Ken Young issued his warning to the National Assembly for Wales - which controls FEFCW - at the annual public meeting of the Welsh funding councils held in Cardiff last week. He said staff in the 28 Welsh colleges should not draw negative conclusions from the delay, but that it was understandable that the failure to publish was creating concern. There have been three mergers since FEFCW was created in 1992.

The report on the potential for mergers in further education, together with a similar report on higher education, was commissioned by the Assembly’s post-16 education and training committee. Both were submitted in September and the higher education document was released last month. Derek Adams, the Assembly’s head of further and higher education, told the meeting he could not say when the report would be released, but he expected it to be published “in due course”.

Merger concerns struck a rare negative chord in a meeting whose predominant note was cautious optimism. John Andrews, the joint chief executive of the funding councils, said further education was in better shape than at any time he could remember and that none of the 28 colleges currently had negative reserves. He said a favourable financial settlement last year had provided a much needed boost: “I feel personally very confident about the future of the sector and could not possibly have said that 18 months to two years ago”.

The majority of Welsh colleges can also expect to benefit once the first programmes under the European Social Fund’s Objective One project begin next year. But Professor Andrews warned that colleges should not become over-dependent on European programmes: “We have advised colleges that they should not rely on European funding as part of their core. They should not take on expenses they cannot fund out of other income.”

Both Mr Young and his Higher Education Funding Council for Wales counterpart Sir Philip Jones emphasised the continuing importance of cross-sectoral collaboration, in particular welcoming the extension of the Training and Consultancy Services (TACS) programme, which aims to develop commercial and business links for expertise within institutions, into further education. The FEFCW has provided a pound;200,000 grant for TACS to supplement initial funding from the Welsh Office (now the National Assembly).

Sir Philip said the provision of higher education in FE institutions was a vital part of his council’s strategy for widening access.