The Red Lane Nursery in Breightmet has already closed its baby room waiting list in an effort to save money. Some of its 20 staff have left, while others are being helped to apply for new jobs and the remainder may face redundancy if the unit cannot afford to implement a statutory 30 per cent pay increase.
A 90-day consultation period, involving staff, the local education authority and unions, ends in August. It is looking at the financial options for the nursery, which is privately run by Red Lane School but whose staff are on the local authority's payroll and therefore subject to a council pay review.
The purpose-built unit opened in August 2003, offering places for 56 children aged from six weeks upwards.
A Bolton Council spokesman said that the nursery had been plainly advised, from the start, of the implications of its management structure, including using the council's payroll and administration systems.
'The local authority gave them strong advice - and we can only give advice, in such situations - but they didn't follow it. We also advised them in writing to make allocations in their budget for the pay review. If they were having a short-term financial difficulty we could help with grants or loans, but this is going to happen every year.'
He said the council would work to ensure that overall pre-school provision in the area was not affected by Red Lane's difficulties.
The nursery has strong support from parents, with community links enhanced by some staff who were originally parent volunteers or even pupils at Red Lane School.
Nursery manager Shirley Nicholson has been involved in Red Lane School pre-school provision for 14 years.
She does not oppose the pay rise, which she said reflects the professional status of staff, but said the 30 per cent level was unexpected. 'Obviously we all knew the pay and grading review was going on, but we were expecting 5 per cent or 6 per cent. This is just phenomenal.
'So now we have the situation where we are looking after these children on this pay scale, while someone down the road at a different nursery will be being paid peanuts. Why should one child be worth more than another?
'Parents are quite upset, because for us to sustain this even in the short term, our fees are going to have to shoot up, and they can't afford it. We can last perhaps a few months - we have some contingency funding to allow us to do that. It would be a nonsense if the nursery had to close when it only opened six years ago.'
Ms Nicholson said she hopes that some solution can emerge from the ongoing consultation. The most likely outcome is for Red Lane to cater only for children aged three years and upwards, saving wages on the higher staffing ratios required for younger age groups.
'It will make things difficult for parents,' said Mrs Nicholson. 'We are well known for our standards of care, and moving a child to another nursery is not like using a different supermarket. It is such a major decision for parents.'