Ian Graham, head of John Wheatley College, Glasgow, which serves some of Scotland’s poorest communities, told a conference on Monday that the future was “not tremendously rosy”.

In a bitter attack on the Scottish Office and its methods for allocating funding, Mr Graham protested: “Social exclusion is actually excluded from the debate about FE funding.” Ironically, there was now a penalty for tackling it.

John Wheatley had more than pound;100,000 cut from its budget but no account was taken of its outreach non-certificate work. It was the “vital first step” for many people, he said.

Mr Graham, a former senior official in Strathclyde Region, forecast Scottish colleges would also lose a third of the pound;22.5 million they currently receive from the European Social Fund. “There is going to be a chill wind blowing from the year 2000 onwards,” he predicted.

Local authority funds are under similar pressure, he said, with community education and voluntary organisations hard hit. Urban aid cash, for so long a supporter of initiatives, is being redirected while the local enterprise companies seldom saw informal adult education as a way of promoting training.

Mr Graham believed some LECs would top-slice cash for New Deal training initiatives from colleges, although they were already funded for it. A figure of 5 per cent of costs was being mooted.

At the same time, the Government was setting up new colleges in several parts of Scotland, including the University of the Highlands and Islands, but failing to expand resources. Mr Graham also feared the new Scottish Further Education Funding Council would cost pound;3 million a year to run, are likely to be trimmed from college budgets.

Brian Wilson, the Education Minister, said that plans for a comprehensive system of lifelong learning were “about long-term planning and that means shifts in attitudes and thinking as well as in the ways that learning is managed and delivered”.