Helena Kennedy, the QC, broadcaster and writer on criminal law, will head the committee, which will advise the council on what could and should be done to encourage more people to take advantage of further education and training.

Her appointment comes in a week when protests over likely redundancies hit a new peak, with colleges saying they will be forced to make cuts in the very areas where drop-out and failure rates are highest.

College bosses will find out today whether the further education sector has met its recruitment targets, as the first year of the new funding system draws to a close. Figures will be released at the FEFC meeting in Birmingham.

Government demands for an 8 per cent rise in student numbers and a 5 per cent efficiency saving have caused the biggest squeeze in FE in recent years, college principals say. Against these pressures, principals must submit budget bids and spell out their recruitment targets for 1995-96 by February 20.

Early signs are that almost half the colleges in England and Wales will miss the targets and face considerable cuts. The FEFC estimates that one in 20 colleges will be in financial trouble, but a survey by the National Association of Teachers in Further and Higher Education paints a more disturbing picture, with warnings of thousands of job losses.

The Association of Principals of Colleges is due to meet with FEFC leaders within the next two weeks to push for a rethink on funding. APC president Dave Gibson said: “We know that several colleges are facing serious financial problems at the moment and it is too simplistic to say that it is all down to bad management.

“Part of the problem is that they were all funded differently when they were under local authority control and now the FEFC is trying to even out the funding.

“At the same time the unit cost per student has gone down and colleges are having to compete with each other for students in order to meet the recruitment targets imposed on them.”

The FEFC says the earliest chance of a change in the formula would be 1996-97. But it is due to build in a recognition for child care costs this coming year and promises that help will come from the deliberations of the Kennedy Committee. It will look at the case of colleges with a large number of disadvantaged students.

Helena Kennedy said this week she recognised the need for urgent action as there was “increasing polarisation between those with high-level skills and access to jobs and those with neither.”

Ways had to be found of drawing people back into college and giving them a second chance. “For those who fall out of the education system without knowledge or skills, the prospects are very bleak and the social and personal costs are enormous.”

Helena Kennedy is currently one of the highest-profile campaigners against disadvantage and injustice, particularly among younger people. She is chair of Charter 88 and of the Standing Committee for Youth Justice. She is also chair of the commission of inquiry into violence in penal institutions for children, the creator of the televison series Blind Justice and chancellor of Oxford Brookes University.

Her committee will sit for two years. It will investigate why some groups of students do worse than others and try to come up with strategies to improve the way colleges are funded.

However, with the NATFHE survey predicting “a huge wave of redundancies” after the FEFC spending announcements for 1995-96 today, a spokeswoman for the union said it would need considerable reforms to put things right: “Colleges are covering their backs and expecting the worst.” The survey suggests that every region would be affected, with high spending inner city colleges likely to be worst hit.

Hackney College in North London must cut 39 full-time-equivalent jobs, and dozens of part-time staff will go as a result. Its problems are made worse by a 17 per cent cut in money from the London Borough of Hackney, which funds adult classes.

The college said: “We are in a deprived area and have always had high costs but we are being put under pressure to deliver courses for the same cost as the rest of the country.”

In the North West of England, 150 redundancies are likely at Liverpool College. North Trafford College is making 25 FTE staff redundant to save Pounds 600,000 and St Helens College looks set to make 20 compulsory redundancies.

At least five colleges in Yorkshire and Humberside are having budget problems, including Sheffield, the largest FE college in Europe. Sheffield principal Ken Ruddiman said: “We are trying to cut back on the managerial side and rationalise our premises before considering cuts in lecturers.”

In the West Midlands at least 25 of the 45 FE colleges share full-time lecturers. Some colleges are switching to part-timers because they are cheaper.

A spokeswoman for the FEFC said: “One of our aims is to iron out the wide disparities in funding under the old system. We are aware that some colleges are experiencing difficulties but this is partly due to inherited deficits. ”