 2021 census data.