Private nurseries and child minders in Midlothian will be given an increase in the hourly rate paid for council places - but only for one year.
Midlothian Councillors have approved plans to raise the hourly rate for three to five year olds paid to private partners from £5.71 to £6.42 while keeping the current rate of £6.90 for two year olds the same.
However they said they could only commit to the new rate for this year and would wait to find out how much the Scottish Government was going to give towards funding of the 1140 free hours next year before deciding any rate changes.
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At a meeting of the full council today elected members were told that government funding for the 1140 hours was more than £1 million below what was needed to pay the new rate.
Officers said the government was looking at a new method of working out how much local authorities should receive to fund the additional early learning hours which are free to all families, and it was not known how much Midlothian would receive.
The decision caused concern for some councillors with Councillor Kelly Drummond asking "are we seriously saying 'here is a rise but next year we might be taking it off you'?"
Questions were asked by councillors who had been contacted by private nursery owners about claims that the local authority kept more of the Scottish Government funding for its own nurseries than private nurseries.
However they were told trying to compare the money given to council facilities and private partners was like comparing "apples to oranges".
Councillor Peter Smaill said: "One of the essential thrusts of the campaign we have seen is that there is an inequity in that the private sector accounting for roughly a third of places around Scotland only gets a fifth of the money.
"That seems to go against the principle of the same rate following the child. Are we at Midlothian Council helping ourselves to a bigger share of the pot or is it more complicated than that because there is some council money going into our regulatory or supervisory function?
"How can I look providers in the face and say you are getting an equitable deal albeit it is not fully funded by the Scottish Government?"
Dr Sinead Urquhart, executive business manager with the local authority, told councillors: "It is a difficult calculation to determine, we get our funding through financial years and applied 1140 funding is through academic years so ot would be comparing apples and oranges initially.
"We are looking into that work but it is very difficult to extrapolate that information to be directly comparable."
Fiona Robertson, head of education and children's services, said: "We have a range of in-house benefits in kind that we offer our private partners including training."
Ms Robertson said an FAQ sheet was being prepared for councillors which provided more detail on the benefits available to private partners.
The increase in hourly rate for three to five year olds was approved by councillors with Councillor Smaill abstaining from the vote.
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