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Alliance calls for unspent tax-free childcare funds to be reallocated

By Rachel LawlerTax free Childcare underspend

The Alliance has called on the government to reallocate the unspent funds set aside for its tax-free childcare scheme to support childcare providers facing closure.

Last month, the government published figures in response to a Parliamentary question from shadow early years minister Tulip Siddiq that showed a significant underspend on the policy. In the past three years the government spent just £385 million on tax-free childcare, compared to its initial forecast of £2.1 billion.

The Alliance has called on the government to put this £1.7 billion towards supporting struggling providers as many continue to face rising costs and lower occupancy after the coronavirus crisis.

Neil Leitch, chief executive of the Alliance, said: “At a time when nurseries, pre-schools and childminders are in such desperate need of a significant increase in funding, it beggars belief that the government would look at a huge underspend like this - money that was always intended to support parents to access childcare - and choose not to use it to support the early year sector.

“The combination of years of underfunding for the government’s so-called ‘free childcare’ schemes and the impact of the coronavirus pandemic has had a devastating effect on childcare providers, and without urgent action, many simply will not survive in the long term.

"With the take-up of tax-free childcare continuing to fall far below original estimates, we urge ministers to reallocate the unused funding for this policy to where it is clearly needed. If the government genuinely cares about early education and ensuring parents have access to the childcare they need, then supporting the sector that provides both is surely an obvious political choice."