Funding Fiasco Forces London Schools to Return Thousands
A serious administrative error involving incorrect postcodes has left numerous schools and nurseries across two London boroughs facing demands to repay hundreds of thousands of pounds in funding they incorrectly received. The mistake, which occurred due to faulty data entry into a central funding system, has resulted in a combined overpayment of more than £650,000.
The Root of the Problem: A System Error
The issue originated before November 2024 when the wrong postcode parameters were uploaded to Synergy, a funding portal used by over 90 local authorities across the UK. The system, developed by The Access Group, is designed to calculate and distribute the deprivation funding supplement to Early Years providers.
Instead of uploading the specific bands defined by the Department for Education—which cover the 37.5% most deprived areas in England—the system was incorrectly configured with data for deciles 1-6. This broader classification encompasses 60% of the most deprived areas, making far more children appear eligible for the extra financial support than should have been.
The Financial Fallout for Councils
The financial impact has been substantial for both councils, which share responsibility for children's services.
Westminster City Council reported an overspend of £584,000. Of this, £351,000 has been confirmed as direct overpayments to providers. The council is still investigating the factors that led to the remaining portion of the overspend. In total, Westminster paid out £1,099,418 when it should have distributed only £747,628.
Kensington and Chelsea Council confirmed overpayments totalling £302,000. Its records show that £749,495 was paid out during the 2024/25 financial year, against a correct allocation of just £446,546.
The Repayment Plan and Sector Concerns
With no additional funding in the Early Years budget to cover the shortfall, both councils are now asking providers to repay the money. The authorities have set a deadline of July 2027 for the full amount to be returned.
Providers have been given several options to manage the repayments:
- Repay the amount as a single lump sum.
- Clear the balance by the end of March 2026.
- Spread the cost over 10 monthly payments.
During a recent School Forum meeting, concerns were raised about recouping the cash from a sector already described as being "squeezed." In response, a council representative stated that the most hard-pressed providers would be offered a more extended 20-month repayment plan to ease the burden. It was noted that all but one provider are expected to be able to repay, with the amount from the sole exception not being deemed significant.
Kensington and Chelsea has outlined a two-stage recovery plan, expecting to retrieve £181,770 between October 2025 and March 2026, followed by another £121,179 by July 2026. Westminster, however, faces a slight setback; despite identifying £351,000 in overpayments, it can only reclaim £347,000 because one provider has since closed down.
Investigation and Future Safeguards
Payments for this specific funding in Kensington and Chelsea were paused in the summer while an official investigation was carried out. Council officials stated they only became aware of the overpayments at the end of the last financial year.
The investigation also uncovered "additional concerns" about the accuracy of data exported from the Synergy system, necessitating further minor corrections. Both councils have now reviewed their systems and say they are confident that the methodology is accurate and that similar errors will not happen again.
Steve Sawyer, Managing Director at Access Health, Support and Care, which manages Synergy, acknowledged the issue. He stated, "We're aware of the deprivation funding issues... The system performs calculations based on the data and parameters it is configured with, which in this case led to the overpayments identified." He added that the company is committed to working with partners to ensure systems operate effectively.
Westminster City Council has said it cannot comment further while its internal investigation is ongoing, but expects it to conclude by the end of this year.
