The 10 per cent extra grant given to colleges to help them tackle the problems of disadvantaged students is inadequate, say researchers advising the Learning and Skills Council on funding reform. Research for the council's national rates advisory group says the extra cash to recruit and retain students from disadvantaged and deprived homes should be upped to 15 per cent.
The disadvantage weighting was geared towards London in the 1990s because of how it was calculated. Now the North-east is found to be the most disadvantaged area.
The new funding formula is likely to call for separate assessment of costs associated with teaching students in the college and with those based on "outreach" work. Extra payments aimed at widening participation are likely to remain.
The issue of London weighting is likely to become more contentious as a result of research for the LSC. Costs may have risen rapidly in the capital but much of the country is catching up. The study by Frontier Economics reveals "hotspots" outside London and the South-east.
A problem for the Department for Education and Skills is that if they have a weighting outside the South-east, other departments will expect the same treatment. With up to one-third of the country likely to plead a special case, this would not be politically acceptable.
The research shows that up to a third of England and Wales would qualify for area weightings of between 5 and 25 per cent at additional costs approaching pound;250 million. The most likely outcome is for the LSC to increase disadvantage payments but cut area weighting.
Researchers for the LSC have found no justification for paying rural colleges any extra for "isolation" or "sparsity". They found no evidence that rural colleges were in any worse shape or needed a wider range of support and resources for each learner.
While transport costs were a factor, these were covered by other learner support funds, they found. If higher costs were a factor they only applied to the most isolated areas such as Cumbria. But it is felt that more research is needed.
Similarly with programme weights - the relative costs of teaching different types of subject - there is unlikely to be a big spending shift.
The PriceWaterhouseCoopers review also found no reason to continue with the extra 10 per cent uplift on budgets for specialist colleges which are due to be scrapped in August 2003. However, they are often rural colleges or are in a position where cuts would be counterproductive. The end of this uplift is likely to be phased in.
The top-up was created by the Further Education Funding Council in the 1990s, partly to compensate colleges which gave approved fee remissions and partly to stop an exodus of agriculture and art and design colleges to the HE sector. Agricultural colleges will say they need it because of the extra costs of foot and mouth disease. The decision to chop the grant will also be seen as odd when the Government wants more specialist colleges.