Some colleges have had their expansion plans rejected. Many others have only a third to a half of the extra cash they bid for. They say it has left them with an impossible dilemma as they have already recruited thousands of students for September.

Individual colleges were this week notified of likely budgets for 1995-96. Twenty-one out of 30 principals who spoke to The TES were angry about the amounts. One said: “I am beside myself with rage.” Another said: “We will survive but I am extremely disappointed.”

Mike Wardle, secretary of the Further Education Funding Council, said these were provisional allocations, against which colleges could appeal. Also, the criteria for how the cash would be shared had been given to all colleges.

But the chances of any significant change to the allocations appear slim. Mr Wardle said: “There was substantially more money bid for this year than was available. This led to a greater number of bids not being accepted for funding.”

But this has failed to quell the anger. Many principals say the council has put too much emphasis on Government demands to drive down costs at the expense of expansion.

Adrian Perry, principal of Lambeth College, said: “We bid for 10 per cent and got 6 per cent. We will effectively have to teach 6 per cent more students on the amount of cash we had last year. The college has already lost Pounds 800,000 with the collapse of South Thames TEC.”

Park College in East Sussex had its bid for 20 per cent expansion rejected. A neighbouring sixth-form college has also had an effective freeze on expansion imposed by the FEFC. The old technical colleges introducing high-cost National Vocational Qualifications were among the hardest hit.

Full details of the final 1995-96 allocations for Wales were published this week. Figures for England will be published on May 18.

* A breakthrough in the two-year dispute over new contracts for lecturers came this week as leaders of their union, NATFHE, began talks at the conciliation service (ACAS) with the Colleges’ Employers’ Forum. Both sides expressed “cautious optimism” and said they were willing to move on the fraught question of a single contract for all lecturers covering hours and including safeguards against exploitation.

Efforts to push through local agreements since the collapse of national talks a year ago have not been fruitful. With national conferences looming, leaders of both the CEF and NATFHE are under tremendous grassroots pressure to settle. The FEFC also confirmed this week that colleges without new contracts by June will be affected by Government plans to withhold Pounds 50m of grant as a lever.