Principals who must urgently cut staff to stay in budget say they will struggle to do so without the cash.

They are calling on the Further Education Funding Council to reintroduce its restructuring fund - cash which was available until last August to colleges making staff redundant. Colleges were able to claim a grant that went towards pay-offs but not pensions and other continuing costs. However, the FEFC withdrew the fund at the end of the 1995-96 academic year after handing out Pounds 55 million over the three years since colleges left local authority control.

This year it has opted to redistribute the cash - which was top-sliced from the overall grant given by the Government to further education - to all colleges as part of their individual budget allocations.

The FEFC says it may consider reinstating the fund in 1997-98, but its decision will depend on the cash given to FE for that year in the public expenditure round due to be announced in next month’s Budget.

Principals say they need the cash urgently in order to get redundancy programmes under way. Carol Gibson, principal of Oldham College, Greater Manchester, said her college had been forced to plan restructuring after the FEFC issued funding guidelines last June. These told colleges to plan for the worst.

That had left just over a month to put in applications for grants before the cash was withdrawn in August. She said: “We felt we needed longer than that to work out the best future for the college. We did not want short-term gain in exchange for a long-term foolish decision.”

However, the college now found it very difficult to carry out its considered restructuring plan without support, she said.

The Association of Colleges has written to the FEFC calling for the reintroduction of the fund. The association’s development director, John Brennan, said: “Colleges are getting caught in a double bind. If they have little money they can’t offer incentives to staff to leave, yet they need redundancies to survive.”