Kensington and Chelsea's Schools Forum addressed errors in early years deprivation funding at its meeting on Monday, 17 November 2025, prompting a clawback of overpayments from providers. The error stemmed from using incorrect deprivation data, which led to a miscalculation of funding allocations.
The forum reviewed an Update on Early Years Deprivation Overpayments in 2024/25, which revealed that a deprivation funding supplement, intended for families in the most deprived 37.5% of areas in England, was incorrectly applied to the 60% most deprived areas. According to the Public reports pack, the deprived area bands used to implement the deprivation weighting in the funding portal for 2024/25 were incorrectly based on Index of Multiple Deprivation (IMD) deciles 1–6, which comprise the 60% most deprived areas of England. The correct methodology should have been based on the Department for Education's (DfE) six deprived area bands (A to F) based on the Income Deprivation Affecting Children Index (IDACI) 2019 index, covering the 37.5% most deprived areas of England. This resulted in overpayments to early years providers during the 2024/25 period.
The report stated:
We recalculated overpayments for 2024/25 based on the DfE guidance and the methodology covered above in order to identify providers that had been overpaid and underpaid. Since there is no additional funding in the Early Years DGS block to cover for these overpayments, we have written to providers to apologise for the error and inform them of the amounts they had been overpaid/underpaid and offered them three options regarding repayments (paying the full amount as one lump sum, pay the amount by the end of March or over 10 payments. We have also specified that providers that would struggle financially could request to extend these repayments beyond the 10-month period in recognition of smaller businesses' needs).
The total overpayment amounted to £302,949, with an estimated clawback of £181,770 expected between October 2025 and March 2026, and a further £121,179 between April and July 2026. According to the Public reports pack, the council has contacted affected providers, offering repayment options, including extended payment plans for smaller businesses facing financial difficulties. Providers that would struggle financially can request to extend repayments beyond the initial 10-month period, particularly in recognition of smaller businesses' needs.
Forum members sought assurance that schools struggling would not be affected by the clawback and asked if this had been communicated to early years settings. Officers stated that payments had not been significant as they were only a small percentage of the whole rate they received. They had not yet informed Early Years settings as they needed to identify and understand what the issue was and come back with a definitive answer. They assured that once the main issue was identified they would liaise with the Department for Education (DFE) to figure out the next steps to be taken and would come back to forum.
Officers affirmed that the funding distribution was dependent on a system that used post codes, in addition to the DfE's six deprived-area bands based on IDACI 2019, to determine deprivation levels for early years funding.
The Schools' Forum agreed to note the clawback arrangements for early years deprivation amounts overpaid in 2024/25.
