The Education Secretary announced further education spending would increase by pound;1.5 billion in 20078 to enable development of the skills strategy and the 14 to 19 phase.

But colleges claim the extra funding is way below what is needed to deliver the aims of the strategy, and warn that targets may have to be less exacting.

The Association of Colleges estimates colleges will actually get pound;1 billion, with the rest going to school sixth forms, prison education, Learndirect, adult learning and work-based learning.

This is pound;600 million more than has already been allocated for 20056, but represents only a 5 per cent increase for colleges, compared to a 10 per cent rise for higher education, the association has calculated.

Dr John Brennan, the AoC’s chief executive, said: “The allocations are going to fall a long way short of what we believe necessary to deliver all the objectives that Government has set.

“We are looking forward to hearing how it aims to meet its own targets for the sector within the limited resources now likely to be available, or how they will adjust those targets to match that funding.”

Mr Clarke said the additional pound;1.5bn will take total expenditure on post-16 education, excluding higher education, to pound;11bn.

“This is a substantial overall investment which will allow the sector to meet growth in 16-19 participation,” he added.

Mr Clarke said it will also enable progress on delivering the “Success for All” goals and on reshaping the sector to become more demand-led, as set out in the Skills Strategy.

The lecturers’ union Natfhe said the extra cash means colleges will have no excuse for not implementing stage two of the pay deal for lecturers, due to provide an average 5 per cent increase payable from August.

Barry Lovejoy, head of colleges at Natfhe, said: “We are being told that around 60 per cent of colleges say they cannot afford to pay the full award.

“We are anxious to see it implemented to avoid further disputes.”