FAMILIES will benefit from more flexible nursery places under major changes to early years funding, but some schools and playgroups will lose thousands of pounds.

The Government has picked Cheshire East Council as a pathfinder authority so it can be one of the first in England to introduce a new single funding formula for nurseries.

The changes will happen in April, a year ahead of Staffordshire and Stoke-on-Trent, and will affect 5,700 youngsters.

It will ensure three and four-year-olds get the same basic £3.25 per hour spent on their education, whether they go to a state-run nursery class, a private day nursery or a voluntary pre-school.

There will also be cash incentives for offering flexible childcare, along with extra money for employing better qualified staff, being rated outstanding, supporting disadvantaged youngsters or serving a rural area.

At the moment, Cheshire East schools can only offer 12 and a half hours of free nursery education each week, usually through morning or afternoon sessions.

The changes aim to make the system fairer. Some schools are currently funded for empty places because their budget is partly linked to capacity.

But private nurseries only receive money for children on their books. The new formula will be based on children attending.

Cheshire East Council predicts 60 early years providers will lose out, but 122 will make gains.

Among the biggest losers will be Audlem St James' Primary, which could see £22,173 wiped from its budget, a 19 per cent drop.

Others counting the cost could include: Congleton's Marlfields Primary (down £9,839), Wyche Primary, in Nantwich (down £7,319), Peter Pan Pre-School, in Middlewich (down £3,967), Nantwich Pre-School Playgroup (down £3,526) and The Croft Pre-School, in Haslington (down £3,111).

Westminster Nursery School, in Crewe, the council's only nursery school, is due to receive £18,456 less under the formula, but will get a lump sum in recognition of its higher running costs.

The local authority is treating 2010-11 as a transition year, with nurseries only facing 50 per cent of their budget reductions.

Policy and strategy manager Gill Betton hopes redundancies will be avoided.

She said: "We are working very closely with settings to support them. There are going to be some who don't like it, but most providers agree it is a fairer system."

Jill Lloyd is manager of The Croft Pre-School, a registered charity that uses a village hall.

She said the impact would depend on how parents use their free nursery entitlement, which is going up to 15 hours a week from September.

She said: "Until then, we won't know our wages bill. Some parents will want five mornings or afternoons. Some children will come for two or three full days. We'll open from 9am to 3pm to offer flexibility. I think we'll be OK.

"But I worry it will be the end of some small pre-schools. Some can't offer flexibility."