Colleges and universities have had the lion's share of the EU's objective 3 structural funds, accounting for 37 per cent of the total to run programmes aimed at improving qualifications, skills and employability.
Under the current renegotiation of the EU budget for 2007-13, support for 50 per cent of EU-funded programmes in further education would cease immediately. But Allan Wilson, Deputy Lifelong Learning Minister, said on Friday that all EU expenditure could be at risk, to be replaced with programmes dictated by the Treasury.
The greater needs of the new eastern European members have forced the rethink, and the European Commission is suggesting to ministers that the priorities should be advancing the knowledge economy, improving competitiveness and promoting sustainable development.
Graeme Hyslop, principal of Langside College in Glasgow and chair of the West of Scotland Colleges' Partnership (WoSCoP), said that colleges would subscribe to these principles but were concerned that they might exclude social inclusion programmes.
The partnership staged a special "festival of further education" last Friday, at which Mr Wilson made his comments, to showcase the difference EU college funding has made to the lives of people in the west of Scotland.
This support also included objective 2 cash under the European Regional Development Fund, which colleges have used to modernise buildings and facilities. In the 10 years to 2003, some pound;20 million was secured for west of Scotland colleges alone, representing 28 per cent of the total costs of 28 capital projects.
Mr Hyslop said at a seminar that he feared "we will hit the wall running".
He was told by Philip Raines from the Scottish Executive: "We will certainly hit the wall and of that there is no doubt. The question is whether we will be able to leap over it."
Alistair Grimes, of consultants Rocket Science UK, said that key problems usually occur during times of transition from one programme to another. "So 2007 will be hellish," Mr Grimes said, "and it is important that the transition is managed well."
The Scottish Funding Council has set up a working group to look at how the reduction can be managed. Mr Wilson revealed in his speech that the national review of FE would also investigate the issue.
But the minister sought to provide assurance by pointing out that the vast majority of expenditure in FE and HE, some 95-97 per cent, came from domestic sources.
"The Scottish Executive, together with the UK Government, is committed to maximising that expenditure," Mr Wilson said.