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By Rachel Lawler

given in response to a Parliamentary question has revealed a £2.4 billion underspend on tax-free childcare since 2017.

Responding to a question from Labour’s shadow children and early years minister Tulip Siddiq, the government said that it spent £630 million on the tax-free childcare scheme between 2017/18 and 2020/21.

In the OBR’s economic and fiscal outlook overview, the initial forecast spend for the scheme over the same period was £3 billion, although forecasts have been revised down in later reports.

This means that the government has spent £2.4 billion less than initially planned on the scheme when in launched in 2017.

Low take-up
Neil Leitch, chief executive of the Alliance, commented: "The tax-free childcare scheme has long struggled with low take-up, and so it is no surprise to see that spending on the policy remains significantly lower than previously predicted by government.

But at a time when so many nurseries, pre-school and childminding settings in England are struggling to remain financially sustainable, it makes no sense for such a substantial underspend - on a policy designed specifically to support access to childcare and early education services - to not be reinvested into the early years sector.

"We know that, despite the increase in early years funding announced at the recent Spending Review, historic sector underfunding alongside the ongoing impact of the pandemic means that many providers still face an uphill battle to remain in business.

"As such, we are calling on the government to ensure that any unused funding for the tax-free childcare scheme is reallocated back into the sector, so that providers can deliver the quality, affordable and crucially sustainable care and education that children and families need."

Find out more
Getting started with tax-free childcare