If advice to the Further Education Funding Council tariff committee is accepted next month then Lambeth College would receive around Pounds 800, 000 for higher salary costs. Cash to support initiatives under Baroness Kennedy’s call to widen participation could take its extra cash to around Pounds 1.5 million.

But as the Government’s continued efficiency measures take effect, the college would simply have to find Pounds 2 million savings instead of Pounds 3. 5m. Lewisham College faces similar problems, according to figures discussed by the FEFC London costs committee.

After the Kennedy report was published, the FEFC was understood to have wanted to play down its importance, given the demands from a range of other reports, including the costs of computer technology arising from the earlier Higginson report and the Tomlinson recommendations for students with learning difficulties and disabilities.

But sources close to ministers said Education and Employment Secretary David Blunkett was impatient of the slow changes and wanted faster action. This has meant swifter movement on the pilot schemes, many of which have implications for inner-city student recruitment.

The joint impact of Kennedy costs and the recommendations on London costs to the tariff committee would mean a boost of around 14 per cent to inner-London college budgets.

This, however, has provoked deeper concerns within the committee over who pays, given that all colleges face cuts next year, some will face a sharper decline in budgets than they might have expected.

Members of the London costs committee were reluctant to comment in advance of the FEFC’s final decision. But one told The TES: “The Kennedy report has clearly identified London as having genuinely higher social and economic costs. If the Government wants her recommendations seen through, it must provide extra money.”

Another principal said: “The rural lobby were strongly against us initially. Their attitude has changed to one of being deeply suspicious. And maybe you can’t blame them. They have their transport and other social costs - also identified in the Kennedy report.”

Many colleges will still have some explaining to do. It is unlikely that the FEFC will accept that the higher costs of Lambeth College, for example, can be explained away in these terms.

Principals in inner and outer London built up a strong head of steam in protest over the failure to recognise the higher costs last year. But their argument from the start was that until real costs were identified then the issue of so-called “inefficiencies” was muddied.