“£600m underspend on tax-free childcare to return to Treasury”

“Labour has accused the government of failing to support hard-pressed families after it emerged that a £600m underspend on its tax-free childcare (TFC) scheme is to be returned to the Treasury.

The underspend on the troubled programme was uncovered by Labour analysis of data from the Office for Budget Responsibility (OBR), which showed that spending on TFC is projected to be £600m lower than expected over the next four years.

The TFC scheme has been struggling to improve levels of uptake among families. Earlier warnings from the OBR said the programme had helped less than 10% of the families originally predicted, and spending in the first year was just 5% of initial forecasts.

Instead of reallocating the £600m to support other childcare policies, however, the Conservatives said the leftover funds would go back to government, prompting fury from those working in the early years sector.

Childcare providers say they are struggling to try to deliver the Conservatives’ 30-hour free childcare promise to working parents. They say the Tories’ flagship policy is underfunded and poses a risk to the financial sustainability of early years providers.

Neil Leitch, chief executive of the Pre-school Learning Alliance, called on the government to re-invest the leftover funds.

“Given that childcare providers across the country have long been crying out for additional funding, the suggestion that government underspend on the tax-free childcare scheme is to be returned to the Treasury rather than used to support a sector in crisis beggars belief,” he said.

“Such a decision suggests that pre-schools, nurseries and childminders are being left to struggle not because the government simply doesn’t have the money for additional investment, but rather because it doesn’t believe that there is a true need for it in the childcare sector.”

The underspend confirms that uptake of tax-free childcare remains way below government projections, either because parents don’t understand their entitlement or they’re choosing not to take it up. …”