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Chancellor hands FE pound;200m to meet September guarantee

But pre-Budget report's cash injection blighted by pound;300m more cuts to adult skills over three years

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But pre-Budget report's cash injection blighted by pound;300m more cuts to adult skills over three years

Funding for 16- to 19-year-olds has received an unexpected boost with an extra pound;200 million next year - but expensive colleges and schools face a crackdown.

Chancellor Alistair Darling's pre-Budget report outlines how the Department for Children, Schools and Families will commit more money to ensure the September guarantee is met and to prepare for raising the participation age.

As well as the pound;200 million boost, cash for 16-19 places will rise by 0.9 per cent in real terms each year under the Chancellor's plans - equivalent to an extra pound;60 million or nearly 14,000 places. The extra cash will help to stave off cuts of 4.5 per cent, which were predicted in a leaked memo last month unless the DCSF secured extra funding to meet the increasing number of students.

But adult skills will see a further pound;300 million cut by 2013 on top of the pound;340 million of savings identified for the 201011 budget, despite denials from the Department for Business, Innovation and Skills (BIS) last month that any further cuts were being planned.

The report said the cuts would come "by reducing funding not directly supporting learner participation and lower priority adult skills budgets, increasing co-funding of training, and further efficiencies in the delivery of learning to focus spending on those people that need it most".

Julian Gravatt, assistant chief executive at the Association of Colleges, said: "It's good that the DCSF and Treasury have recognised the large number of extra 16- to 19-year-olds in education and are putting more money in, but that doesn't mean it's not going to be difficult for the next couple of years.

"There is nothing left in the adult skills budget that isn't a priority now, and there are administration costs. They should look at the pound;100 million for the Skills Funding Agency and the money spent on the Learning and Skills Improvement Service."

With recent figure showing more than 130,000 17-year-olds out of work or in jobs without training, many more education and training places will have to be found by 2013 when the first phase of raising the participation age comes into force.

The Learning and Skills Council (LSC) has said it plans to make the money go further by ending "transitional rates" paid to a handful of colleges, but mostly to costly small sixth forms. These institutions are given several hundred pounds per student above the standard national rate, but their funding will be brought down to size over three years.

Nick Linford, a funding and performance consultant, said the change would mean a fairer use of funds. "In some cases they receive more than pound;1,000 extra per student, while most of FE is on the national rate," he said. "If local authorities are expected to be provider neutral in commissioning from April, funding rates should not be discriminatory. We need a level playing field."

Even if transitional rates are scrapped, schools still benefit from a funding rate that is 3 per cent higher than colleges, he said. Colleges and schools running large numbers of expensive courses such as international baccalaureates or Diplomas, or with many students taking large numbers of qualifications, are also due to face more stringent caps on their rates under the LSC plans.

Other pre-Budget report provisions give Manchester and Leeds new powers over adult skills, similar to those held by the London mayor. Manchester will also gain a role in 16-19 learning and apprenticeships.

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