Well-off parents who send their children to independent schools stand to gain the most from the voucher scheme. Since nearly all state school children begin reception class during a term when they are still four, at least one-third of the voucher’s value will be “neutralised” - coming from the local authority budget and going back to the school. However, parents planning an independent school education for their children will end up with a full Pounds 1,100 subsidy in their pockets.

The scheme will work like this:

Parents will be invited to apply for vouchers worth about Pounds 1,100 through the child benefit system, and will receive them through the post.

They will be good for three terms, beginning the term after the child turns four.

The voucher will be exchangeable for:

* a part-time place, five half-days a week in any independent, voluntary or state institution providing nursery education;

* a full time place in a reception class;

* up to a full-time place in a playgroup;

* A combination of these.

Redemption arrangements will enable them to mix and match pre-school provision from one term to the next.

Vouchers will make little difference to parents whose children are in existing state provision for all of their fourth year.

There is nothing in the plans to ensure that those parents who at present have no state or private place for their children will be provided for; this is to be left to market forces.