Nursery vouchers cost councils pounds 70m

Seven local authorities lose pounds 10m for under-fives under boycotted pilot scheme. Judith Judd reports

Seven local authorities will each lose more than pounds 10m of government grant for under-fives because of the introduction of nursery vouchers, according to figures released today.

By Friday only two of the 107 local authorities, Conservative Buckinghamshire and Wandsworth, had applied for the pilot scheme. The deadline for applications is today.

Gillian Shephard, the Secretary of State for Education and Employment, has said that she hopes 10 per cent of local authorities will take part in the pilot, which aims to fulfil the Prime Minister's pledge of a nursery place for all four-year-olds whose parents want it.

The new figures show for the first time the effect on individual councils of the Government's decision to hold back pounds 545m from local authorities and redistribute it to parents in vouchers.

Thousands of council nursery places could disappear if parents choose to spend their vouchers on private nurseries or playgroups instead, said Stephen Byers, Labour MP for Wallsend, who released the figures, compiled by Commons library.

Most councils are refusing to take part in the scheme, arguing that they will be unable to plan nursery places because there is no guarantee that parents will choose to spend their pounds 1,100 vouchers in local authority nurseries. Instead, they may go to private nurseries or playgroups.

Ministers say vouchers will give parents more choice and create a market so that more nurseries will be set up. They believe good quality local authority nurseries will compete successfully with their rivals.

Today's figures show that Essex, Hampshire, Kent, Birmingham, Lancashire, Hertfordshire and Nottinghamshire will each lose more than pounds 10m in government grant for funding under-fives.

They compare each local authority's current grant for the under-fives with the amount it will lose under the voucher scheme.

Mr Byers said the table showed the difficulties and uncertainties created by the voucher scheme, which was "an empty paper promise".

Existing nursery provision in local authorities which already had a high proportion of good quality nursery places was threatened because parents might choose cheaper alternatives. Some local authority places cost as much as pounds 2,100 and will not be covered by the voucher.

Robin Squire, junior education minister, said last week that 12 local authorities were discussing nursery vouchers with the department. Wandsworth says that most of its three- and four-year-olds already have nursery places.

The pilot is due to begin in February next year and vouchers will be distributed to parents of four-year-olds the following year. A spokesman for the Department for Education and Employment said: "We shall be saying something at the end of August when we have reached a decision about the pilot."