Clarke in favour of nursery vouchers

Kenneth Clarke, the Chancellor of the Exchequer, has added weight to a growing Cabinet alliance in favour of issuing vouchers for nursery education.

Gillian Shepherd, the Secretary of State for Education, has been compelled to do more work on vouchers after her department produced a scheme that favoured a different option for fulfilling the Prime Minister's promise of an expansion of nursery education. Yesterday, she dismissed the idea of school vouchers for five-to-16-year-olds.

The battle over nursery vouchers is not yet fully resolved, but some ministers believe the balance has now shifted decisively in favour of vouchers.

Mr Clarke, Jonathan Aitken, the Chief Secretary at the Treasury, and John Redwood, the Welsh Secretary, are all pressing for nursery vouchers over the Department for Education's preferred option, which would allow private operators, playgroups and local authorities to bid for nursery money in areas where there is a shortage of places.

The main difficulty about a universal nursery voucher is that it gives public money to well-off parents, who are at present paying for private nursery places.

Mr Clarke and Mr Aitken, who spoke out on Wednesday in favour of nursery vouchers, insist that this could be overcome by exempting all top tax- rate payers. Alternatively, the rate of the voucher could be fixed so low - a few hundred pounds compared with the actual cost of a place (around £2,500) - that it could be available to all.

Means testing has political disadvantages, because it would benefit the less well-off but not middle-class Conservative voters who would probably be no better off than at present.

The Treasury is not convinced that vouchers would be as costly as Mrs Shepherd believes and has asked her to produce more detailed figures for introducing such a system.