A difference of Pounds 150-Pounds 300 between the Government's Pounds 1,100 nursery voucher and the true cost of a part-time place will mean higher staff-pupil ratios, cuts in the number of days available to four-year-olds, restrictions on places for three-year-olds and fewer full-day places, according to Elizabeth Maginnis, the local authorities' education convener.
Parents will be driven towards private-sector nurseries as the service deteriorates, Mrs Maginnis warned.
Commenting after the Scottish Grand Committee's debate on the voucher scheme in Stirling, Mrs Maginnis predicted that councils, such as Fife and Edinburgh, which have invested heavily in pre-school education for four-year-olds would be penalised. Authorities were not being permitted to charge parents the difference between the actual cost and the value of the voucher.
The authorities also fear that the Pounds 30 million of new money the Government has allocated will in fact be removed, or "top-sliced", from councils' existing spending on pre-school education.
But Michael Forsyth, the Scottish Secretary, told MPs on Monday that the voucher was set at a "realistic level", and this was supported by last week's Audit Commission report south of the border. Mr Forsyth promised a further examination of the value of the voucher once the pilot programme, due to begin in August in around six councils, has been completed.
"I believe we will see a great expansion of nursery education as supply comes forward to meet demand. The voucher scheme is a chance to liberate people and bring in the voluntary and private sectors," he said.
Mr Forsyth ruled out statutory support on the grounds that parents should not be told what to do by local authorities. Despite his suggestion that new provision would not necessarily be staffed by fully qualified nursery teachers, Labour accusations that quality would suffer were rejected. All providers would have to meet strict standards, be involved in self-evaluation and be subject to regular inspection by HMIs, Mr Forsyth said. Poor providers would be "driven out" by lack of parental support.
Malcolm Chisholm, Labour MP for Leith, accused the Government of putting money into the pockets of parents who already pay for nursery provision. South of the border, it was estimated that three-quarters of the cash would go to parents with children at a private nursery. Ten per cent of the new money in England was going towards administering the system. In Scotland, an equivalent sum would be Pounds 3 million. The voucher scheme was the "last botched act of the incompetent ideologues" in the Conservative party, Mr Chisholm said.
Helen Liddell, Labour's education spokesman, said vouchers were an attempt to introduce the market-place and competition into the comprehensive system. The Audit Commission's report had highlighted that the scheme was open to fraud.
As a former playgroup helper for four years, Mrs Liddell said her experience showed that voluntary groups were "no substitute" for a proper nursery education. The scheme did not include capital costs. A sub-plot behind the initiative was the privatisation of the Inspectorate, she added.
Rachel Squire, Labour member for Dunfermline West, said Fife's nursery provision, which catered for 97 per cent of four-year-olds, would be put at risk. The council currently spent Pounds 6 million on nursery provision, although the Scottish Office only provided Pounds 1.5 million of that. Provision might be restricted to children whose parents could pay.
* A consultation paper on the standards providers will be required to meet was issued this week by the Scottish Office. An evaluation of the pilot will be carried out by outside researchers.