WHEN Education Secretary Charles Clarke announced that FE and sixth-form colleges would get an extra pound;1.2 billion in funding over the next three years, principals naturally thought their budgets would increase.

Total funding for FE, Mr Clarke said, would rise by 19 per cent in real terms, with total funding per student rising by 7 per cent in real terms.

All colleges would get a 2 per cent increase in their unit rate of funding next year.

After being long regarded as the Cinderella of education, it seemed that not only had the FE sector at last been given the glass slipper, but Prince Charming too.

As negotiations with local learning and skills councils have unfolded, however, the picture is not as positive as it seemed five months ago, and some colleges are beginning to wonder if the slipper is too small and they have ended up with Buttons.

Last November’s announcement came after a summer of fiscal discontent in colleges.

While students were enjoying the long vacation, governors were doing their sums. A survey of 170 English FE colleges, carried out by the Association of Colleges, found 72 per cent of sixth form and general FE colleges were losing an average of pound;65,000 in 2002-3.

The association warned that 50 per cent of FE colleges were trading at a deficit and 20 per cent were in a “very serious” financial condition.

Last week, the AoC said the Government’s pledge to meet the country’s future skills was doomed to fail through lack of funding.

The Government, which aims for 50 per cent participation in higher education by 2010, is committed to paving the way by cutting the number of adults without level 2 qualifications by a million by 2006, increasing the number of 19-year-olds with level 2 and 3 qualifications (equivalent to GCSE and A-level), and improving the literacy and numeracy of 1.5 million adults with poor basic skills.

But colleges across the country say they are being told by LSCs that 19-plus recruitment is not a priority for funding unless it is for basic skills provision, and that bids for growth are being rejected.

David Gibson, the AoC’s chief executive, said: “We are being told that when colleges are applying for extra funding for post-19 they are being told that no growth is being allowed.”

The Learning and Skills Council says it has “limited resources” which it needs to spend “wisely on targeting priorities”. A spokeswoman said: “We want to fund courses that are relevant to business and beneficial to the economy.”

However, the fear is that to achieve growth among the over-19s, students and employers may face being charged more for courses that are not considered relevant.

Ian Munro, the AoC’s regional director for south-west England, says the dilemma facing many of the 34 colleges in his area is typical of the situation across the country. He says that two-thirds of his colleges “are not seeing any funding increase”.

“Somewhere between what the Government says it wants and what the colleges get to provide it, something goes wrong,” he said.

“The Government says it wants to drive up the economy and get the skills necessary to do that, so when it announced it was going to give colleges an extra 19 per cent increase in their income we were all very pleased.

“But after crunching the numbers and taking into account that some areas are now being capped, colleges are realising that, actually, there is no funding for growth.”

Gary Aitken, director of strategy and operations at City College, Coventry, says that for many colleges realisation of the real funding they will get next year has come as something of a wake-up call.

He said: “There is more money in the system, but this has been partly swallowed by increases in national insurance and pension contributions by the colleges - it is given with one hand and taken with the other.

“Also, since several other streams of LSC income have been consolidated into the base funding, in many cases there is a net standstill, or even a slight loss compared with this year.”

“Colleges feel that the ‘headline’ spin, which is saying that they are receiving a 10 per cent uplift this year, is at best misleading and at worst a bit of a con-trick.

“Overall, I think that the slow dawning of the reality of the ‘extra cash’

for next year is leaving some principals feeling that they have overslept.”

Warwickshire College was not caught napping. Its growth funding targets have been agreed with the local LSC.

“The Government is prioritising growth in 14-19 teaching and that has come through in the finance we have received,” said Ioan Morgan, the principal.

“We have made a big investment for provision of basic skills and have received the funding. You could say we read the runes,” he added.

Sparsholt College, near Winchester, had been braced for problems with its application for funding to increase the number of full-time 19-plus students by 45.

Tim Jackson, the principal, had been told by his local LSC that there was a difficulty nationally on the availability of post-19 funding as a result of having to prioritise.

Mr Jackson said that funding for the additional posts has now been granted.

But, he added: “It would have been terrible if colleges were having to turn round and tell students, ‘Sorry we can’t accept you because we have run out of money’.”

Mr Munro said: “Colleges don’t want to turn anyone away. They always try to say ‘Yes, you have a place’, because at the end of the day we are there to support people in their training.”

Sara Mogel, principal of West Cheshire College, said she expects to take on between 130 and 160 19-plus students next year but has received funding for just six.

Ms Mogel said: “It’s better than nothing, but only just. From our point of view we are not being funded for post-19 education. But we are not going to turn students away, even if it means we will be teaching for no money.

“Financially, it is a risky policy, but this college puts students first every time. The choice is stark. You either turn students away or risk solvency. But how do you choose who can come and who can’t?”