Parents have received some of their money back after Sheffield Council accepted it charged too much under a scheme to provide musical instruments for youngsters.
The authority has apologised and said it had not intended to profit from sales through the scheme, which allows parents to buy instruments without paying VAT.
Instead, parents paid an administration fee, which used to be £10 - but is now equivalent to 10 per cent of the purchase price before tax.
For some instruments, the new scheme does not cover the council’s actual administration costs.
But for a £1,750 saxophone, the council’s £175 administration charge is £91.55 higher than the actual £83.45 transaction cost to the council.
The council has now agreed to an £85 cap on charges, ensuring that profits are not made – and has agreed to refund four parents who complained.
Coun Colin Ross, opposition Liberal Democrat education spokesman, said: “I was shocked to learn the council was pocketing profits of almost £100, ripping-off parents in what was an unfair and probably illegal policy.”
The council profited on sales of wood clarinets, saxophones, tenor saxes and alto saxes, but did not charge enough to cover costs on cornets, cellos, trumpets, flutes and clarinets.
Coun Jackie Drayton, cabinet member for children’s services, said: “The council actually subsidises more people than the income that is generated.
“But we will be refunding the four people who feel they have paid more than they should.”