Overpayments were made to Early Years providers in Westminster and Kensington and Chelsea, because the wrong postcodes were inputted to a system that calculates funding
A data entry mistake with software has left London schools and nurseries needing to repay hundreds of thousands of pounds in funding they were not meant to receive.
Reports by Kensington and Chelsea Council and Westminster City Council, which share responsibility for children services, found Early Years providers were overpaid more than £650,000 in the deprivation funding supplement during the 2024/25 financial year.
Westminster City reported an overspend of £584,000 but says only £351,000 was identified as overpayments. The council said it’s still working to identify issues that contributed to the rest of the overspend.
Kensington and Chelsea overpaid providers by £302,000, records show. Both authorities aim to claw back the funds by July 2027, according to council reports.
The mix-up happened prior to November 2024 when the wrong postcodes were uploaded onto the funding portal, known as Synergy, resulting in too many children being eligible for the payment. Synergy is a product developed by The Access Group, a business software company.
The portal was meant to distribute funding to schools and nurseries in the six most deprived areas according to bands defined by the Department for Education. These bands consist of 37.5per cent of the most deprived areas in England.
Instead, deciles 1-6 were uploaded, which consisted of 60pc of the most deprived areas in England. An investigation also found “additional concerns” about the accuracy of the data exported from Synergy which meant more minor corrections were needed, according to a report by Kensington and Chelsea Council.
According to the council, since there is no additional funding in the Early Years budget, providers are being asked to repay the cash. They can either repay the amount as one lump sum, pay by the end of March or over 10 payments.
During Monday’s School Forum meeting, a representative said the most hard-pressed providers would be offered a 20-month repayment plan. It comes as members of the forum expressed concern about recouping the cash from a sector they said was already being “squeezed”.
Another representative said all but one provider will be able to repay, with the lost amount – which wasn’t shared – not being very significant. According to the council report, £749,495 was paid in 2024/25 instead of £446,546.
The council expects to claw back the cash in two tranches. The first, between October 2025 and March 2026, is expected to fetch £181,770. Another £121,179 is tipped to come back by July 2026.
Westminster City made £1,099,418 in payments when it was meant to hand out £747,628. Despite identifying £351,000 in overpayments, it can only claw back £347,000 after one of the providers closed down.
According to both councils, its systems have been reviewed and they are confident similar issues will not reoccur in the future. They also said they are confident their methodology is now accurate.
Payments were paused in Kensington and Chelsea in the summer while council officials carried out an investigation. Officials said they hadn’t realised overpayments were made until the end of the last financial year.
According to the Department for Education, Synergy is used by more than 90 local authorities. Steve Sawyer, Managing Director at Access Health, Support and Care, which manages the software, said: “We’re aware of the deprivation funding issues which have been reported and understand the importance of accurate payments to childcare providers.
“The council reports indicate that incorrect postcode parameters were entered into the Synergy system – deciles 1-6 rather than the required deprived-area bands. This resulted in the system calculating payments based on those parameters.
“Synergy processes millions of pounds worth of education-related transactions annually across UK local authorities. The system performs calculations based on the data and parameters it is configured with, which in this case led to the overpayments identified.
“We’re committed to working with all our partners to ensure systems operate effectively for everyone who depends on them.”
Westminster City Council said it cannot comment while an investigation is ongoing but does expect it to conclude at the end of this year.
Have you been affected by this? If so, contact Adrian at [email protected]
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