Nursery vouchers will fail without extra capital from the Government, says the Pre-school Learning Alliance in a new report which is highly critical of the scheme.
The alliance wants local development boards set up to share out any additional money - a proposal which local authorities favour.
The alliance, which has surveyed 40 per cent (171) of its playgroup members in areas where vouchers are being piloted, warns: "The scheme relies too heavily on market forces as a means of expanding provision. Competition for four-year-olds may create a loss of places."
"Local authorities feel particularly threatened because any drop in the number of four-year-olds in maintained provision will result in a reduction in funding. Action to compensate for this by admitting more four-year-olds into reception classes has no educational justification and may force non-statutory providers to close." It adds that there is no guarantee that places will be created where they are needed.
But the alliance also reports four crucial positive findings: 94 per cent of playgroups have registered to accept the Pounds 1,100 vouchers; 27 per cent have increased the number of sessions offered to four-year-olds; the demand for training has risen significantly; and 80 per cent believe parents value vouchers.
However, it is worried that the number of voucher-bearing four-year-olds varies from 53 in one playgroup to only one in another. The scope for investing voucher income in training, additional staff or new premises will therefore be significant in some cases and limited in others, says the alliance.
The organisation, which has 20,000 playgroups in England, proposes development boards in each local authority with representation from statutory and non-statutory providers and parents. Vouchers would still follow the child but the boards would decide how much extra capital was needed to ensure that enough good places were available. The boards would bid for extra money put up by the Government to expand nursery education.