The cost of next year's nursery voucher pilot will total Pounds 22 million - and more money will be spent on administering the scheme than in providing 4,500 extra places for pre-school children.
The Capita group, whose software system SIMS is used by more than 55 local education authorities, is to be paid Pounds 5m to run the scheme, education junior minister Robin Squire revealed last week.
He hoped the vouchers, worth Pounds 1,100 per child, would open new pre-school places for 4,500 children - at a cost of Pounds 4.95 million.
The bulk of the budget for the pilot phase of the scheme will go on refinancing 11,100 nursery and school places which already exist, mainly provided by local authorities.
And the disclosure that more money was being spent on bureaucracy than creating new places prompted criticism from Estelle Morris, a member of Labour's education team, that the cash would have created 8,000 extra part-time places for four-year olds. Just four councils, one-third of the original target of 12, have agreed to pilot the nursery voucher scheme from April next year.
Parents in each authority will receive vouchers to cover part or all of the cost of nursery education over the next three months, but they are not guaranteed a place.
Labour councils have refused to take part in the pilot. Only Tory-held Wandsworth, Kensington and Chelsea, and Westminster, have committed themselves. Norfolk, which is hung, has provisionally agreed to take part (see below).
Between them, the councils contain an estimated 3 per cent of the 150, 000 four-year-olds not in school or nursery education.
The scheme will be extended to all authorities in 1997. Once operating fully, it will cost more than Pounds 700m to run: Pounds 165m will be new money, and the rest will be clawed back from local authorities.