Parents cashing in their nursery vouchers for playgroup places will only get half the value of those going private, it has emerged.
Playgroup leaders were shocked to discover that they will get no more than Pounds 550 a year for each four-year-old attending five sessions a week. They add that this fact was not disclosed during a briefing with Eric Forth, the Education Minister of State, on the day of the voucher scheme's launch, and only emerged during later conversations with officials.
In most cases, the remaining Pounds 550 will go back to the Treasury. Meanwhile, private nurseries, working to the same quality standards, will get the full Pounds 1,100 for five half-days a week.
Liberal Democrat education spokesman Don Foster says this is a "con" which will save the Treasury at least Pounds 50 million a year .
"It is totally unfair and totally unsupportable," said Margaret Lochrie, the PreSchool Learning Alliance's chief executive officer. "Many of our member preschools already cost more than the Pounds 550 per child which has been proposed. Others need additional funding to improve their resources and to expand their provision for children currently attending for fewer than five morning or afternoon sessions a week.
"Not only will Pounds 550 be insufficient to cover the costs of the type of education which is envisaged, it is in complete contradiction to the assertion that in future nursery education will operate on free-market principles. "
She welcomed the fact that ministers have agreed to look at the situation again.
The Pounds 730m voucher scheme will be funded with Pounds 545m of local authority money and Pounds 185m of new money and will cover the three terms after the child turns four. However, since most of the 200,000-plus four-year-olds in playgroups leave to start primary school before turning five, at least a third of each parent's voucher money will go back to local authority primary schools. For a parent whose child attends a playgroup half-time for two terms after turning four, the voucher would be worth just Pounds 326.66, since state education is free, unless their children go on to an independent school.
Under the scheme, announced last week, all services accredited to receive vouchers will have to meet the same quality threshold. "Under those arrangements it shouldn't matter what your institution is called," said Mr Foster. The voucher system was leading to three systems of funding: one for the voluntary sector, one for the private and a third for the state, he said.
"Gillian Shephard is known to believe that the system of vouchers is complicated and bureaucratic. Her worst nightmare is beginning to come true. She really is beginning to preside over a complete and utter muddle."
David Blunkett, Labour's education spokesman, said, "The Government concealed the truth about its initiative last week. Ministers did not tell the House that the voluntary sector is going to be put on a lower level than private provision."
Education minister Robin Squire has now written to the PLA saying that if the level is deemed to be too low they will look at it again, a move which has been welcomed by Mrs Lochrie.
A Department for Education and Employment spokesperson said the DFEE had looked at playgroups and found them inexpensive to run, normally costing parents Pounds 2 per session. It then decided that because not all playgroups could offer 10 sessions a week, they could offer five for half the voucher.
The decision is particularly surprising after the Government's wooing of the playgroup sector - partly thanks to its cheapness, according to some early-years specialists.
Last November Michael Richardson, head of the Government's task force on under-fives education, told the PLA's annual conference he understood their problems and wanted to help.
He hinted there would be more money and help for training for playgroups, and he gave an assurance that existing playgroups would not be allowed to suffer as a result of any decision to invest in nursery classes.