He is expected to announce a cash injection of at least pound;600 million for 2001-2002 - the third year of the Government’s comprehensive spending review settlement -when he addresses the annual conference of the Association of Colleges in Harrogate.

The cash will prepare the ground for the major reforms to be spelled out in a Learning and Skills Bill. Legislation will be unveiled in the Queen’s Speech, one week before his keynote speech at the AOC.

The annual conference has become for colleges what the North of England education conference was for schools in the 1980s - the forum for Government to make major spending and policy announcements.

Mr Blunkett will use it to spell out measures to reform the youth and careers services, and recruit and retain more part-time students. He will also announce extra cash for the University for Industry to lower barriers to inclusion.

Government sources told The TES that Mr Blunkett expected to be a “considerable beneficiary” from Chancellor Gordon Brown’s war-chest before the next election. The rise would be a significant increase on the 8 per cent already secured for the second year.

Mr Blunkett wrested pound;725m from the Treasury for the first two years following the spending review. Benefits this autumn include a 100 per cent rise in cash for education maintenance allowances and to ease hardship.

But the sector was still nervous about his ability to continue winning more cash for colleges. However, the Government source was confident that an increase of “at least 10 per cent” would be won, to sustain growth and help tackle funding disparities between colleges and school sixth forms where an average of pound;1,500 more is spent on each A-level student.

A rigorous improvement programme will be unveiled in Harrogate, including further measures to widen student participation, raise standards, improve teaching and management training and increase spending on transport and childcare.

The AOC and the lecturers’ union Natfhe have two further items on their shopping lists to the Treasury: increased cash to improve staff pay and money to tackle “the horrendous mess” of access funds which, they say, is still a major deterrent to recruitment and retention.

College principals and governors drove the message home also to the Tories, at a private meeting during the party’s annual conference in Blackpool this week, at which further and higher education spokesman Tim Boswell described the White Paper as “ok as a press release”. The AOC said this year’s 3 per cent rise would not be enough to retain staff and meet government recruitment targets.

Ministers are therefore looking to secure cash from other sources.

Training and enterprise councils were warned by lifelong learning minister Malcolm Wicks this week to “behave responsibly” in the run-up to their demise, when they will be replaced by learning and skills councils.

He spoke privately to London TECs on Monday about their concerns. After the meeting, a government source said: “Essentially he warned them not to run away with the money.” TECs have a budget of pound;1 billion and have been criticised by ministers for wasting huge amounts on administration.