Question to the Department for Education:

To ask the Secretary of State for Education, what action her Department will take where local authorities are found to be retaining more than the permitted 3% of early years funding.

The passthrough requirement ensures that the great majority of government funding for the early years entitlements reaches providers so that they can deliver the entitlement offers. The passthrough rate is a statutory requirement set out in the Schools and Early Years Finance Regulations. The minimum passthrough requirement is 96% for financial year 2025/2026 and will increase to 97% in 2026/2027.

The department monitors local authority compliance to the minimum pass-through requirement via section 251 budget returns each financial year and will query any returns that suggest a lower rate than required.

In circumstances where an authority has failed to meet the minimum pass-through requirement, through retaining too much funding centrally or for any other reason, the department holds the right to claw back funding from local authorities.