North Lanarkshire is the latest to consider inviting private tenders for more than 22,000 children’s footwear and clothing grants, which are paid out to the neediest children in a fixed Pounds 50 per capita sum.

Councillors have delayed a decision pending a fuller investigation of the implications. Officials proposed that tenders should be invited to avoid overspending on the council’s Pounds 1 million clothing budget for the third year running. The education department believes it could save as much as Pounds 200,000.

But there are fears that families in need, particularly in rural areas, will be put off and that small shops may lose out to large retail stores.

South Lanarkshire, South Ayrshire and Renfrewshire already insist that parents cash 30,400 vouchers at Marks and Spencer and Littlewoods netting the companies more than Pounds 1.5 million. The total market for clothing and footwear grants is put at Pounds 11 million a year.

Charles Gray, North Lanarkshire’s education convener, is wary about following other authorities and says “vouchers could infringe the dignity of families”.

Officials acknowledge this but suggest successful bidders could issue clothing coupons that would be indistinguishable from gift vouchers. Mail order catalogues were another suggested solution to the problems of travel to a designated retailer and the risk of social stigma.

The committee felt, however, that problems would still remain if the council was locked into one supplier, posing difficulties for parents in outlying areas as well as for small retailers denied the business.

Gordon Murray, former SNP provost of Cumbernauld, said: “There is no Littlewoods or Marks and Spencer in North Lanarkshire.” Many families would prefer to go to stores like What Everyone Wants rather than Marks and Spencer, Mr Murray said. He is opposed to “taking Pounds 1 million out of the pockets of small traders”.

A different plea came from Catherine Craigie, a Labour councillor, who declared: “Let’s get into the real world. Youngsters don’t want to come to school kitted out in Marks and Spencer and Littlewoods clothes. We should deal with sports shops and places that sell the kind of things kids want to wear.”

But Mr Gray insisted: “All we are asking is a further investigation so we can devise a scheme which saves us money but still gives pupils the Pounds 50 they have at present.”

The experience of South Lanarkshire demonstrates some of the pitfalls. The council received only three tenders for processing 16,000 grants and all were awarded part of the business. Two were children’s wear shops in Larkhall and Blantyre but the bulk of the contract went to Marks and Spencer.

The anticipated savings were eroded, however, because the council had to issue travel passes for parents from rural areas who had to buy and collect the footwear and clothing on an appointed day.

David Evans, secretary of the retail section on Hamilton Chamber of Commerce, supports the scheme in principle. “It ensures the clothing grant goes to the children and is not dissipated in some other way. And there is a financial gain to the authority if the contract is put out to tender, which is good commercial practice.”

A fair tendering process is a crucial factor, Mr Evans said. Parents and retailers had been disadvantaged in the first year of operation in South Lanarkshire because the contract had been briefly advertised only in the Herald newspaper.

Council officials are now consulting widely to thrash out a new scheme for the coming year, central to which will be attempts to make it more accessible to parents in rural areas. That, in turn, will depend on how many bids are received.

South Lanarkshire’s budget for footwear and clothing grants is Pounds 650,000 and the council estimates that tendering can achieve a saving of 7 per cent.