More than £65 million for childcare expansion not reaching providers
Millions of pounds of Government money intended to support early years providers to create more places to meet demand for the childcare expansion has still not reached providers.
Research and analysis carried out by the National Day Nurseries Association (NDNA) through Freedom of Information (FOI) requests discovered that large amounts of two funds to support the expansion of funded childcare by this September had not been distributed to providers.
The Early Years Expansion Grant of more than £75 million was announced in December 2024. However, less than a third of this money had been distributed by councils by early August.
Only half of an earlier fund, the £100 million Childcare Expansion Capital Grant, has been distributed to date. This was announced in 2023 and paid to councils in February 2024, to help fund early years providers, wraparound childcare and support local authority infrastructure preparations for the expansion.
Both of the funding pots were supposed to support childcare providers to increase their capacity ready for September 2025, when children in working families will be eligible for 30 hours’ funded childcare from nine months onwards.
On the Early Years Expansion Grant, 10% of councils reported that they won’t have passed all the grant fund on to providers ahead of September and ten of these confirmed they will still have more than £1 million left at this point. By the start of August, £35m from this fund had been allocated but not given to providers so they would not have been able to fully benefit from any allocation ahead of the start of the academic year.
While the Childcare Expansion Capital Grant had been known about for longer, only £52 million has been distributed. More than half of councils who responded (57%) said they will not have given their full allocation to providers before the start of September.
Tim McLachlan, Chief Executive of National Day Nurseries Association, said: “It’s a shocking state of affairs that millions of pounds of money made available for nurseries to be able to increase their capacity for the childcare expansion has still not been paid out – eighteen months after councils have received it in some cases.
“This money could make a real difference to underfunded providers who have been struggling with the recruitment crisis, exacerbated by the increased National Insurance Contributions, and who are trying hard to meet local demand for places.
“Adding both pots of money together, there’s £65 million of grant funding that has yet to be distributed to providers – of that there is more than £44 million that is unaccounted for.
“Added to unspent budgets in Tax-Free Childcare and early years underspends there is a worrying amount of public money not reaching the children and families it is intended to support.
“When the Government looks at the Early Years funding review as part of the Best Start in Life strategy it needs to find a way to simplify the system for families, councils and providers to avoid these types of underspends.
“Money that is set aside to ensure children get the best start in life must reach the providers delivering these places to make a real difference to children’s outcomes.”
Councils that had distributed funding told NDNA 33% of the Childcare Expansion Capital Grant and nearly 9% of the Early Years Expansion Grant had been given to school-based providers. This distribution is disproportionate given that school-based providers deliver around 6% of funded places to two-year-olds and under twos.*
A quarter of the Childcare Expansion Capital Grant money went to support wraparound care which includes breakfast clubs, after-school clubs and holiday clubs. This was in addition to a separate funding stream made available for wraparound support and expansion of £125m.
Tim added: “It is a kick in the teeth for the PVI nurseries who deliver the vast majority of places for two-year-olds and under twos that schools seem to be getting more than their fair share of this grant money. The Government has already allocated separate funding of more than £200 million for school-based nurseries.
“If the Government is relying on nurseries to support their ambitious plans for funded childcare, we really need them to be fair to all types of providers.”
Some examples of how local authorities are dealing with the expansion funding:
Kingston upon Hull
Hull City Council was given £307k from the expansion grant but only distributed £74,000. All of this money has gone to school-based settings and none to PVI providers. At the end of August they will still have £233,100 left.
For their capital grant, Hull received £427,581 in 2024. It has given £290k of this to school-based providers and £96.7k to PVI providers. The council has not reported what it will be with the remaining £40.5k.
Portsmouth
Portsmouth County Council received £322,536 from the expansion grant and had allocated it all but not distributed it at the time of responding. The council did not report how they had split this money between schools and PVI providers but they expected to have distributed all their money by the end of August 2025.
The council received £379,179 capital grant funding in 2024 and distributed only £68,300, all going to school-based providers. The council was unable to say how much it would have distributed by the end of August 2025 and would not give a figure of how much was still to be allocated, stating planning permissions and leases as reasons.
Kirklees
Kirklees Council has distributed £614,264 of its expansion grant when it was only given £612,000. 97% of this has gone to PVI providers.
However, Kirklees was given £899,328 of capital grant money in 2024 and gave no information on who it was distributing this to although it did report to have distributed all funding before the end of August.
Case study – nursery refused capital expansion grant funding
George Apel of Atherton House Nursery Group applied for an expansion grant in May 2024 for his nursery in Altrincham. He was refused this money by Trafford Council in July 2025. However, a school within a mile of his nursery was given a school-based nursery grant to create a new nursery.
George said: “As a provider with two Ofsted Outstanding settings already located within Trafford, it was frustrating to find out we were unsuccessful in our grant application to expand our offering. We did however continue with our plans and this January opened a new 80 place nursery in Trafford. However, having then found out about a £150,000 grant being given to a local primary school to open a brand new provision from this coming September, it appears there is definitely an additional agenda at play.”
Full results of our FOI request investigation:
Early years expansion grant 2025 (£75m) https://www.gov.uk/government/publications/early-years-expansion-grant-2025-to-2026
- Responses from 127 local authorities although 100 fully answered each question
- Respondents had distributed £22,764,452.80 which is 30.41% of the total £75m pot
- Respondents had allocated £35,699,920.83 but not distributed at time of responding (July/August 2025) which is 47.68% of the total
- 12 councils said they wouldn’t have distributed all their money by the end of August 2025 – ten gave amounts totalling £1,029,427.17 which is 1.37% of total amount
- Therefore £15.4m is unaccounted for – 20.54% of total amount
- The split between PVI and school-based providers was 91.1% PVI:8.7% school-based
Childcare expansion capital grant funding (£100m)
https://www.gov.uk/government/publications/childcare-expansion-capital-grant-funding
- Responses from 127 local authorities although 109 fully answered each question
- Respondents had distributed £51,747,544.35 which is 51.8% of the total £100m pot
- 71 councils (56% of those who answered) said they wouldn’t have distributed all their money by the end of August 2025 – 56 gave amounts totalling £19,527,133.01
which is 20% of total amount
- Therefore £28,725,329.64 is unaccounted for – 29% of total amount
- The split between PVI, school-based providers and LA infrastructure was 67% PVI:33% school-based: 0.4% infrastructure
- The split between early years providers and wraparound care was 76% PVI: 24% wraparound
*This figure is based on the figures in the latest Early Years Providers report 2024 https://explore-education-statistics.service.gov.uk/find-statistics/childcare-and-early-years-provider-survey/2024
For more media information, please contact Leila Marshall, PR Officer, on 01484 40 70 66, 07587033568, [email protected]
NDNA:
National Day Nurseries Association (NDNA) is the national charity representing children’s nurseries across the UK.
We are the voice of the 20,000-strong nursery sector, an integral part of the lives of more than a million young children and their families. We provide information, training and advice to support nurseries and the 250,000 people who work in them to deliver world-class early learning and childcare. Working closely with local and national governments in England, Scotland and Wales, we campaign on the cost, choice and quality of childcare to benefit nurseries, families and the economy.
- England
- early years
- England
- funding
Similar Articles
More to do to make childcare funding fairer in Scotland
EPI report: Absence rates are increasing among youngest children
