The Scottish Office is to be called in to resolve an angry clash in Clackmannan involving an independent nursery and the local authority, a scenario predicted only three weeks ago by the Scottish Independent Nurseries’ Association.

Eileen Flanagan, head of Rosemount nursery and out of school club in Dollar, is fighting the council’s plan to withhold funding under the Government’s scheme of universal pre-school provision for four-year-olds. Mrs Flanagan has accused the council of insulting the private and voluntary sectors and lying about details of the scheme.

The council says it is already meeting the Government’s priorities for early education and has no need to draw on the services of private nurseries when budgets are tight. It has not ruled out paying for places and year-long provision if parents who send their children to Rosemount are on family credit.

But Mrs Flanagan contends the council has breached the spirit of partnership spelt out in the consultative paper on early education. “I expect the Scottish Office to throw this out. This is discriminating against working mothers of four-year-olds and will cause a great deal of hardship,” she said.

Dr Eric Wilkinson, of Glasgow University’s education department and a quality assurance adviser to the independent nurseries, said Clackmannan’s position appeared to be “not in the spirit of the consultation paper, and that means sharing out the bounty”.

The independent nurseries have repeatedly warned ministers that they are at the mercy of councils - now the controlling agencies for pre-five funding - and predicted some could be driven out of business. They also argue working parents fare badly under the new regime with its focus on two-and-a-half hour nursery sessions.

Mrs Flanagan says: “There is specific funding available under Tony Blair’s pound;1,100 for pre-school children. It’s not for Clackmannan to take away the pound;1,100 from children who are here because they cannot access the other nursery schools due to their two-and-a-half hour sessions and 15 weeks’ holidays. This is morally wrong.”

An early years forum in Alloa last week discussed the draft pre-school plans but failed to establish common ground with the private sector. Sandy Wilson, Clackmannan’s head of lifelong learning, said the council was not implementing a voucher scheme by another name. “It is a different model we are looking for. When one has choices that means priorities.” Informal discussions with the Scottish Office did not indicate the council was breaking guidelines, Mr Wilson stated.

Eighty-eight per cent of Clackmannan four-year-olds already attend a local authority nursery, 8 per cent attend privately and 2 per cent are in playgroups. “It is difficult to see how we can be anything other than the lead partner,” Mr Wilson said.

The council wants to use its share of national pre-five funding to improve the quality of provision, for example, by deploying teachers in playgroups, and by extending provision for three-year-olds via playgroups. The council considered removing funding from the local branch of the Scottish Pre-School Play Association but is now likely to backtrack.

Mr Wilson said it was important to separate pre-school education from child care. The length of session in council-run nurseries, a complaint made by Mrs Flanagan, was irrelevant. “The same argument could be made for primary education.” But Mrs Flanagan retorted: “We live in the real world and the real world does not fit into neat little boxes,” she said.

Rosemount opens from 8am to 6pm and has 72 children, aged two to four. Mrs Flanagan said: “We have got 24 three-year-olds who will get pre-school education in August but the grant will not be given to them. It is going to be kept by the council for its own nursery schools. The council wants to be in partnership with itself.”

No more than four parents of the three-year-olds would be able to pay the going rate for nursery education and Mrs Flanagan said the part-time working mum was disadvantaged. “It does not allow you access unless you can find a childminder and there are no childminders in Dollar for love or money.”

Mary Wales, development manager with the Scottish Pre-school Play Association, said there seemed to be a concerted effort to cut out the voluntary sector. Clackmannan was ready to join North and South Lanarkshire in cutting funding to local association branches. “It’s all very well saying partnership, but the reality does not seem to be happening,” Mrs Wales said.