Colleges worst hit by the Government’s funding squeeze have urged further education paymasters to keep their promise to reward them for their efficiency.

Ministers pledged when colleges were made independent of local education authorities that those with the lowest costs would be rewarded. But the colleges say that three years on the inefficient ones are still being rewarded.

Seventy-three FE and tertiary colleges are putting pressure on funding leaders to change a system which they warn is badly hitting the service to students.

In a letter this week to Sir William Stubbs, Further Education Funding Council chief executive, the colleges claim larger classes, limited extra-curricular activities and lower investment in buildings and equipment are among the consequences of the funding squeeze.

They insist the historically-dictated pattern of funding across the sector is being tackled too slowly, distorting competition with other institutions.

College budgets are divided into units under a complex FEFC funding formula. The cash value of the units differs from college to college, depending on how generous LEAs were before incorporation.

The FEFC is trying to make the cash value of units equal for all under its policy of convergence. But colleges at the top end of the funding scale are not being brought into line fast enough. Therefore the cash is not being released to help the most needy.

Andrew Middleton, principal of Stamford College, Lincolnshire, called for a single, standard unit of funding for all colleges.

He said: “Convergence has not worked and is causing serious problems. In my own college, I am going to have to amputate limbs in terms of curriculum and services.”

Colleges with the good fortune to inherit higher funding levels had a competitive advantage in the race for students, with the means to offer incentives such as free transport and fee subsidies, Mr Middleton added.

Their campaign coincides with the decision of six leading organisations for FE and sixth-form colleges to lobby ministers against recent cuts and unacceptable levels of funding for the sector as a whole.

They insist the efforts to end differences in spending on the same courses among different colleges nationwide are being hampered by repeated Government cuts.

The six associations are the Association for Colleges, Colleges’ Employers’ Forum, Association of Principals of Colleges, Association for College Management, Sixth Form Colleges Association and Sixth Form Colleges’ Employers’ Forum.

A joint policy paper, to be published in two weeks, will press for a Government rethink on a wide range of funding issues including the Pounds 100 million capital spending cuts over the next three years.

Leaders of the organisations were this week optimistic that ministers might relent over the cuts. Higher education minister Eric Forth hinted that the Government might rethink its planned Pounds 550 million university capital spending cuts.

He told vice-chancellors: “One does not make decisions that are forever. They can be revised.”

John Brennan, policy director for the AFC, said: “If the Government is going to rethink HE spending, we expect the same for FE. This point will be made clear by all of our organisations when we make a joint approach to ministers. ”

Others were deeply pessimistic about any improvement for FE. They say that colleges are out of favour with James Paice, FE minister, whose allegiance they see as being closer to the training and enterprise councils, given his roots in the Employment Department.

Government sources said that there may be a big rethink in the autumn public expenditure settlement but it is unlikely to influence capital spending significantly as ministers were committed to the Private Finance Initiative.