But after Government demands for 5 per cent efficiency savings, it looks more like a cut to college managers, many of whom will fail to reach expansion targets and gain a much-needed cash bonus from the FEFC. Ministers, their advisers and industrialists recently used colleges as a model which the private sector should look to. If this is so, where are the rewards?

Demands for 8 per cent growth in student numbers are not the only pressure on colleges; other parties are after the students. Many principals say the targets are unrealistic. New and expanding sixth-forms are pulling students out of the sector.

When the training and enterprise councils go into the business of learning credits for school leavers this autumn, colleges will lose control of Pounds 6 million rising to Pounds 20 million which will go to the Department of Employment.

The lessons of pilot training credit schemes were clear: TECs use the controls to drive down costs in the name of efficiency savings. And as discretionary awards from cash-strapped LEAs continue to fall - as will numbers of school-leavers for the next two years - the growth targets for FEFC-funded students in colleges look increasingly remote.

Evidence in this FE Update reveals that colleges are showing remarkable ingenuity in getting out and recruiting in new areas - most notably, the adult market (pages 2-4). But success here brings its own funding burdens, as the costs of courses for adult returners and under-achievers are high and the small amount of extra cash for exceeding targets can be a deterrent For example, Scotland has been the most successful area for adult recruitment. The reward? James Watt College expanded from 600 to 2,500 students in four years. This means it is short of only half the cash it needs, as against three-quarters (page 4).

Having recruited well, and having got students through their new vocational courses (pages 5-7) colleges face an even more severely cash-limited HE market which, in the words of Ruth Gee, chief executive of the Association for Colleges, is in danger of “cutting off its nose to spite its face” by limiting the number of FE colleges which can offer degrees and diplomas. The impact on student retention would be devastating (pages 10-12). With ever-greater demand for local degree and diploma courses in colleges, limiting outlets must be counter-productive.

But perhaps the greatest scandal is the under-funding of FE college libraries (page 13, 14), highlighted in the FEFC chief inspector’s recent annual report. Under-funding of libraries may create a “learning bottleneck”, as the Library Association points out, because demands have outstripped funds now for over five years.

An FEFC survey of libraries is called for to identify exact needs. But what will the consequences of such a survey be? The world of FE is full of studies identifying desperate shortages.

The reply from ministers is that it is up to the colleges how they spend their cash. But should libraries - the heart of the new flexible learning system, essential to the success of a rapidly growing student population - be subject to a limited cash lottery?

Principals are becoming increasingly cynical about the whole exercise. What ministers call expansion looks increasingly like a shifting of the same pot of money from one quango to another, with cuts being imposed at every stage in the name of efficiency savings.

Ian Nash

Editor, Further Education Update